Episode-1659- The Great Recession That Will Never End
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The green shoots have taken root, the recession of 2008 is gone forever, recovery is here. I’d like to believe that, I would also like to believe that Santa and the Ester Bunny will bring me stuff but well, you know how that goes right?
What we are actually seeing right now is a larger divide between the haves and have nots. Not the class warfare haves and have nots, that are really just a shield for the elites.
This is due to a shift, a shift in technology, collective psychology and an insistence on clinging to a past paradigm that is dying. The following is from the movie Harrison Bereron.
- Teacher – “What do we call the period after the end of the cold war”
- Harrison – “The Great Recession”
- Teacher – “And what made this recession different from all recessions before it”
- Jeanie – “It never really ended, it just kept going“.
- Teacher – “Why?” ..Class doesn’t know..
- Teacher – “Harrison?”
- Harrison – “Well in all previous recessions once the economy bottomed out and production increased, unemployment decreased. Um, but in the great recession because of new and improved technologies, fewer and fewer workers were required in all sectors. With so many people forced from their jobs, the traditional economic recovery was impossible.
- Teacher – Exactly by the year 2018 only 15% of the population had jobs. America was divided into two camps. A highly skilled and prosperous elite and an unemployed destitute majority. What happened next, Garth?”
- Garth – “Well the people who didn’t have jobs were very unhappy. And they started making trouble. Like they bombed buildings and had riots and killed people and stuff.
- Teacher – “Right and that was the beginning of what we now know as?”
- Class – “The Second American Revolution”
- Teacher – “Right and we’ll stop there for today”.
Let me ask you honestly how prophetic this sounds if you just change the year 2018 to say 2028 and move it only 10 years forward? Mind you this movie was made in 1996!
Join Me Today to Discuss
- What is GDP and how does it show us a “recession”
- What changes were made to how GDP is calculated, why does it matter
- What does technology replacing 2% of jobs a year for 10 years mean
- 23 million jobs eliminated
- With a flat population unemployment would be about 23%
- Current unemployment is claimed to be about 5%, why this is a lie
- Why I think 2% is a very low number, lower then what we should expect
- How this transition is like slow sinking quick sand
- Why the younger you are the worse it could be or the better it could be
- The type of thinking necessary to adapt to this, (the poem “If” by Rudyard Kipling)
- Why true ecologically sound production is a great play right now
- In spite of everything build, invest smartly, learn, grow, create, get shit done
Resources for today’s show…
- Join the Members Brigade
- The Year 1659
- Join Our Forum
- Walking To Freedom
- TSP Gear
- Fortress Defense Consultants – (sponsor of the day)
- The Berkey Guy – (sponsor of the day)
- The Real Unemployment Rate
- Forget Burger Flipping, Automation May Replace Anesthesiologists
- If – By Rudyard Kipling
- Working Man’s Dollar
Special Note – the claim that a 2% loss in jobs per year for ten years equals 23 million jobs is based on the following math.
According to The Wall Street Journal there are approximately 138 million jobs in America. The numbers below are rounded off to the nearest million.
- In year one a 2% loss leaves – 135 million jobs
- In year two a 2% loss leaves – 132 million jobs
- In year three a 2% loss leaves – 130 million jobs
- In year four a 2% loss leaves – 127 million jobs
- In year five a 2% loss leaves – 124 million jobs
- In year six a 2% loss leaves – 122 million jobs
- In year seven a 2% loss leaves – 119 million jobs
- In year eight a 2% loss leaves – 117 million jobs
- In year nine a 2% loss leaves – 115 million jobs
- In year ten a 2% loss leaves – 112 million jobs
138 million minus 112 million equals net loss of 26 million jobs.
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Working man’s dollar huh. After yesterday’s song I listened to literally all of the Chris LeDoux I have on my iPod. When Working Man’s Dollar came up I heard it exactly the way you meant it. I think Chris had that context in mind when he wrote that song. He was more than just a great songwriter and cowboy. He was a pretty good thinker too.
A lot of the automated job replacement isn’t machines, it’s code (bots).
Unlike robots (or other hardware), once the code is written, the cost is ZERO to replicate its functionality EVERYWHERE.
A lot of my work is writing bots, and part of that is ‘being a Bob’ and interviewing people in companies to find out what they actually DO so I can develop better tools to help them be more productive.
