Sunday, October 27, 2013

What Has Caused Extreme Inequality in America?

We must know the reasons for inequality to solve the problem of equality. We have to understand the real causes not stuff intended to distract or confuse or anger.

We are going to deal with structural issues first.

Lets make sure we all have a grasp of the problem.  This short video can really help.

We have lost a huge number of jobs over the last 50 years. This is an arbitrary time frame, because the previous 50 years moved us from an agricultural economy to an industrial economy where millions of jobs in agriculture were lost and Americans were absorbed into the burgeoning industrial economy. This was a traumatic disruption that were the roots of the great depression. We can learn many lessons for today from the depression era LINK but lets do that separately.

Technology is great. It improves productivity. Improved productivity means we can build more products and provide more services with less people power. Less people power means fewer jobs. Our great advance in our era is just how good we are at taking people out of the work equation. This is great for productivity and great for producing profit and return on capital. It does create income inequality because more income goes to capital leveraging technology than people struggling to find a new job, to find a new opportunity.

This does create severe imbalances. People are not commodities. You are not a commodity. What you need are ample opportunities to fit into the economy that you can pursue for your personal fulfillment and for income to support your family. What you get instead is a rapidly changing society where once thriving industries are struggling for survival, and the vast majority of jobs available are low paying service jobs which offer little opportunity for advancement and where even robots threaten to take jobs from fry cooks.  LINK - What are we going to do with people?

Lets look at some historical perspective. By 1973, the productivity of U.S. workers had risen 96% since 1945, and average hourly compensation rose in tandem—94 percent in the same time period. This was the golden age of  blue collar America. You could, with a high school education or less, find a job. You could go out and apply for work- fill out an application form with a pencil- have an interview the same day, and pretty much find a job quickly.  Author Edward McClelland gives a great personal favor for growing up in the 70’s in an auto making town in the mid West.

But in the decades since the 70's there have been huge changes in labor and the nature of and number of jobs.  60 years ago one-third of the American workforce was in manufacturing. Today, less than one-tenth is in manufacturing. Millions of jobs have been lost and while other jobs have come along and we have had great innovations in technology and innovation; when you get to the end of the equation-

  • there are fewer jobs,
  • the jobs available are either much more complex and require much more education and learning and specialized human nature,  OR
  • much more dispersed and diversified, service oriented and low paying.
And the remaining jobs are under even more pressure from technology. This trend has made labor more vulnerable in the constant struggle against labor management and weakened labor in it struggles against capital. Job losses and lower wages helped increase inequality in America.

Make sure you understand that as a nation, we have never been wealthier. Increased productivity- the ability to deliver more products and services makes the nation wealthier in aggregate. Here are some thoughts on America's wealth. We have a problem with distribution of wealth. We have a severe imbalance of income between where the richest 300 Americans have more wealth, more income than the poorest 85 million Americans.  Here is a great infographic on wealth distribution.

Severe income inequality is a really serious problem for our future. It is a problem especially for poor people but also for wealthy people. I  am not exaggerating here for a political purpose. Severe inequality tears at our social fabric. It distorts our economy. It creates unintended consequences- most all bad.

We move on to discussion of solutions later, right now we need  to work on our perspective here. If we don't know the roots of the problem, fear mongerers find it profitable to rabble rouse and get people angry. We need facts and passion to do something about it. Not just fear and a passion to react angrily.

In the next three decades, from 1973 to 2011, worker productivity rose another 80 percent but hourly compensation only grew by a little more than 10 percent. Ordinary Americans were being cut out of their share of the nation’s economic gains.  Hedrick Smith gives a compelling timeline of the structural forces which have ravaged the prosperity of the American Middle Class.

Their share? is that pejorative? Well, the battle in the future to reduce income inequality has a very big political component. Hardworking Americans and Americans scrambling to find work need to stop and figure out what is good for them- learn some lessons from brazen big corporations who are very pushy about what they want- what they feel they deserve. Hard working Americans need to watch and learn here and work together to create political influence to change attitudes.... hard working Americans need to understand what is happening and develop some countervailing power.

This might be a good time to bring up the subject of the common good. What is good for America? It is often easier to see what America needs through our own eyes and experiences, but we need a broader perspective. 

Millions of jobs were lost overseas.  Technology has also provided the means to send millions of jobs overseas. Broad pipes of information- powerful software tools allow the sharing of key information where products can be designed anywhere and sourced somewhere else. Technology has empowered a variety of services. Bookkeeping  and accounting services have moved overseas. Software writing, graphics, and website construction have become a worldwide marketplace. OK, who hasn't had to deal with customer service on a phone line with a strange accent that you cannot understand, and who cannot understand what you are trying to say? Today, engineers in America compete with engineers around the world using advanced software and huge information pipes.

But the really big job losses took place right here in America. Once powerful industries have shed millions of employees as they try to deal with the turbulence caused by all kinds of technologies. Publishing, once a dominant industry, is on the ropes, as newspapers are expensive to produce and slow to keep up with the 24 7 news day and thousands of sources of information on the Internet.

Lets revisit our discussion of technology and robotics and this impact on employment and income inequality. Robotics and technology take human hands out of repetitive tasks. How many can we think of? Feel free to add your thoughts in the comments.

It is pretty near impossible to list all the jobs taken by robotics or on the list ready to be taken by robotics. When is the last time, you bought gas and had no personal contact with anyone for the purchase. This is huge. Have you visited your local QT recently. All kinds of food to buy there. Machines whir and spin burritos, tube meats- all without the hands of a cook, just someone to watch and replenish the food stocks.

Who remembers what a secretary was or did? Remember when typing 70 words per minute was a resume skill? Robotic systems mix drinks without liquor losses. Robots vacuum floors, scrub and polish- mow and manicure lawns. Any repetitive task can or will be done by a robot.

What does the future look like with Robots?

The sad state of politics and the exercise of exploitive political power have exacerbated income inequality.

Politics as usual has only made income equality worse. While it would be practical to have a free ranging conversation about how things are and what we can do to make serious structural changes- we are instead caught up in politics and a maelstrom of BS to obfuscate, to manipulate, to motivate for political gain.

But we are at fault too. Too many of us are busy and distracted. Who has time to spend studying our national problems and thinking about solutions? Especially when we are working long hours, and stressed out by all our challenges. Well some of us do, and we have to be the lightning rods for change. We have to be the leaders. This is too big a problem for the class of politicians we have right now. We need leaders. We need statesmen. We need men and women with courage and strength and conviction.

What do we do? How do we create economic growth in America? Great question. We address that next. LINK Feel free to add your thoughts below.

No comments:

Post a Comment

So what do you like to add? All comments are moderated.