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>So now here we sit with 14% U6 unemployment ('the new normal'), and a labor force participation rate that matches 35 or so years ag The other important statis

>So now here we sit with 14% U6 unemployment ('the new normal'), and a labor force participation rate that matches 35 or so years ag The other important statistic you're missing is that corporate profits are way up, even better than pre 2008 levels in fact. The question is why, if the economy is so bad that employment is perpetually depressed, how are corporate profits so high? The answer is that production is in fact back to where it used to be. But through automation and piling more work onto fewer people, corporations are reaping ever bigger profits at the expense of the rest of the economy. In fact, the problem we're seeing is a prelude to the very future folks like kurzweli talk about: a future where human labor is obsolete in favor of automation. It's not that the future is necessarily one of destitution for the vast majority of humanity, its one where current thoughts on how to best distribute wealth will have to change. These really are easy problems to solve: some form of basic income. The hard question is how do we get from where we are to there without a very nasty revolution. One good step would be to simply mandate a reduced work-week. Full time becomes say 30 hours rather than 40. These sorts of steps are going to become necessary to maintain social stability as these trends towards fewer and fewer jobs increase.

adventured 13y ago
Corporate profits are only way up for international corporations. That is to say, the S&P 500 and similar. And they're up so far, because many areas of the world such as the BRIC nations, have seen a boom the last decade while America has not seen a real improvement in its situation. We're taking on water, while nations like Brazil, India, Russia, Canada, Australia and China have seen impressive gains (some of the gains are immense, as in China). One reason labor in the US isn't do well, while corporate profits are booming, is because America's most successful corporations make most of their profits outside the US now. Companies like Apple and Microsoft hugely tilt the profit numbers, while earning very large portions of their profits from the global economy. Some examples: Exxon gets 45% of its sales overseas; GE 54%; Ford 51%; IBM 64%; Boeing 41%; Intel 85%; McDonalds 66%; Nike 50%; Dow Chemical 67%
LiweiZ 13y ago
Sorry to chime in. But I do want to remind everyone that Federal Reserve System and other major central banks did print money like crazy since financial crisis in 2007. Perhaps Zero Hedge is a place to get some sense in that part. Maybe I'm wrong, but finance world is definitely a fundamental aspect we have to take into account when we want to talk about the future. When we have A, we tend to think we can achieve some dream with just A, however, usually there are B/C/D.. needed to actually make that dream come true. And at that point A might be not even a crucial driver. Just my 2 cents.
- leot 13y ago
  In the 1950s the financial sector amounted to around 2.5% of GDP. It now amounts to more than 8%, and more than 30% of corporate profits. Anyone who is an apologist for such an increase needs to be able to convincingly argue that this increase has been instrumental in increasing the U.S. standard of living in spite of labor's receiving a decreasing share of gains. I for one think it's rather easy to imagine finance and the American standard of living getting along just fine with finance capturing a mere 2.5%. The question is whether this shift is a symptom or a cause: perhaps it's a symptom of a property of progress, whereby labor is becoming decreasingly remunerative, thereby forcing the best and the brightest into finance. The more cynical (and thus, to my mind at least, more likely) explanation is the pervasive, and plainly visible, influence that the financial sector has exercised on policy makers for the past half century, eventually leading to Wall Street's pull turning into an ever strengthening positive feedback loop, whereby savvy Ivy League-ers feel decreasingly adequate if they're not taking in seven figures within a decade of graduation. And so instead of inspiring and setting wonderful examples for everyone else, America's most charismatic are busy cutting deals with each other and exploiting private information asymmetries.
- digitalengineer 13y ago
  Agreed. But more jobs are coming back to the US thanks to the systematically destruction of the value of the dollar vs other currencies. It is becoming cheaper to produce in the US. More jobs, but not more 'real' wage that is. The Yuan has moved up 32% since it low (when it was 'pegged' to the US dollar). The Euro is 'strong' again against the dollar as well despite all their problems.
marvin 13y ago
You're making a very good point, one which I've been making for a long time. Chiming in as a Norwegian, we actually have much higher levels of automation than the United States does. This is a necessity, since salaries here are so high. But we also have (1) higher salaries for lower-skilled jobs and (2) a very strong social safety net which ensures that you will live a decent life even if you get long-term illness or are rendered obsolete. It is my hypothesis that the Scandinavian social welfare model is a prequel to the way things need to be in the even more automated future: High taxation of high incomes, and either a very strong welfare system or negative taxation for low incomes / citizen's wage paid out to everyone regardless of income.

