Fortunately It’s Not Just Jobs that Robots and Computers Will Take

The Australian, in the true spirit of Right Wing ideology, ie be afraid, be very afraid, has written another end-of-the-world-as-we-know-it piece on the coming of the robots.

Basically, we’re all going to lose our jobs to computerization and robots and there’s nothing we can do about it.

To be fair, the author, Andrew Keen, does quote lots of very robotsimportant people whose collective opinion can best be summed up in the quote from Google’s executive chairman, Eric Schmidt, who told the 2014 World Economic Forum in Davos that the “race between computers and people” will be the “defining one” for the next quarter-century.

Well… maybe.

But here’s the thing that Keen, and most others commenting on the issue, nearly always overlook.

Robots won’t just replace workers, they’ll replace consumers.

And here’s another thing: Robots and computers don’t consume.

All those billionaires busily getting rid of people in their businesses, rubbing their hands with glee as their labour costs plummet, apparently forget that they need these pesky things called customers if their factories are to continue to be profitable.

Here’s a simple formula: JOBS = WORKERS WITH MONEY = CUSTOMERS = DEMAND = PRODUCTION = JOBS.

It doesn’t matter where we break the loop, if it gets broken the whole shebang collapses.

What I’m saying is that if most jobs are to be replaced by robots and computers, then our entire economic model will have to be reinvented.

Because somehow, money has to find its way into the hands of consumers if the Capitalist Economy is to survive.

Which is another way of saying that we’re going to have to come up with a model to distribute wealth other than working for a wage.

I can think of several ways, of varying degrees of practicality, that this could be done.

For example, we could lend redundant workers money to buy a robot. The ex-worker could then earn an income by leasing Robby Robot out to a factory or a govt department. (Okay, maybe that’s one of the less plausible options…)

But here’s the thing; it’s extremely difficult to come up with a workable scenario that doesn’t smack of socialism. (I know, the word “Socialism” flashed in your mind in bright red lights back up the page when I mentioned wealth redistribution, right?)

Can you imagine a greater irony than if capitalism, in it’s never ending pursuit of lower costs and higher profits, became the driving force behind the emergence of some lasting, efficient form of socialism?

What is it the Chinese say about Yin and Yang – everything in the universe contains within it the seeds of its opposite.

Bingo!

So, I’m not lying awake at night worrying about robots taking all the jobs.

Because we workers will be needed as much as ever we were. Only difference might be, many of us won’t be forced to spend our days doing something we hate.

Tax Cuts for Small Business – Or, Where Right Wing Economic Gobbledygook Get’s Us

Seems the Greens are supporting Abbott and his cronies’ notion of a tax cut of 1.5% for small business.

I like a cash back as much as the next person, so why just small business? Why give only that part of the economy a leg up?

“Ah,” I hear you say, “Small Business is the backbone of the economy. A tax cut will create jobs.”

“Oh really?” I reply, trying not to laugh.

Let’s take my mate Jack. I’ll call him Jack ‘cos that’s his name and he’s definitely not innocent enough to need protecting.

Jack’s got a small business.

He makes a taxable income of about a million dollars a year. Probably middle of the road for a small business.

So this tax cut bequeathed by our incredibly generous government will put an extra $15,000 in his pocket.

Hands up anyone who seriously thinks Jack’s first thought on seeing this prize will be – Oh, I must rush out and hire somebody.

Before you answer that, I’d point out that, with on costs, hiring another person will cost Jack at least $40,000/annum.

So, hiring an extra bod’ will now put him out of pocket $25,000 a year.

Still reckon Jack is going to call a recruiting agency?

Me neither.

See Jack has this golden rule. Turns out most small – and large – businesses have it:

They only hire somebody when having that new somebody will contribute to profit.

Why the hell else would anybody hire somebody?

Jack will only hire when he can profitably put that person to work. And if that situation exists after the tax cut, then it existed before the tax cuts and Jack would’ve hired anyway.

So, what will Jack do with his tax cut?

He’ll do what you or I would likely do, spend it on a drunken week in Bali, or on some other exercise in self indulgence.

The only thing that makes any business hire extra staff is when it’ll add to profit.

And the best way to create that situation is to have more economic activity.

We could give everyone a tax cut, so everyone would spend more and that would create jobs. But we’d have nothing in the long term to show for it, except a bigger debt.

If government wants to stimulate the economy while creating a financially sustainable future, it has to spend money on smart investments like infrastructure, education and research. That way, jobs will be created immediately while simultaneously preparing the nation to be more competitive in the future and thus able to service down its debt.

