Evan Rogers here with another breaking story about how we're all doomed because our leading economists are all bozos.
Here's Joseph Stiglitz making the case that technology causes unemployment, and was a major factor in the Great Depression.
http://www.vanityfair.com/politics/2012 … ntPage=all
Obviously he's nuts, but... well, people listen to him.
You obviously didn't read the article.
It boils down to two sentences. Fix the banking system. Invest in infra structure.
I certainly does not suggest that technology is bad.
What’s needed is to get banks out of the dangerous business of speculating and back into the boring business of lending.
Finally, our decaying infrastructure, from roads and railroads to levees and power plants, is a prime target for profitable investment.
Actually, you apparently didn't read the article:
"The underlying cause was a structural change in the real economy: the widespread decline in agricultural prices and incomes, caused by what is ordinarily a “good thing”—greater productivity"
"Agriculture had been a victim of its own success. In 1900, it took a large portion of the U.S. population to produce enough food for the country as a whole. Then came a revolution in agriculture that would gain pace throughout the century—better seeds, better fertilizer, better farming practices, along with widespread mechanization. Today, 2 percent of Americans produce more food than we can consume. What this transition meant, however, is that jobs and livelihoods on the farm were being destroyed. Because of accelerating productivity, output was increasing faster than demand, and prices fell sharply."
Translation: the things that you are claiming he wants changed STEM from the "EVIL TECHNOLOGY"
Okay, I know when I wasting my time. Why you want to misread in such a blatant way will remain forever one of those marvelous mysteries of the human mind.
Evan, you'd never make it as a translator. Among other things Stiglitz said "ordinarily a “good thing”—greater productivity." He's a Nobel Prize economist.
the economist who wrote this article is a student of Keynesian economics perhaps. He believes that monetary policies are not the solution to the econ probs we are facing. The thing is that fiscal policy is susceptible to the mindset of the ones in power, whether the Republicans or Democratic, there is no continuity. Combining monetary and fiscal policy needs fine tuning, a task that is very difficult!!
GOP--One Party, 3 Platforms.
http://www.nytimes.com/roomfordebate/20 … p;emc=tya1
Well, duh. If I own a company that employs 10 workers, and I can buy a computerized machine that does the job of 3 of them, I can fire 3 workers and reduce my workforce to 7. That means 3 people will be out of work.
The Soviet Union, in its short term obsession with jobs and workers, restrained the implementation of technology for this reason. It took an army of old ladies with sickles to cut the grass in a public park, instead of one guy riding a lawnmower.
Stiglitz writes an excellent article. Everybody should read it (and ignore Evan's comical and odd mischaracterizations of it) because it clarifies many misconceptions and offers interesting analysis of the economic situation.
Nowhere does the word "evil" appear in the article. Stiglitz is identifying the underlying causes of the Great Depression and this current Great Recession as structural changes in the economy. In the first case, the movement away from agriculture to manufacturing, and now, the movement away from manufacturing to services.
In any new structural economic shift of this magnitude, many people will lose jobs as productivity improvements are implemented, and the old jobs are no longer available. That is a reasoned analysis of cause and effect, not hyperventilations about "evil."
Just as the US government's program with World War II jolted the economy out of the Great Depression, a similar massive effort is needed today, but not a "stimulus" or a loose monetary policy. A totally different kind of effort that addresses the fundamental structural changes occurring in the economic system.
+++Good comment. I can't imagine any economist opposing technological change. Here's a quote from the National Agreement between General Motors and the United Automobile Workers Union first adopted in 1948:
"(101)(b) The Performance Bonus provided herein recognizes that a continuing improvement in the standard of living of employes depends upon technological progress, better tools, methods, processes and equipment, and a cooperative attitude on the part of all parties in such progress. It further recognizes the principle that to produce more with the same amount of human effort is a sound economic and social objective. Accordingly, a Performance Bonus will be made to each eligible employee in accordance with the following table:..."
(1987 National Agreement between General Motors and the UAW.)
General Motors and the UAW received considerable praise when the above contract language was adopted in 1948 from nearly everyone.
ew, Ralph, you actually bought that?
I just lost a lot of respect for you.
... Technology is a good thing because it frees up labor for other tasks and further helps to end scarcity.
I actually thought better of you, Ralph.
Please read this book: Economics in One Lesson, by Henry Hazlitt. It's $10 off of amazon.com
Evan, my name is on the agreement. Technological progress is the basis of the increase in everyone's standard of living in this country and the civilized world. Are you familiar with this poem by any chance? It describes the current situation of millions of people in other countries not blessed by progress from technological change as we have been in this country.
The Man with a Hoe by Edward Markham
Bowed by the weight of centuries he leans
Upon his hoe and gazes on the ground,
The emptiness of ages in his face,
And on his back, the burden of the world.
Who made him dead to rapture and despair,
A thing that grieves not and that never hopes,
Stolid and stunned, a brother to the ox?
Who loosened and let down this brutal jaw?
Whose was the hand that slanted back this brow?
