It simply doesn’t let up. Global trade is skidding south at a breath-taking speed.
China produced a doozie:
The General Administration of Customs reported on Monday that in yuan terms, exports dropped 6.6% in January from a year ago while imports plunged 14.4%. In dollar terms, it was even worse due to the depreciation of the yuan since August: exports plunged 11.2% and imports 18.8%, far worse than economists had expected.
And so the trade surplus, powered by those plunging imports, jumped 12.2% to a record $63.3 billion.
This came on top of China’s deteriorating trade numbers last year, when exports had fallen 1.8% in yuan terms while imports had plunged 13.2%. Imports have now declined for 15 months in a row. That’s tough for the world economy.
OK, Chinese trade data can be heavily distorted by fake invoicing of “imports” from Hong Kong, a practice used to maneuver around capital controls and send money out of China. Imports from Hong Kong in January soared 108% from a year ago, even as shipments from other major trading partners declined. Bloomberg:
China has acknowledged a problem with fake invoicing in the past. In 2013, the government said export and import figures were overstated due to the phony trade to bring money into the mainland. Trade data for December suggested the practice had flared up again, this time to get money out.
In January, we have the additional fudge factor of the Lunar New Year. Chinese companies were closed all last week. It caused all kinds of front-loading in December and early January followed by a wind-down in late January and early February.
Oh, and India:
On Monday, the Ministry of Commerce and Industry in Asia’s third largest economy reported that exports of goods plunged 13.6% in January year-over-year, the 14th month in a row of declines. To blame are crummy global demand, including in the US and Europe, and as always a weaker currency somewhere, this time in China.
The economy shrank in the October through December quarter, the second quarterly decline so far this fiscal year, which started April 1. Over the past nine quarters, five booked declines; over the past 20 quarters, 10 showed declines. Most sectors got hit: consumption, housing investment, exports….
The decline in exports is particularly troubling for Abenomics. It never cared about consumers. To heck with them. It’s all about exports and Japan Inc. But two weeks ago, the Ministry of Finance reported that in December exports had dropped 8% year over year while imports had plunged 18%.
In the first half of 2015, exports still rose 7.9%; but in the second half, they declined 0.6%. Turns out, the bottom fell out during the last three months of the year: exports dropped 2.2% in October, 3.3% in November, and 8.0% in December.
In December, exports to the rest of Asia plunged 10.3%! Within that, exports to China plunged 8.6%. Asia is Japan’s largest export market by far, accounting for over 52% of total exports and dwarfing exports to the US and Canada, at 23% of total exports.
But even exports to the US fell 3.3% in December, and exports to Canada, which has been getting whacked by the commodities rout and the plunging loonie, swooned 10.4%! While exports to Western Europe rose 2.2%, exports to Russia, which is mired in a deep recession, plunged 22%.
Three years of Abenomics have brought the purposeful destruction of the yen, massive QE, negative yields on government bonds, a torrent of deficit spending, and a bevy of subsidies, tax cuts, and stimulus packages for Japan Inc. It was all balanced by a broad-based consumption-tax hike for consumers. The big rally in stocks that it created has now imploded. Abenomics is falling apart for all the world to see.
Export-powerhouse Germany too?
This scenario of crummy global demand was confirmed in a broader context by the German Bundesbank, which today released its Monthly Report for January. While exports still rose year-over-year, “at the end of the year, the German economy felt the effects of a lack of demand stimuli not only from China and commodity-producing emerging economies, but also from some industrialized countries outside the euro area.
[G]lobal economic growth in the final quarter of 2015 was unable to keep pace with its tempo of the period spanning the second and third quarters of the year. However, this recent deceleration does not reflect a broad-based economic slowdown. Rather, it was due mainly to a perceptible weakening of economic growth in the United States.
At the same time, due to the commodities rout, “the major commodity-exporting countries remained in a tight spot,” the report explained.
And some big hopes got trashed: The oil price plunge’s “stimulative effects for the global economy” had been “overestimated” and didn’t do much good, hampered also by the effects of “massive reduction in investments through the oil industry.” So “hopes for a noticeable stimulation of the global economy overall have up to now not been fulfilled.”
