Big Shift

It has been the continuing obsession of this writer that we are living in an Interregnum, where the “old is dying, but the new cannot be borne”. The new National Intelligence Council report, Global Trends 2030, seems to be further evidence that others share my assumptions.“The ’unipolar’ moment is over and Pax Americana — the era of American ascendancy in international politics that began in 1945 — is fast winding down,”the report says.

The 140-page report released today by the National Intelligence Council lays out dangers and opportunities for nations, economies, investors, political systems and leaders due to four “megatrends” that government intelligence analysts say are transforming the world.

Those major trends are the end of U.S. global dominance, the rising power of individuals against states, a rising middle class whose demands challenge governments, and a Gordian knot of water, food and energy shortages, according to the analysts.

“We are at a critical juncture in human history, which could lead to widely contrasting futures,” Council Chairman Christopher Kojm writes in the report.

Although I discuss much of this in the new America 3.0 video, I’d like to touch on a few key points here.

  • The End of U.S. Global Dominance-As I have been saying for a while, this is a good thing. Imperial overstretch has sapped our ability to rebuild the sagging infrastructure of America, on which future productivity and growth depend. Obama’s greatest legacy may be that he extracted us from two fruitless wars in the Mideast and restructured our military in a manner to suit the security needs of the 21st Century.
  • The Rising Middle Class-The notion that for the first time in history less than half of the world’s population would be living in poverty is good news. But it also means that authoritarian regimes are constantly going to be challenged.
  • The Rising Power of Individuals against States-I have thought for a while that a new breed of Cyber savvy Anarchist could be a great threat to the world order, especially in the most developed of nations. I don’t know how this plays out, but both government and multinational firms are really vulnerable to attacks from a few bad actors.
  • Global Resource Squeeze-I’ve been studying Jeremy Grantham’s work recently. As the middle class grows, the demands for protein put real strains on the food an water supplies already stressed by Climate Change. Here again, the U.S. is in relatively good shape, but the strains in Africa and Asia will be massive.

Although I have not read the whole report, there is one other aspect of modern life that appears to be missing. There is significant evidence (as I pointed out in the piece on Grantham) that the rise of manufacturing automation will lead us to an era of very low job growth. The only antidote is of course the massive retirement of boomers. Krugman wrote eloquently about this yesterday.

In a recent book, “Race Against the Machine,” M.I.T.’s Erik Brynjolfsson and Andrew McAfee argue that similar stories are playing out in many fields, including services like translation and legal research. What’s striking about their examples is that many of the jobs being displaced are high-skill and high-wage; the downside of technology isn’t limited to menial workers.

Still, can innovation and progress really hurt large numbers of workers, maybe even workers in general? I often encounter assertions that this can’t happen. But the truth is that it can, and serious economists have been aware of this possibility for almost two centuries. The early-19th-century economist David Ricardo is best known for the theory of comparative advantage, which makes the case for free trade; but the same 1817 book in which he presented that theory also included a chapter on how the new, capital-intensive technologies of the Industrial Revolution could actually make workers worse off, at least for a while — which modern scholarship suggests may indeed have happened for several decades.

As he suggests, this discussion of the role of automation and the role of monopolies which has caused “the shift of income from labor to capital has not yet made it into our national discourse.” We have been talking about this on this blog for three years. Perhaps the wider conversation has now begun.

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14 Responses to Big Shift

  1. ariel says:

    this post triggered the recollection of a TEDx video I watched just yesterday (which by the way is very quickly going viral) which speaks directly to the jobs question you discuss above. ( In the lecture he even mentions in passing M.I.T.’s Erik Brynjolfsson and Andrew McAfee.

  2. Rick Turner says:

    You want to see where the smart kids are headed? Here’s mine, 17 years old, fully engrossed in retro-futurism using computers to document his music and a CAD program Solid Works, like I used a band saw at his age.

    He’s already talking about getting a CNC machine to produce parts for his design, and he’s got a business plan coming together for after he completes his PhD in mechanical engineering. Of course he has to get into college first! He wants to teach and build odd but useful musical instruments in his spare time using the best “desktop” computer aided tools he can get. CNC machines are now what desk top computers were…on the way to very affordable, and the desktop 3D printers are getting to be amazing. He also understands full well that the markets for what he may build will be small, but these markets…the potential clients…are in the global village of the Internet.

    And he’ll do it. Maybe this is post-futurism…and it’s certainly the collision of art, craft, and modern technology.