If necessary, the federal government should borrow more and postpone surpluses to do this.

After all, the increased economic activity will increase future government revenues, thus making it easier to reduce the debt as we become more competitive.

And if we don’t make these investments, then we’ll be unable to compete in the future and so will finish up being… oh, what’s the technical term I’m looking for? Screwed, that’s it. We’ll be screwed anyway.

But tax cuts are not the answer, other than giving a short term, temporary boost….

Unless of course, as the Howard/Costello government did, it wants to buy an election.

Tax increases would in fact have a much better impact on debt reduction, provided the increased government revenue is used as described.

 

 

 

 

 

Why LNP Governments Never Manage to Rescue the Economy

Suppose your uncle’s sick. Would you starve him? Or would you feed him up?

I’m guessing you’d go with feeding him up. The time for starving him is when he’s in fine health and his booty is maybe starting to get a wobble up.

Well, it’s the same with an economy.

If an economy gets a bit sick, that’s exactly the wrong time to starve it.

The time to put an economy on a strict diet, otherwise known as Austerity, is when it’s in good health, making good surpluses. We take those surplus kgs, er, dollars, and tuck them away for when the economy gets sick again. Because economies are cyclical creatures.

In other words, the smart thing is to cut the top off the boom and stash it away so we can put it back in to support the economy during a bust.

What does that mean in practical terms?

It means, we should now be borrowing more and pumping it into the economy while it’s not doing so well. Borrowing rates are at all time lows, Australia retains – for now – it’s AAA Credit rating, and has one of the lowest debt/GDP ratios in the developed world.

But here’s the thing. If we give that borrowed money to corporations as tax cuts, (which is the LNP’s answer to every economic problem), then foreign investors will  simply buy another yacht, and we’ll end up with nothing to show for the extra debt.

So, we have to ensure that the borrowed money is spent to achieve two things:

  1. To act as a buffer in the short term to keep the economy humming and unemployment low. Because we are, first and foremost, a society, not an economy. (Listen up, right wingers, the economy is there to serve we the people, not the other way around); and
  2. To position Australia so that in the medium to long term we are able to compete successfully in the global market, thus protecting our quality of life.

But what does it look like, an Australia that will be competitive in the long term?

I have a fair idea, but I really don’t know, though one thing I am certain of; the current federal government has no idea either and isn’t trying to find out.

Yet one could argue that, after national security, anticipating what will keep us competitive in future decades is a key government responsibility.

But instead, what’s keeping Abbott’s mob up at night? The fact that they wont be able to give business more tax cuts this year.

The LNP is more worried about European and American luxury yacht sales than it is about our long term competitiveness.

Of course, in boom times, what does the LNP always do? It gives the extra revenues away as… tax cuts.

One might reasonably ask how they could be so economically idiotic.

The answer is that right wing governments always put ideology ahead of practical experience and data.

And their answer to every problem is… to starve the patient.

What Voters Understand Perfectly, but the LNP Just Doesn’t Get.

The LNP has brainstormed and road tested a response to it’s post QLD election thrashing, and it’s this:

What the Qld result proves is that voters don’t understand why privatization is necessary.

And, as we’ve come to expect from the current iteration of the LNP, they’re wrong.

The truth is this:

Voters understand perfectly why privatization is not just a dumb idea, it’s a REALLY dumb idea.

And, for the benefit of any right wingers who may have accidentally stumbled across my blog, ‘cos they certainly won’t come here voluntarily, I’ll explain why it’s a REALLY dumb idea.

Any business, whether government or corporate owned has a basic formula: Revenues less costs equals profit. Even Joe Hockey can probably get that.

Let’s start with the profit, which,  after tax and stuff, finds its way to shareholders.

With a government owned business, “Shareholders”, means you and me, because the profits go into consolidated revenue and help pay for our hospitals and roads and schools, year after year after year.

With corporations, “Shareholders” means the pockets of an increasingly small number of individuals.

And no amount of profit is ever enough for said small number of individuals

Hard to see an upside for us voters so far.

We all know why corporations love to buy government owned assets: Because they know they can make huge buckeroos.

Most government businesses provide a service – usually a monopoly service –  to consumers, electricity being the typical example. So any increase in revenue to generate better profit must come either from increased revenues, i.e. higher prices for you and me, or reduced costs, or some combination of both.

So, ask yourself this: If you managed a monopoly business and were under pressure from your board to increase profits, (and trust me, you would be), what’s the first thing you’d do?

Riiiiiight, jack up prices.

And guess what we see shortly after any privatization?