Whose breath blew out the light within this brain?
Is this the Thing the Lord God made and gave
To have dominion over sea and land;
To trace the stars and search the heavens for power;
To feel the passion of Eternity?
Is this the dream He dreamed who shaped the suns
And marked their ways upon the ancient deep?
Down all the caverns of Hell to their last gulf
There is no shape more terrible than this--
More tongued with cries against the world's blind greed--
More filled with signs and portents for the soul--
More packed with danger to the universe.
What gulfs between him and the seraphim!
Slave of the wheel of labor, what to him
Are Plato and the swing of the Pleiades?
What the long reaches of the peaks of song,
The rift of dawn, the reddening of the rose?
Through this dread shape the suffering ages look;
Time's tragedy is in that aching stoop;
Through this dread shape humanity betrayed,
Plundered, profaned and disinherited,
Cries protest to the Powers that made the world,
A protest that is also prophecy.
O masters, lords and rulers in all lands,
Is this the handiwork you give to God,
This monstrous thing distorted and soul-quenched?
How will you ever straighten up this shape;
Touch it again with immortality;
Give back the upward looking and the light;
Rebuild in it the music and the dream;
Make right the immemorial infamies,
Perfidious wrongs, immedicable woes?
O masters, lords and rulers in all lands,
How will the future reckon with this Man?
How answer his brute question in that hour
When whirlwinds of rebellion shake all shores?
How will it be with kingdoms and with kings--
With those who shaped him to the thing he is--
When this dumb Terror shall rise to judge the world,
After the silence of the centuries?
"It further recognizes the principle that to produce more with the same amount of human effort is a sound economic and social objective."
This is complete nonsense.
If you increase production, then unemployment is less of a problem because things are cheaper AND the labor is free to enter new sectors of the economy making even more things cheaper.
I keep hearing people say "I'm still unemployed" on my local news radio, and reading it in the local newspaper... all I can think is "I've seen about 20+ help wanted signs in the past month".
As the heads of industry gain more and more money, they save money and invest it so that they can make more money.
This invested money helps produce lower interest rates, which produce a greater ability to invest money in new projects. These new projects are then able to afford workers because there are a few freed up from the technology in the first place.
http://www.fee.org/pdf/books/Economics_ … lesson.pdf
Please read chapter 7.
I like the poem, Ralph. Somehow I had missed that one.
No, he never did mention "evil", he just said that technology helped cause a 10 years slump in economic history.
Which is clearly Bull**it.
... I'm shocked at how many hubbers believe this garbage.
Profanity aside, I don't hear an argument here.
There is nothing inherent in technology that must lead to more jobs. In fact, it makes more sense to say that in the short term, technological advancement will lead to job losses as existing labor is rendered unnecessary, while in the long run, it leads to job gains as the technology opens new markets and new opportunities.
Another example: computers put plenty of researchers, librarians, bank tellers and administrative laborers out of work in the 1960s and 70s. But there was no market for social media consultants, software developers or (fittingly) online writers at that time either.
Technology => increased production => increased supply => decreased prices
decreased prices => more savings or spending (really they're the same thing) => more investment => new jobs.
If I said "more jobs" I'm afraid I misspoke. It would merely be jobs that need filled.
Wait wait - Let me explain why this is clearly nonsense.
I know that I didn't win a Nobel Prize, like this twit has, but let me explain it.
If you build technology that produces X faster and cheaper than human labor, then, yes, for a short period unemployment will be higher.
A SHORT period.
But, in exchange for that brief period of unemployment - a year or so tops - you have PERMANENTLY decreased costs of production for the entire economy, AND increased the supply of labor.
This means that, while prices throughout the entire economy go down, labor is able to enter new fields of work.
It is not a 0 sum game because humans always want more. Trading always creates wealth.
That's true and consistent with Stiglitz. Improving productivity through technological change is the basis of our economic progress. It does however produce a certain amount of economic dislocation. Not many people are still employed making buggy whips or plowing with horses. Technology permits us to produce more with the same human effort or produce the same amount with less human effort.
Evan your criticism of Nobel Prize recipients Stiglitz and Krugman is comparable to an ant crawling up a female elephant's leg bent on rape.
An ant crawling up an elephant? Well, if we change "rape" to "kill", then let's run with the metaphor.
The Austrian School properly predicted every major economic event in the 20th and 21st century. Here's the list with citations:
The Keyensians were caught with their pants down each time;
Here's Stiglitz's own failure -- EVEN IN LATE 2009 -- to recognize the current housing bubble:
"This analysis shows that, based on historical data, the probability of a shock as severe as embodied in the risk-based capital standard is substantially less than one in 500,000 — and may be smaller than one in three million."
Translation? The elephant is already dead, and the ants are merely getting stronger eating the remaining carcass.
Trading does NOT create wealth !!!
Only what is produced, manufactured or harvested creates wealth. Trading (and service) will only distribute the wealth among (hopefully) all participants of an economy.