And US exports are spiraling down.
Booming exports of US petroleum products covered up part of the fiasco transpiring in the export of manufactured goods. But even that isn’t enough anymore. In December, total exports dropped 7% year over year to $181.5 billion, seasonally adjusted, down 8.7% from their peak in October 2014, and at the lowest level since January 2012.
Everyone wants to export their way out of trouble. Central banks in these countries want to crush their currencies to get the process going. But it’s not working anymore. Because there’s one problem: crummy global demand.
“Massive deterioration,” the CEO of container shipping company Maersk called the phenomenon. Read… “Worse than 2008”: World’s Largest Container Carrier on the Slowdown in Global Trade
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Thanks, Wolf. Global trade dropping like a stone – reminds me of the Great Depression. Remind me – what did governments do at the time to fix this? Oh, I remember – WW2 happened.
BfroTot – CORRECT.
When all else fails?
Take the nation to war. Getting close now.
That maniac Erdogan wants to send troops into Syria!
However, a reason, or an horrific occurrence is needed as excuse.
Enter a false flag today! Wonder of wonders! Hospitals bombed.
All blamed on that dastardly Putin and the Russian’s. Oh the horror!
Turkey is a NATO country. Russia will react with force. If any of their military is threatened or harmed, they will retaliate. All it will take is one miscue to turn this nuclear and global.
Then, the VERY last thing people will be thinking about is the economy!
This morning, Turkey is ramping up the “Russian attack” theme on the hospitals yesterday, as an excuse to send ground troops into Syria. Calling the hospital bombings, “a criminal act” and requiring a presence on the ground to “protect innocent lives”.
Even though Turkey for the fourth day in a row, is continuing it’s heavy artillery bombardment of the area in which this “criminal act” took place! False flag event well in place for follow up, by the Turkish military to smash Kurdish forces.
And don’t forget.
The next Commander-in-Chief is coming online next year. Whoever it is, it’s good no to be somebody who’s never been one before, and whether you’re a CEO or a C.O. – without experience, you’re gonna make some mistakes.
Sigh. It’s gonna get tougher and rougher.
The Powers want perpetual war with relentless subjugation chaos and casualties. U.S. Leadership now is essential but a powerful Goon Squad has hijacked our country. It is hard to envision how we will reclaim our country and get on track toward a noble destiny of a harmonious world. We are so down, dummied so far down, we just go along, and that is not sustainable which means tomorrow it will be gone so unless we reclaim, well, we had our chance.
War is very profitable and makes great memories for those who survive.
If a world war happens now, it will easily and unpredictably escalate to an all out nuclear war. It is estimated that this will release approximately 10,000 rads of radiation over every square inch of the earth’s surface. 500 rads are lethal to humans. The highest animals that can survive such doses are insects. the highest plants that can are grasses. Who will profit?Who will survive? Crab grass and cockroaches shall inherit the Earth.
OK, so we don’t have WW2 on the horizon, but Saudi Arabia claims they’ve got a coalition of Islamic Nations that can/will send 350,000 troops and 20,000 tanks to Syria while Turkey is ready to invade from the North and the 101st Airborne Division is sending at least two brigades to … where? On the other side are the de jure government of Syria, Russia, Jordan, and Iran. I don’t think this is going to go well.
Thailand also released ‘disappointing’ Q4 2015 numbers yesterday with downwardly revised forecasts for 2016. Numbers for Singapore have also been ‘disappointing’ for Q4
“DOWN GOES FRAZIER, DOWN GOES FRAZIER.DOWN GOES FRA___________”
There are two things I’ve been noticed, very closely related.
First, German and Japanese companies have been stuffing exports in every nook and cranny: warehouses are bursting at the seams worldwide. It’s nigh on unbelievable.
Second, there appears to be a very severe pricing disconnect among goods sold by aforementioned companies.
Capital goods prices have been slashed in prices for over a year now, while consumer goods (and spare parts) continue their race upwards.
In short deflation for me but not for thee.
From this pricing disconnect between consumer goods and the industrial goods (not to mention commodities) used to manufacture them, one trend is emerging: the worldwide economy is piling unto consumers to make ends meet.