    And Jon knows that I’ve been spouting this whole idea of the end of labor for some time here…

  3. Hugo St. Victor says:

    Hadn’t known that you’d been advocating such a bicameral approach, len. Brilliant course. (In Econ Theory this is called “counterfoil” strategy, a chosen tension; in simpler military terms, a more passive/defensive “back-up”, or redundancy). Labor — organized Labor even — isn’t at its end, though. Rather it’s in the throes of reinvention. Not for the first time. Each of the principal political parties in the USA since ~ 1855 has improved generally the lives of American laborers and just as I think we haven’t heard the last from the Labor movements so do I doubt that the political parties suddenly will cease to produce fresh ideas that can benefit laborers here. The motives at play still are too strong and mutually beneficial. But the players will have to give up nostalgia. My sense has been that what accounts for Jon’s longstanding perception of this Interegnum’s breach birth is some sort of Victorian problem with Nostalgia, a fear of pioneering. In Victorian terms perhaps it’s due to “maternal impressions” upon a pregnant woman frightened by Future Shock. Something like that. Today Boomers are the most moist-eyed sentimentalists I find or have known. Unspeakably hidebound by our educational experiences which by and large were too schitzy, for obvious and good reasons, yet therefore insufficiently whole

  4. Rick Turner says:

    Well, the unions just took a hit in Michegan, and I am frankly of two minds about the whole issue of “right to work”. The unions rode the auto industry nearly to death, not that management was much better. They drove Gibson Guitars out of Kalamazoo and off to Nashville (though there are a lot of stories there!). And I don’t think the unions are facing this whole issue of capital prevailing over labor very intelligently. They should be strongly advocating for job retraining and continued education of their members to keep them relevant in today’s increasingly robotic manufacturing environment. They should be advocating for useful schooling for their members’ kids. They should be lobbying for universal health care so that workers can change jobs without losing health insurance benefits or paying outrageous COBRA fees. And perhaps they should be working harder for their members to be stockholders in the companies for which they work. Why can’t the labor force be capitalists, too?

  5. Fentex says:

    Why can’t the labor force be capitalists, too?

    Because those who labour do not have capital, if they did they would not labour.

  6. Rick Turner says:

    Well, then, capital will win and there will be masses of unemployed folks on the dole forever or it will be heads on pikes and torches in the streets. The capitalists will have to figure out just how little they can pay out in welfare to prevent revolution. Bread and circuses…

  7. JTMcPhee says:

    @Rick Turner
    “Right to work” is not the cure for the ills you lay at labor’s door. Guys like Hoffa and Boyle are no different in mindset and operation from the shits who inhabit the C Suites, or the shits who are peddling “right to work” as a panacea that also makes them personally richer and more powerful. What you’re highlighting is politics and human nature including greed and seeing your opportunities and taking them. “Right to work” is a patent fraud, a Big Lie, a one-way lever that corporatists can use to club the shuffling laborer into submission: “At least I have some kind of job… for now.” RTW leads to serfdom, like the retail job i had where I was expected to burn my “PTO” (notice it’s not called “vacation” or “sick leave” or anything like that any more — PTO has that little ugly flavor of “lazy people getting something for nothing,” like “entitlements” has come to carry.)

    The trick in all of human behavior is to figure out ways to moderate the corruption and self-promotion and predation that will always be there. It’s a flowing process, others here have a richer vocabulary covering how process controls work to achieve a desired end result and I’m sure are aware that it’s complicated, that the diagrams and plans and all don’t begin to capture all the inputs and influences and side reactions. And of course all of this is about who gets to write the specs for what the endpoint is supposed to look like.

    “Right to work” is an ALEC-adopted theme that is pat of the disease and totally unrelated to any kind of cure. (Note that MI’s new law, er, FIAT, exempts firefighters and cops — who tend to vote reThuglican — from all the shit that’s dumped on both public and private-sector unions, basically “rendering illegal” all the tools that workers have to keep from becoming race-to-the-bottom wage slaves, knuckling their forelocks and scraping their boots before Mr. Henry Potter, who now owns almost all of Bedford Falls and is in the process of having it re-named “Potterville.”

    We might profit from watching the “Robocop” movies again, with an eye to how Omni Consumer Products operates and what “Detroit” was to be turned into, “Delta City”… And to remember that there’s no Peter Weller to stand up and resist for the rest of us.

  8. Rick Turner says:

    Corporate types and labor unions have been in a pendulum swing for a long time. There was a time when unions were absolutely vital to combat latter day serfdom. But then in the post-WWII industrial explosion, the unions went Mafia and were as bad as the capitalists. They COULD have made stock ownership a part of the whole compensation package, and then labor could become capital…what I was just told is impossible. Labor should have a piece of the action, and labor should have skin in the game. Detroit is the worst example of how to get it wrong, of course. By ignoring all those little cars coming in from Germany, Sweden, and Japan, and insisting on the car as big dick approach, they screwed the pooch, to mix metaphors. And, of course, Germany and Japan in particular had the odd advantage of having to rebuild their industrial bases from scratch…including tooling and infrastructure…while the strictly bottom line bean counting approach of US industry held onto old tooling, old infrastructure, and the unions tried their best to squelch any real productivity improvements in the name of saving jobs.

    Capitalists + mob unions ruined American industry. Time to get the game on and deal with this new death of labor thing.

  9. Fentex says:

    in the post-WWII industrial explosion, the unions went Mafia

    I’m not a U.S citizen and I only know this isn’t true of unions where I live, but I also suspect it isn’t true of unions in the U.S.