What I often find? That I can replace their entire ‘job’ with a few lines of code. At a company I was at last year, interviewing one of the employees uncovered that his entire job was the equivalent of pressing a button once a day. Well.. a bot can do that. One line of code.
I’d like to say this is unusual, but its not. And every time the cost of flesh and blood employees rises (health care benefits, disability insurance, etc.) companies take a hard look at who’s worth keeping.
To quote myself: 😉
Instead of developing skills to attract an employer.. cut out the middle man and develop skills to attract a customer!
Competition for jobs is a rigged game.. competition for customers is a level playing field (a meritocracy).
And keep in mind, if an employer will pay you ‘x’ to do something.. the job has to be worth 3x. Can you get a customer to pay you 1.5x?
If you can’t, you really have to ask yourself ‘what value am I really creating by doing this job?’ If the answer is ‘none’ or ‘I have no idea’.. I can almost guarantee that your job is NOT SATISFYING and your self-image/esteem are being damaged.
Exchanging Value = Greater Wealth for Everyone (see Bastiat)
So don’t think the solution is to bunker up and create your own little island where you produce everything you and your family needs.
Produce what you can produce profitably and exchange for the things you can’t. If you keep your exchange for survival needs within your community (I’m not going to say ‘local’ community.. its ‘your community’) you’re probably MORE SAFE than if you’re producing everything yourself.
(Rationale: If all production is on your property.. and you lose your property.. guess what. If instead you have ten local ‘trade partners’ and your property is lost.. you still have those relationships, and based on your reputation, access to their resources and the retention of them as customers. You’ve retained the GREATER part of your wealth.)
Jack, what about keepvid.com and then burning?
I use to have the Hauppauge WinTV. It would take the White and the Red output jacks (forget what they are called) as input and stream to your PC.
If you correct the typo in year three, your 26 million figure in year 10 would be correct. Daunting figures that will add to my motivation to do……………………………..
so that is what happened! fixed it thanks
Oh, you don’t necessarily need teachers to grade papers..
the quality sucks but here is a youtube copy of harrison bergeron
Jack, I just have to say you are so right about waiters/waitresses magically disappearing into another dimension as soon as you want to pay the bill & leave — that drives me nuts!
Completely agree as well. I hate when I want to drink and my water is empty. I usually get in and want some water to start as I think about what beer I want to have….. Then the server goes away and I want me cold one and no one is there!!!! That does piss me off. I also love it when they serve a spicy dish and never come back to refill your drink……
The quarterly spend, and gooberment discussion, reminded me of my old friend and mentor Sam at Coopers & Lybrand.
He’d always say “A budget is not a bank account”.
Step 1: develop a marketable skill
Step 2: build a business
Step 3: live within your means and save money
Step 4: but some land/become a producer
Step 5: thrive if times get tough or even if they don’t
Step 4.5: develop land and rent it out while acquiring more land, leaving a trail of restoration in your wake.
I love that “Leave a trail of restoration in your wake” Going to share that on my inspirational facebook page.
Thank you…. I never would have thought of that. I am actually going to work towards that now. That’s perfect! I don’t think I would have thought of that.
I am a part of the millennials and I love this time in my life and so far I have not had too many issues with employment. I truly feel lazy people will use what ever they can as an excuse. Maybe lazy might be the wrong term but I think you get what I mean.
We must always reach for the next level and stretch to fit into something so we can grow. We must not settle for normal we must strive for personal greatness at all times.
As you said tick tick tick the clock is going don’t squander your time. This thought gets me up and moving everyday.
Thank you for everything you do Jack.
I watched the movie… unfortunately I can see why he had no other choice.
Yeah, the old man really screwed himself all along the way with his secrets. Had the protagonist and love interest known things differently the ending might have been different [it also might have had less impact on the setting too though.]
Well the key is he really believed in what he was doing. Most people like him do. That is kind of one of the main points of the movie.
Can’t wait to play this version of IF for my family. My young son reads the copies I have posted in my offices, pauses and asks a new question every time he reads it.
Thanks for all you do.
Correction, Why he “didn’t think” he had another choice.
My gut feeling is that unemployment is not quite as bad and automation not quite as advanced… yet.
I don’t think this is the ‘great recession’ that ends with 85% of the population without jobs. I suspect it is the next great recession which feels like it will be just as bad as 2008, if not worse. The 2022 – 2040 time frame will be what I suspect is a deeply profound time of change for the world.