As a whole Japan Incorporated and Germany AG seem determined to make up for lost revenues in the capital goods department (sales may increase by 2% but if you slash prices by 8%…) by overcharging consumers worldwide. An extremely dangerous game, as consumers worldwide seem maxed out.
Leaving aside the usual extravagant data originating from China (retail sales going up 11% on the New Year Week… right), the Christmas shopping season in the US and Europe has generally been nothing to write home about and downright disappointing in some sectors. Only Amazon has any reason to celebrate as eBay is starting to suffer from the decision to increase seller fees to double digit territory on some key markets.
It seems the wave of deflation, for which stuttering global trade is a symptom, is stopping short from reaching those consumers everybody hopes will pull the worldwide economy out of the quicksands it’s slowly sinking into. In fact consumers seem to have become the ultimate “chicken to be plucked naked”.
This could work if real wages weren’t stagnating or declining and if household debt worldwide weren’t already a serious problem. In the 2007-2014 period it has not grown in ridiculously brazen fashion such as corporate (+45%) and sovereign (+80%) but it increased a very respectable 20% nonetheless. Those SUV’s don’t grow on trees, you know.
As a commenter here said previously, we are sailing into uncharted waters. Never before in history we had a period of a similar pricing disconnect between capital and consumer prices coupled with stagnating or contracting purchasing power. Never before we entered stormy weather with all monetary arrows already expended: there’s literally nothing left to cut to stimulate consumption and hence global trade.
You’ve identified some of the symptoms… here is the disease.
Tullet Prebon – an energy consultancy to commercial and investment banks – put this in front of their clients a few years ago.
You do not put this sort of thing in front of your clients unless you are bloody well certain of the conclusions…. for obvious reasons
THE PERFECT STORM (see p. 58 onwards)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel.
Channel stuffing, stock buybacks, ZIRP and now NIRP in the EU (and probably coming to America): the world economy has actually been dead since 2008. Any activity witnessed is in fact merely the twitching of a corpse being electroshocked by hordes of financial Dr. Frankensteins.
In 2015, U.S. beef imports were up 14.4 per cent, but beef exports were down 11.9 per cent. The exports of all U.S. goods fell 4.8% in 2015, “to mark the largest decline since the final year of the Great Recession”.
Final year of the great recession That doesn’t exist because we never left it
In our wonderful new, supply side, trickle down world we have taken our eye off the global consumer.
How is the global consumer these days?
1) The once wealthy Western consumer has had all their high paying jobs off-shored. As a stop gap solution they were allowed to carry on consuming through debt. They are now maxed out on debt.
2) Japanese consumers have been living in a stagnant economy for decades.
3) Chinese and Eastern consumers were always poorly paid and with nonexistent welfare states are always saving for a rainy day. Western demand slumped in 2008 and the debt fuelled stop gap has now come to an end.
4) The Middle Eastern consumers are now too busy fighting each other to think about consuming anything and are just concerned with saying alive.
5) South American and African consumers are busy struggling with economies that are disintegrating fast.
No demand, no surprise.
The Neo-liberal ideology swept the world and it is now destroying itself.
“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” Warren Buffett
The 1% went to war on the 99% (aka the global consumer), very silly really.
Before they win, everyone loses.
China is now the workshop of the world.
China’s problems clearly illustrate the lack of global demand.
China manufactures its products from imported raw materials from other emerging economies, so these in turn suffer from the lack of global demand for China’s finished goods.
Global commodity prices and the Baltic Dry Index are at record lows illustrating this collapse in demand.
Capitalism is like Siamese twins at war with each other.
The 1% and 99% always fighting each other to get more, but if either side win they destroy each other.
The 1% were in the ascendency in the 1920s and blew it up with a Wall Street Crash in 1929.
The 99% were in the ascendency in the 1970s and blew it up with constant strikes making individual nations uncompetitive.
The 1% are in the ascendency again and have already caused another Wall Street Crash (2008) plunging the world into a global recession that seems without end.
The 1% haven’t worked out that they have gone to war against the consumers that buy their products and services.