adventured 13y ago

Corporate profits are only way up for international corporations. That is to say, the S&P 500 and similar. And they're up so far, because many areas of the world such as the BRIC nations, have seen a boom the last decade while America has not seen a real improvement in its situation. We're taking on water, while nations like Brazil, India, Russia, Canada, Australia and China have seen impressive gains (some of the gains are immense, as in China). One reason labor in the US isn't do well, while corporate profits are booming, is because America's most successful corporations make most of their profits outside the US now. Companies like Apple and Microsoft hugely tilt the profit numbers, while earning very large portions of their profits from the global economy. Some examples: Exxon gets 45% of its sales overseas; GE 54%; Ford 51%; IBM 64%; Boeing 41%; Intel 85%; McDonalds 66%; Nike 50%; Dow Chemical 67%

LiweiZ 13y ago

Sorry to chime in. But I do want to remind everyone that Federal Reserve System and other major central banks did print money like crazy since financial crisis in 2007. Perhaps Zero Hedge is a place to get some sense in that part. Maybe I'm wrong, but finance world is definitely a fundamental aspect we have to take into account when we want to talk about the future. When we have A, we tend to think we can achieve some dream with just A, however, usually there are B/C/D.. needed to actually make that dream come true. And at that point A might be not even a crucial driver. Just my 2 cents.

leot 13y ago
In the 1950s the financial sector amounted to around 2.5% of GDP. It now amounts to more than 8%, and more than 30% of corporate profits. Anyone who is an apologist for such an increase needs to be able to convincingly argue that this increase has been instrumental in increasing the U.S. standard of living in spite of labor's receiving a decreasing share of gains. I for one think it's rather easy to imagine finance and the American standard of living getting along just fine with finance capturing a mere 2.5%. The question is whether this shift is a symptom or a cause: perhaps it's a symptom of a property of progress, whereby labor is becoming decreasingly remunerative, thereby forcing the best and the brightest into finance. The more cynical (and thus, to my mind at least, more likely) explanation is the pervasive, and plainly visible, influence that the financial sector has exercised on policy makers for the past half century, eventually leading to Wall Street's pull turning into an ever strengthening positive feedback loop, whereby savvy Ivy League-ers feel decreasingly adequate if they're not taking in seven figures within a decade of graduation. And so instead of inspiring and setting wonderful examples for everyone else, America's most charismatic are busy cutting deals with each other and exploiting private information asymmetries.
digitalengineer 13y ago
Agreed. But more jobs are coming back to the US thanks to the systematically destruction of the value of the dollar vs other currencies. It is becoming cheaper to produce in the US. More jobs, but not more 'real' wage that is. The Yuan has moved up 32% since it low (when it was 'pegged' to the US dollar). The Euro is 'strong' again against the dollar as well despite all their problems.

marvin 13y ago

You're making a very good point, one which I've been making for a long time. Chiming in as a Norwegian, we actually have much higher levels of automation than the United States does. This is a necessity, since salaries here are so high. But we also have (1) higher salaries for lower-skilled jobs and (2) a very strong social safety net which ensures that you will live a decent life even if you get long-term illness or are rendered obsolete. It is my hypothesis that the Scandinavian social welfare model is a prequel to the way things need to be in the even more automated future: High taxation of high incomes, and either a very strong welfare system or negative taxation for low incomes / citizen's wage paid out to everyone regardless of income.