I know, no real facts or figures. It’s just my sense of it.
One driver that I think will truly force us to adjust to a new paradigm is artificial intelligence. I don’t know about time travel 😉 , but I have great faith in the future birth of Skynet (or something like it).
Okay the problem with gut feelings is they ignore math, facts and reality.
Of course it is not as advanced YET. Again my numbers are based on a cannibalization of just 2% a year over ten years. If you can’t see that writing on the wall what are you looking at. Not the facts man.
Also I did say we would likely never get there (80%) because when the reality hits us we have to radically transform the way we do things.
However, if we don’t, this is the pending result. The shift is the concern here not the final highest unemployment rate.
Like Insidious said above, it is bots and code that will replace more people than mechanical robots. And it is happening, as I said, we built software that can eliminate 135 very high paying engineering jobs in about five minutes.
That software and that fact are from ONE employer. There are several hundred such employers in the world. These are not low end jobs, they are high six figure (like over 200K a year) jobs.
The same software can be adapted to do the same thing in
The medical industry
The airline industry
The food service industry (talking shipping here)
On and on and on
Sure you need people to manage the systems, write and update the code, etc.
But and I know this for a fact for every 100 jobs it will eliminate it will create about 20 on the other side, a net consumption of 80%!
That is just one, just one. My gut feeling is that we as a society will adapt but it will be a radical adaptation. Lots of people will be hurt.
People want to think this is like elevator operators and phone switch operators, and it won’t be a big deal. This is different, a LOT different.
Why do people pay people $200k to do something a computer program could do in the first place?
And an inability to adopt solutions at the speed of technological change.
New businesses adopt the technology that exists at the time of their founding, immediately gaining the benefits.
Old businesses, particularly in marginally competitive industries, only adopt new technologies out of NECESSITY (Their old system has ceased to function).
When they do, they suddenly have MANY employees who’s jobs could have long ago been replaced by automation.
In my experience, this is mostly medium to small companies. Big companies can hire teams of consultants, or have dedicated groups, that are always looking at how to increase the bottom line (Of course, they also WASTE crap loads of money on things that are ineffective.. but they can afford to).
Small to medium companies don’t have the resources/foresight to really analyze and upgrade all of their business processes on an ongoing basis.
So you’ve been in business for 30 years, your profitable, and your still running your business on the software you purchased in the early 90’s (if you’re lucky, I’ve been in a a company who’s accounting systems was on a PDP-10. Its getting expensive to hire COBOL programmers. Not to mention find parts).
Profitable = Comfortable = No Change
AI is what actually worries me the most. Each mini-singularity devalues the replaced item. Steam engines resolved many power issues and freed people to do what truly creates value, applied thought. If machines can do that better then what use are humans? What more is that better AI could recreate the situation that lead to the feudal system. To my knowledge the feudal system was only possible because of the battle superiority of the mounted knight which put power in the hands of very few. Popular uprisings then became all but suicidal. This ended with the English longbow. Now strong AI and drones could put this power back in the hands of the few. It is hard to control the masses using present means. It would be easier to just enslave people.
I don’t worry about machines becoming our masters, I worry about a few humans using machines cement their present control to make them our masters.
I agree with putting education on the web but the difference between an affluent area with good education and a poorer area is the quality of family life. My wife teaches third grade in a poorer area. The kids are great but there is no one at home to help them with homework or projects. My wife purposely does not assign homework or projects because of this. If there is a project to be done, it is done in the classroom. There are crappy teachers in all schools and there are great teachers in all schools. Its not about the teacher or the school district, its about the parents that care about their children to make sure they are learning what they need to know.
No, assuming your wife is perfect, she can only teach to the class as a whole or at least in majority. She cannot give truly personalized training to each child. That means that the class can easily be dragged down by a large group of kids who are having problems with the subject. So if many kids in the class are still learning English as a language then they will be probably have problems with English as a subject. This will require the teacher to spend more time with them and less time with the children who aren’t having problems. This is a problem of parents, but it isn’t something that the parents of the well performing kids can solve.
For example, though I am biased, but my daughter is very bright. When she went into 2nd grade she got her first list of spelling words which included CAT, BAT, SAT and other words of similar complexity. I was appalled but as my wife used to be an English teacher explained, they have to start with easy words at the beginning of the year because they have not segmented the class yet so they don’t want the slower kids getting frustrated. So they start by teaching to the slowest student then segment and try to keep kids on their perceived learning curves. This assumes that the teacher is good enough to understand a child’s learning curve and that the curve does not change based on topic.