Obviously this was all spotted by Marx a long time ago, but he had never seen the results of the 99% in power (Pol Pot’s Cambodia, Stalin’s Russia, Mao’s China, etc …). He came from a wealthy family and was only too aware of the greed, self-interest and hypocrisy in his own class. It doesn’t seem to matter which ideology you try and follow the psychopaths always end up in the positions of power.
Capitalism is an endless fight between the two sides, but neither side can win, to do so destroys themselves.
A more balanced approach is needed but the very thing that makes Capitalism work, self-interest and greed, ensures neither side is ever happy with their lot and always wants more.
(Latest update – The demise of the Western consumer has affected demand for Chinese products and their Keynesian infrastructure investment has run out of money due to the length of the downturn in the West.
The lack of demand for Chinese products and the end of its Keynesian, debt fuelled stop gap has fed back into global commodity prices.
This is affecting commodity producers in Latin America and Africa.
Spain and Portugal are massively invested in Latin America and the losses are starting to mount.
The vicious circle is now complete and can only spin faster and faster until the global consumer gets some money to spend.)
Gee. Tell us how you really feel………….
You know, economic theories remind me of the old fable of the 6 wise men and the elephant. Each wise man perceived the elephant in an entirely different way because each was feeling a different part of the elephant. We need a holistic approach to economic theory that takes into account all important components of the economy as an organic dynamic whole. I think the whole experience of the 20th Century shows that a blend of both socialism and free enterprise give the best results as long as they occur in the context of a healthy democracy.Socialistic measures are appropriate for the most basic elements of the economy, like communications, health care, transportation on the highest levels, basic ownership of natural resources, that sort of thing. That does not mean government bureaucrats should run everything but the private companies that do so are subject to strong public oversight. The government will offer a basic living to any who require it but in return, your labor power is at the discretion of society for public works. People should be able to get rich but only by their own efforts, not by manipulation, exploitation and speculation. Like I said, the necessities of life should be socialized to a major degree. On the other hand, much of the economy deals with luxuries and indulgences and this cannot be socialized nor should it be. This can be given over to laissez faire capitalism but this can only be preserved in the long run if policies are in place that strongly protect the free market and prevent monopolies. I think we are now technologically ready for direct democracy because of the Internet. Major acts of legislation would need to be approved by a public plebiscite before becoming law. Financing of all elections would be strictly controlled and lobbying largely banned. All officials, whether publicly elected or not would be subject to recall if an absolute majority of the relevant voters wanted this. Genuine democracy has up to now been rare, but if we are to prevent the situation we have now.
Economic trends are very closely following demographic trends, yes, as Harry Dent predicts. Even the local news reported the number of college enrollees is dropping (no mention of a lower number of 18 yr olds) setting off alarms for local universities to ‘advertise’ more. On a macro level, the next four years will be difficult, then less difficult after 2019. India actually has favorable demographics, as does the U.S. as compared to its economic peers – which makes me doubt the U.S. will ever revert to bizarre banking practices of Japan and others.
The US actually has favorable demographics, thanks to immigration. There will be many old people, but not the crisis levels that EU will see. Merkel knew exactly what she was doing by letting in 1 million migrants, young workers (and future tax payers) are needed.
I live in one called Turkey and they produce ALOT of manufactured goods including autos appliances and my wifes cousin is a manager for Nike in Bursa so you shouldn’t put all Muslim countries in the same basket Markar
There is awful little mention of the broader demographic “tectonic shifts” that happen on this blog. I wish Wolfgang would bring that up on occasion. It’s a great blog. Just feels a bit narrow on occasion.
Or maybe I just don’t notice it.
It’s a hell of a situation where Angela Merkel and the Bundestag cannot think of ways to encourage family formation among Germans but has to import fertile foreigners. (Actually, there was a policy of providing cash benefits for new children, but the net effect is still an aging population.)
While this is a much longer term macro comment, the “collapse” in global trade has always been baked into the cake due to demographics.
ASIDE: I would comment that I had a hard time finding a list of “peak” working-age populations by country (post something if you have a link). What I really wanted was a table of the “peak” working age by year by country, be it past or forecasted, so I could sort the list and compare the “already peaked” to the “going to peak”.
Page 2 of this PDF has a pretty information dense chart that is easy to read once you get the hang of it.