Riiiiight agaiiiiin.

“Ahh,” say the LNP/IPA idealoges, “But corporations are such wonderful managers, they’ll reduce the costs.”

Oh really?

In the first pace, over the years, all governments have been dragging more and more money from these assets. Any cost cutting has long since been done, and then some.

In the second place, after a couple of decades in the military and a couple more in fairly senior corporate roles, I have to say I saw little evidence that corporate managers are any better than public sector managers. In many cases, corporate management is well educated but poorly trained. Meaning that most corporate managers have degrees, often impressive one, but get little OJT on actual management and leadership.

Plus, the inevitable corporate focus on short term profitability over long term strategy often leads to truly awful decision making.

So, with the vast majority of privatizations, little if any cost reductions are ever achieved.

In which case, what’s a corporate CEO going to do to get that pesky extra profit his or her bonus depends on?

Exactly, hit the old increase prices button.

Meanwhile, the government will have spent most of the money generated by the asset sale on what?

On buying it’s way to victory at the next election.

And that, boys and girls of the right wing persuasion, is why privatization is so on the nose with the electorate.

Because, as the Qld election has just shown, and contrary to LNP belief, voters are not stupid.

As to the sanity of anyone who supports privatization, I shall refrain from passing judgement.

Why the Abbott Govt Simply Must Lie

For much of Democracy’s history, the party system has worked like this.

Each party adopts a set of values and principles. Conservative parties used to stand for tradition, the status quo and ‘Family values’. (They don’t any more and you can read about that here ).

Here in Australia, the Labor Party’s  values revolve around social justice, and strong links to the Labour movement. (Though the latter is becoming less and less the case.)

Historically, the strategies (policies) a party developed to enhance the nation’s future were rooted in those espoused values and principles.

Voters expected that once elected the party would address new problems in ways that worked for the national good, but which would still be rooted in the party’s published values and principles.

We can summarize this historical approach as, “Vote for us and we’ll do what’s best for the nation using solutions underpinned by the values and principles we told you about.”

And then along came the Abbott government with a new paradigm, which goes like this, “We have a set of ideologies and once elected we will, come what may, implement policies that further those ideologies, whether they are good for the nation and its people or not.”

In other words, national well being has become secondary to the furthering of right wing ideology.

Of course, they didn’t tell us about the new paradigm.

Now, if policies that fall out of right wing ideologies benefit the Common Weal, then no problem.

But, as we’re seeing, there’s a humungous problem, because these policies benefit only a tiny minority, far to few to win a single seat even if they were all in the same electorate.

See, right wing ideologies are based on economic theories developed and promoted by Milton Friedman and the Chicago School. They’ve been thoroughly discredited.

In fact only three times in the 20th Century were these polices ever tried; Argentina under the Generals, Chile under Pinochet and the UK under Thatcher.

In each case, the result was human misery on varying degrees of a grand scale.

Also interesting to note is that in each case, the countries that tried to make these policies work were run by acknowledged sociopaths. Coincidence? Maybe not.

So Abbott and his cronies are in the unenviable position of being dedicated to ideologies that, aside from being mostly reprehensible, inevitably lead to policies that just don’t work for the vast bulk of voters.

So, what to do?

Well, the only option open to them is to conceal the truth; the term you and I might use is, ‘lie’.

The perfect example is Healthcare. Universal healthcare is a fantastic benefit to all Australians. We’re the envy of the world.

But it runs exactly counter to right wing ideology, that says, “If you give the people something for nothing they’ll lose the incentive to work.” Of course, there’s not a shred of evidence to support this proposition, but that’s the thing about being ideology driven, evidence doesn’t matter.

So, as you might almost expect, with the co-payment debacle we have one lie after another as the government casts about for some story that we might believe.

We’ve had:

  • The country’s going broke. (An easily disprovable and rather silly lie);
  • The money is going to fund Medical Research anyway, (which basically acknowledges that the first lie was, in fact, a lie);
  • Then, completely out of left field, it’s all about protecting us from naughty doctors. Who knows what brain fart produced that one?
  • Finally, from Susan Ley, “oh, it was about protecting concession holders all along.”

All lies.

All seen as lies by most Australians, despite the best efforts of the Murdoch… well, I’ll use the word “Press” for want of another term.

In a way, I could almost feel sorry for the poor dears. They simply have no choice but to get up each morning and fib like mad and hope one of them gets traction.

On second thoughts, no, scratch that, there’s no way I could feel sorry for them.

But anyway, now you can see why the Abbott government lies as much as it does. It has to.

The truth is too awful to contemplate.