One student may be a bad speller, but may excel at grammar. This student could get placed in the slower curve even though it is only partially necessary. Again at each phase since only a finite number of curves are supportable, then each student will always be in a curve that is either too fast or too slow.
Better districts probably have kids of wealthier parents who can invest more time in their kids. Wealth enables the mobility to move to districts that are already better. They may also be better because parents in that area care more in general, so it forms a vicious cycle.
This is why education on the web is better than any normal classroom. Each kid learns at their own pace. Multiple videos on each topic allow kids to tailor their learning to their method of preferred learning, etc. Many schools are now teaching with Khan Academy videos, and flipping the paradigm so that learning is at home on video and homework is done during the day when teachers can provide one-on-one training to fill in gaps not covered in videos. This means that every student learns at their own pace.
I believe we agree, education on the web would be better. What I was trying to point out is that often the better performing schools are backed by parents who care that their children learn. Children who come to school in dirty cloths smelling of animal urine are not getting the same support at home. It is becoming that the school is raising the kids, not the parents. Parents need to take responsibility of their children and help them learn. If the child is struggling with a subject then the parents need to reach out and find help. Not to keep the child on some schedule but to make sure the child is learning what he/she needs to learn. Right now I do not believe parents of low performing schools are stepping up to take responsibility. My wife as seen it over and over again where a child needs help and the parents will not do anything. They rely on the “State” to take care of them.
And pubic schools do not fix that problem, they really don’t. So it doesn’t rank as an legitimate objection.
The question would be if we did education with technology would the children in these fucked up environments have an opportunity for a better education or would their opportunity go down.
The problem you are speaking of isn’t even about school or education, it is parenting and frankly abuse of children via neglect by their parents.
People tend to value what they work for and take for granted what they are handed. Hence we should not hand people and education, they should have to make some effort to obtain it. Then they would value it.
This but poorer districts have parents that are not involved and so better schools with better parents give kids and unfair advantage thinking is what led to common core. Pulling the good down to equal them with the bad.
I’d agree that there are many to blame for the poor state of public education, but the systemically bad design outweighs the faults of all of the other pieces. Yes, some parents are horrible on both ends of the spectrum. On one end the parents don’t care at all and kids get no support, and also on the other end where parents care too much and destroy their kids education by pressuring the faculty and administration for better grades then their kids deserve. When my wife was a teacher she had one parent ask for their kid to take a test again because they hadn’t studied…WTF! Administrations screw up by not supporting their faculty against parent complaints when compliance would compromise learning. Teachers are human and live in a system where they can do less work if all students are learning the same material. This leads them to average the learning of the group. Kids do not see the importance of education, but all of these things are really just a by product of a screwed up system that forces all involved into roles where they will be part of the problem because they are all merely human beings, not angels.
And that is largely my point indeed. The design sucks and society is unwilling to change the design. Hence the problem will only get worse until the design collapses.
Jack, you can try checking out clipconverter.cc — I don’t know much about “digital security” or whatever it’s called, but the website does use popups and other things which typically make people of my technical competency cautious. I’ve used this site to download videos, and even specific sections of videos, from youtube to .mov and other file types.
Great Show! Listened to it twice. Really liked the reading of “If”
Thanks, Jack, for pointing us to the movie, Harrison Bergeron. I just finished watching it. Meld Orwell’s 1984 with this movie and it’s a pretty good analog for what is happening to the country right now.
Oh the irony of the psychology and tampered/manufactured numbers…
Today the gooberment announced no Social Security increases because gas prices are too low.
My 4 year old figured out how to use the voice search feature on the youtube app. I’ve asked everyone he comes in contact with and no one told him how, lol. It’s baffles and amazes me what kids can figure out. He generally searches for trains, but some of the things he searches for makes me laugh hysterically.
I went to VA Hospital in NC yesterday for my back therapy and the receptionist at the counter was so kind to train me on how to use the new kiosk. It will check you for your appointment, check you out, submit your travel pay, check for future appointments, etc.
This was an eye opener, this machine could do what people at counter can do without an attitude.
And she has no idea she is training her replacement.
Great, great episode! Loved your commentary at the end especially – very inspiring. Thank you so much.
I found Harrison Bergeron on DVD. Here is a link.