What I think I am seeing is that developed countries (highest aggregate demand) are rolling over while undeveloped countries (lowest aggregate demand) are ascending. This is just not good for sustaining current exports/outputs (or growing outputs) on the whole.
Keeping this in mind, many countries in Europe (including Russia) have already peaked or are peaking now, China is peaking now, Japan already peaked, and so on. What I observe is that developed countries tend to have less children (and I presume invest more heavily in them) where as undeveloped countries tend to have more children. This is skewed somewhat by immigration, which I will touch on momentarily.
My point being is that one’s consumer demand when you are “retirement age” is very different than when one is “rearing a family”. Just consider the upstream demand for non-labor stuff created by an expansion in housing when a young couple buys a new house and starts a family (equipment, lumber, piping, appliances, concrete, food, clothes, electronics, etc).
To be clear, the world isn’t ending, but this is definitely a very significant point. If one can safely presume that working age population drives aggregate demand, then it isn’t hard to see why all this monetary stupidity isn’t working. I think this shift in demand started a while ago, but it has been avoided as much as possible and is now a building stress looking for a stasis.
I like to present the problem as a family of 10 living on a farm. If 8 of the members work, 2 can sit on the porch (elders) and enough work gets done so that there is a harvest. As the porch population grows and the field population shrinks, things roll over pretty quick.
A cartoon in a similar vein of thought went around a year or two ago:
There is a reason the elites in Europe are importing so many bodies from Muslim countries – they simply need workers and don’t really care about the native populations. I don’t think they thought that one through very well and it is blowing up in their face. The US has significant immigration components as well, albeit usually more Asian and Latin/South American and is why it is still posting growth (first generation immigrant families tend to have more children) .
And many folks cite war as an “out” for elites, as it were, but in the situation I just described is killing off your young really a way to resolve the problem I just described? Think about that. This “truism” came from a different time period with … wait for it … different demographics.
For someone in my age group 30/40 somethings – one of the best notions to keep in the back of you mind, other than being 100% out of debt, is where you might want to live/work after filtering the list for peak working age population where the peak is a few decades out. The list won’t be pretty, but neither will the future.
The CIA website is a good source for economic data and demographics on a country by country basis.
“SNAP DEPRESSION” is a term I initiated and something I’ve been forecasting in the last year. I believe that the ‘denial’ of economic situation is finally being replaced with the stark realization of the true situation. It’s taken this many years because the human species has strong denial tendencies and because Central Banks and governments have pulled out all the stops to keep that denial in intact.
“SNAP DEPRESSION” is the rapid decline in demand in less than one year time frame. .
So people around the world are quickly and finally realizing the gig is up. They are ‘battening down the hatches’. This will continue in a significant fashion in 2016. It will catch all the Central Banks and governments totally flat footed.
M.Rains its coming alright
How about this.
We are witnessing the end of Capitalism as we known it. When you decimate the middle class you only have the working class left whom always relied on social welfare in past history. Thus socialism replaces capitalism!
You are not witnessing the end of “Capitalism”. You are witnessing the end of Free Enterprise.
All economic systems, be they Socialist, Communist, Fascist, etc. require “Capital” to build and sustain large enterprises. Capitalism is not a system. It is an accounting method. It is just the harnessing of money and labor to produce stuff.
Free Enterprise, where individuals or people, free of Government or Kings, can start and run businesses, is what’s dying.
The State, controlled by the Elite, will use all Capital and Labor while the people will be enslaved. Even Cuba is “Capitalistic” except that YOU can’t open a restaurant or hotel, etc. Only the State can.
Your history obviously goes back no further than 100 years, let’s try 5,000 years of human civilisation.
Every economic system since the dawn of civilization has been set up to support a Leisure Class at the top who are maintained in luxury and leisure through the economically productive, hard work of the middle and lower classes.
The Rich Kids of Instagram are not new but just indulging in the traditional conspicuous consumption and conspicuous leisure that has always been a characteristic of the Leisure Class.
In past centuries, the stately homes that dot the nation provided a conspicuous display of wealth and allowed their residents to enter the child’s world of “mine is bigger than yours” in a more discrete way. Above that and you move on to the palaces of royalty – “mine is bigger than yours”, more of the same.