I am glad you ran over the story from Stiglitz. It puts emphasis on the role of productivity, one thing the US economy lacks for decades already. Productivity is driven by technological advances on a global basis. If you neglect that (as farmers did prior to the depression) you get into trouble.
Today the US has a productivity (capability to produce something) of 10% of its GDP. Now, world productivity (defined by technological progress) is some 14 to 15%. So the US is less productive than necessary with the consequence that the difference is imported (trade deficit). Do a little math on that.
With respect, but all Keynesian or Hayekian models are outdated. However the article of Mr. Stiglitz is full of insight.
According to the theory of "comparative advantage," trade does create wealth. For example, if two countries focus on what they do best due to natural resources, climate, etc, and trade with each other, the sum total of their production will be greater than if they didn't trade and produced what the other country produces using fewer resources in addition to the product in which they have a "comparative advantage."
No objection, but it is not trade the creates wealth, but the sale of the product "information about cost advantages". By trading you distribute productivity. And trade is a non reversal process. You can´t sell back at a higher price without adding value.
You can harvest and eat a potatoe only once, no matter how often you transport, sell and resell, wash, peel, boil, fry, mash or deepfreeze it. And don´t tell me there is more nutrition (value, wealth) added by doing all kinds of fancy things with the potatoe.
Please keep in mind that in our times of global communication and information exchange the product "information" gets more and more devalued.
"You can´t sell back at a higher price without adding value."
I mean no disrespect, but this merely shows an inaccurate understanding of how a price is generated.
Allow me to prove your statement wrong:
A butcher sells me 15 steaks for $10 each. I say "thanks" and go on my way. My family can only really eat about 4 steaks a week (there's only so much cow I can handle), and so I freeze many of them - which should actually lower their values.
However, a week later, my butcher comes to me and asks if I still have the steaks. I say, "well, yes, I actually have about 10 left. However, I froze them".
He explains that it doesn't matter: he needs steaks for a large order from the king, and the butcher has slaughtered all of his cows. He's willing to pay anything.
I say, "alright, I'll sell you the 10 steaks for $20 each". He says "thanks you saved me".
We both end up happier; as does the king. AND I was able to sell a less-valuable product back to the same man who just sold me the EXACT SAME PRODUCT for a profit.
I know this sounds ludicrous, but entirely possible. It highlights perfectly how a price is generated - subjective valuation.
Are there more steaks around? No.
So what actually happened is that your butcher and you took benefit from a specific information advantage. But did that create wealth? No.
Next time the butcher will have to charge you more because he has to reearn the extra money he payed to you. Where is wealth created?
It becomes even more obvious, if the butcher couldn´t repair or replace his meat grinding machine, because he ran out of money. So he uses much more time for your favourite ground beef. Will he sell the beef at higher price next time?
Trade creates wealth.
If you trade me $10 for my tie, then you clearly like the tie more than $10, and I like the $10 more than the tie.
Thus, we both benefited, and we both became more wealthy.
Trade creates wealth.
You are telling us that it decreased costs of production, but where does this beneficial margin go to?
If through technology, you increase production, why would a boss limit himself to a short term? The benefices that you gain don't go to increase the supply of labor but will be reinvested in technology? Doesn't it make sense? Also doesn't technology has its price too? Aren't they echoed on the product too?
And why would the prices go down as a automatism. Because you produce more? When you make a new tv set, the price won't go down because you manufactured more of them?
Economists are bozos. Economics is not an exact science. Which economical postulate or theory solved a crisis situation?
Exactly where does the benefit margin go? Does it go to inthe one percent coffers or is it lost in cyberspace? Or is it invested in offshore Sweatshop's. or banked in to Canary Island Bank Accounts/ Go figure!
The margin goes to spending, savings, and investment.
With more money to invest, new jobs that are more beneficial to mankind are created.
The Austrian Theory predicted the housing boom, the dot-com burst, the failure of socialism/communism, the failure of the bretton-woods agreement, the long-lasting great depression, and the stagflation of the 1970s-80s.
They also have given a comprehensive view of all of these events which uses a similar premise.
They have also given solutions to the problems. They have all been ignored.
Translation? The one school that says "government should spend less", and has a 100+ year history of accurate predictions to back it up, is ignored by the government because it wants to spend more.
Technology is "evil" if using it replaces the human workforce. Don't give us unfounded pseudo-economical theories to support your say!
Some day before too long, Robots will make everything. Robots are even taking over white collar jobs. Technological change dislocates employment. It can "free" up people to starve. However, when robots can produce all the goods for human needs....then the issue will be how will those goods they produce be distributed. Will the stuff created benefit only the owners of the robots or everyone? Theoretically, we could all be rich, at least in the sense of having all of our basic needs met. Think about the last time you preferred an autoteller or a self-check-out, or made an appointment with a computer.....even now doctors are beginning to rely on computer programs for diagnosing patients. Think of the "copyists" who were replaced by copy machines. I used to work on a factory line....when I see images of current auto factory lines, practically all I see is robots. I don't mind robots....but the wealth they create has to be distributed more fairly.
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