    I suspect this is an example of the success of control of information by owners of news agencies and influential wealth in the community.

    I imagine there’s a few famous examples cited as proof that it is true, but I suspect they represent a very small percentage of relevant activity in the U.S and are anecdotes used as evidence to blur reality.

  10. Rick Turner says:

    The big one was the Teamster’s Union, and that was literally Mafia controlled…as in La Cosa Nostra…as in Sicily. Other unions were corrupt as well, though not necessarily quite so connected to the Godfather…

  11. Rick Turner says:

    For instance…

    And you can Google “Mafia and Unions” Here’s a sampling:

    And that’s a lot of why unions have a bad name here in the US. And it’s a bit of why I’m not totally against “right to work” state laws. I used to be a member of the AFofM…the musicians’ union…a totally useless organization in my day, but if you worked as a touring and recording musician playing in major halls and major (and minor!) label studios, as I did, you had to belong just to get paid, especially session pay. I used to have to go down to the union hall in New York to pick up my checks from Vanguard Records so the union could extract it’s cut.

  12. Rick Turner says:

    An you can say it’s the newspapers fault, but you’d be killing the messenger in our case here, Fentex. The unions controlled are huge. The Teamsters, for instance, may have the single most powerful union in the United States. Then there’s the whole waterfront crowd… They may have an old Wobbly veneer, but there’s a lot of corruption below the lefty surface. “Hey, you want a TV cheap? It fell off the back of a truck…” Or, “I know a guy whose brother-in-law can get shit really cheap…it’s all surplus and wasn’t on the bill of lading, so they have to get rid of it so the paper work balances…” Spend a little bit of time in the funkier waterfront bars in neighborhoods in New York or Seattle or Oakland or San Pedro. We have a reality here that isn’t New Zealand…

  13. Hugo St. Victor says:

    The conflict in Michigan is essentially over union shop vs. open shop. The Teamsters historically haven’t figured much in lining up the dispute between those two options recognized under the Labor Law. The contest is more the product of CIO disputes dating from TR’s presidency and, in our lifetime to the rivalries of the two teachers unions, NEA and AFT. Further, the Teamsters were demonstrably Mafia-controlled for not much longer than five years, prior to which (a) the Teamsters were their own posse and (b) the union certainly became increasingly Mafia- influenced — not controlled — the more the Mob used Teamster pension funds as an underground bank with which to fund the ambitious expansion of organized rackets. It should be borne in mind that the State of California for a long time similarly has exploited the retirement funds of its public employees unions, PERS and STRS, in similar manner, just as the federal government appropriates the use of Social Security retirement funds and the retirement funds of e.g. the U.S. Postal Service. When government dips into retirement funds it does so by force of law, openly, and often with no return for moneys borrowed. The governments rape public funds because the can, and do it to pay for a fig leaf covering legislative overspending. The Teamsters, on the other hand, relinquished retirement accounts sub rosa but for big returns negotiated with Organized Crime.

    Moreover, the Teamsters during the period of its Mafia dealings backed both political parties, whereas today the government’s rape of public retirement funds is the M.O. of the Democratic Party with the Party’s quid pro quo being polical protectionism in exchange for union campaign expenditures and foot soldiers. (Political protection for labor protection). The Teamsters and the Mob did it for pecuniary profit; the government robs the public sector unions in the interest of perpetual incumbency, Labor for its own stasis. The politicians’ ploys take in unions in both the public and the private sectors.

    The individual worker doesn’t factor much in any of these various forms of Racketeering, but if you ask me the government’s racket is far less beneficial of the labors as a legal class, and is far more enduring, durable and insidious. The Mafiosi corrupted the Teamsters, briefly. The politicians corrupt the Teamsters, UAW, NEA, my own AFL-CIO at large, and SEIU. The fundamental reason why unions have were especially protected under federal law almost 110 years was that the courts found them quintessentially democratic American organizations. That predicate has become a de jure conceit, a de facto travesty, an economic disutility and an insupportable public expense.

    …and I’m a unionist! Nothing cries out for reform and renewal more than the Labor Movement does.

  14. Hugo St. Victor says:

    I suppose y’all reckon I’d prattle on about today’s H.P. Lovecraft, New England “Unspeakable Horror”, but I’ll never discuss it online again: it’s enough to’vd dealt with former colleagues and students coming home to roost as though I could impart Theodicy to them in a sound bite. The whole crime’s ineffable anyway. I lift mine eyes unto the hills, from whence cometh my help. Onward, Futurism. It’s a balm, regardless of whether the future’s as grim as the Council’s forecast or as tentatively hopeful as Jon’s. “To get behind the mule”, as Waits describes it, also necessitates looking ahead. And probably prayer for those left behind or stuck in the ruts or buried in the furrows, God rest and bless them, old and young.

    Gotta go. What Jon has shared from the front, really deserves a close inspection I think, Fellows…

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