The conspicuous leisure and consumption of the Leisure Class are just obvious displays of wealth to show they have more money than you. Their love of fine art attempts to bring a level of sophistication to their “I’ve got more than you” displays of wealth.
(The Theory of the Leisure Class: An Economic Study of Institutions, by Thorstein Veblen. The Wikipedia entry gives a good insight. It was written a long time ago but much of it is as true today as it was then. This is the source of the term conspicuous consumption.)
In the UK we call our Leisure Class the Aristocracy and they have been doing very little for centuries.
The UK’s aristocracy has seen economic systems come and go, but they all provide a life of luxury and leisure and with someone else doing all the work.
Feudalism – exploit the masses through land ownership
Capitalism – exploit the masses through wealth (Capital)
Today this is done through the parasitic, rentier, upward flow of Capitalism:
a) Those with excess capital invest it and collect interest, dividends and rent.
b) Those with insufficient capital borrow money and pay interest and rent.
The system itself provides for the idle rich and always has done from the first civilisations right up to the 21st Century.
For 5,000 years the rich have been taking from the poor, now there is some flow the other way they don’t like it, they don’t like it at all.
Adam Smith knew all about it:
“The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers.”
Like most classical economists he differentiated between “earned” and “unearned” wealth and noted how the wealthy maintained themselves in idleness and luxury via “unearned”, rentier income from their land and capital.
I bet the elites right now are trying to silently kill off 3D printing or anything that could possibly that could shift the means of production or livelihood independence to the masses as much as possible. Any step in that direction is an irreversible erosion of their power base and fully know it.
The meteoric rise of the Internet as immensely successful free information platform is only so because it caught them entirely off guard. They would not let such a revolution happen again.
Excellent post, Keith! I couldn’t agree more, they don’t like it at all!
It is not that simple. Marx himself predicted that what he called the “Proletariat–those work for a salary or wage rather than as small scale entrepenuers, would come to encompass the great majority of the human race. The Middle Class is as much working class as the factory workers. Marx also predicted all out globalization and the internationalization of big business and many other things we see now. I think that what you are calling “socialism” will happen from technological change rather than political radicalism. Socialism can only work in a world where most essential work is done by machines. By and large, Machines cannot consume the products they produce. To make reasonable consumption possible, you need to have a distribution system that is to some degree socialistic.
Europe’s immigration policy is not solely economics-based. If so, the type of entrants would look very different. Consider what the U.S. did a hundred years ago with specific quotas for each country. Scholars like Stoddard Lothrop were celebrities.
It was a badly executed plan that has now taken a life of its own.
Leaving politics aside, Corporate Europe has been literally obsessed with labor costs for years now. Jean-Claude Trichet and Mario Draghi have helped them, as have statictics bureaus throughout Europe. As most contracts are CPI-tied, wages have effectively been repressed even more than official figures give away.
Problem is by obsessing over cheap labor, Corporate Europe is missing the train of industrial automation. Japan and South Korea invested heavily into it, and the US are burning the midnight oil to catch up. Even China, despite still having a good supply of cheap manpower, is doing more than Europe.
Just last week I was reading a report from my local entrepreurs association and was pleasantly surprised to discover they are now considering our huge gap in automation as big as a problem as our labyrinthine tax code.
To cut a long story short the Japanese are leaving us in the dust due to their headstart and Americans, thanks to Silicon Valley, are advancing by leaps and bounds, albeit they still have some way to catch up with South Korea, let alone Japan.
If the industrial cycle freshly concluded had at its core the scramble for cheap labor, the one just beginning will have at its core the scramble for more favorable fiscal premises. Robots cost the same everywhere, they do not earn wages, they never strike, they have no unions and do not vote. If China became the sweatshop of the world because it offered plenty of dirt cheap labor, the next workshop will be the country which offers the best financial incentives for companies to set their assembly plants there.
A lot of jobs are coming back from China in the next decades, but robots will be getting them. The service industry will be affected as well: if the hamburger flipping robot presented by a Silicon Valley startup is probably nothing more than a fancy gimmick, Daimler is burning the midnight oil to come up with self-driving lorries and vans. Amazon drones were nothing more than a publicity stunt, but automated delivery vans are not in the realm of science fiction anymore. Next up are automated taxis: Europe may wage war on Uber as much as she wants, but cabbies’ days are numbered anyway. And the list goes on and on.
We spend far too much time looking in the rearview mirror while we should look up the road ahead…
It’s not mature enough just yet to be a major concern because it still takes an army of programmers, quality assurance engineers, maintenance mechanics and software administrators to keep a sophisticated robot running, but eventually, that will get sorted.
And then it’s going to be a madhouse of very, VERY few corporations producing an incredible amount of products.
Foxconn, Li&Fung and so on
Oh. And some day of course… Buy n Large!
I see many people get the cost of their labor reduced as more and more H1Bs are allowed in. I don’t care if cheap labor benefits the economy. I prefer loyalty to the citizens of this country.
” Robots cost the same everywhere”
Up until a robotic 3d printer starts 3d printing other robots.
The Reprap project at $99 has the ability to print itself except for
the chips and other complex components.
At some point in the future though, the majority of parts will
be 3d printable.
In the likely distant future one will have your robot make
another robot, and so on. When one robot breaks, you just
3d print another.
The robots will not be able to do all jobs, but at some point they
will do most jobs, and that is when the job paradigm comes to
and end as it is seen at this time.
That terrifies the herd masters, and why they are planning to
“manage the herd” with a mass die off.
The manufacture and replication of parts and pieces with a printer, CNC machine, pattern cutter, etc. will continuously improve and permanently destroy human jobs. I agree with your comments about automation. However, there are many jobs that can not be routinized. Those jobs will remain, especially those that involve human to human interaction (like selling).
Too many people think that their jobs are safe because robots only work in factories or warehouses. In the legal business, “legal research” can be performed by algorithms searching databases with parameters given in key word formats. Those search results are just as (in)accurate as the results generated by humans. But, the machine-driven search process is much cheaper and faster. How many employees spend much of their time just looking shit up. Those jobs will be gone. The people, who will be making the money, will be the owners and operators of the algos and the data bases.
Machine systems enable work to be concentrated in fewer and fewer hands. And, I have no answer for any of this. Take the 90 some million under-employed or unemployed American workers, who are not counted. Their skills are now rusty from disuse. Low paid foreigners may be doing their jobs. But, machines will eventually displace the foreign worker too.
Who will “take care of” this mass of humanity. I think that people in general realize all of this. That is why the birth rate is down in the entire world, except for Africa. Too many people have no future.
Next up is more intense currency wars in drives to export out of economic doldrums resulting in outright trade wars which has shown to lead to real wars.
What is scary at this time is what is unraveling in Syria via proxy war between the US/NATO/Saudi-Sunni and Russia/Iran-Shiite as WW I started over mere assassination attempt while the Euro powder keg just needed an excuse for a big war.
And remember how US made up the Gulf of Tonkin to start a war with Vietnam and it’s anybody’s guess on what blew up USS Maine to usher in Spanish American War.
Automation is a great thing until it gets to a point where the mostly unemployed can’t buy all the stuff being made so productively by machines.
The classic economic retort is that people will all be making machines instead of doing what the machine now do…hmmm
Went to local Olive Garden yesterday and noticed latest gizmo to reduce waiting staff – order, call and pay on the table not to mention little trivia entertainment. My daughter tells me Red Robin in SF bay area has it too.
And with rise of Keynesian wetdream of $15+/hr min wage expect more kiosk to order food and heck even robots to bring it to table. Ironically new canteen at my work got rid of cashiers as one orders the food using credit card using touch pad.
I too, went to Olive Garden. I hated it with their stupid tablets.
We won’t go back OR I will not leave any tip. Why should I for doing all the work myself? Let me put in the order and when it is ready the stupid little tablet can “DING” and I’ll walk up to the kitchen and take the stuff back to the table.
I’ll happily do that to lower my bill by NOT TIPPING ANYBODY.
Olive Garden sucks.
Yeah when the system lay off most of its customers it creates a
degenerative feedback loop.
less buying = less jobs, less jobs = less buying, and the race to
the bottom begins.
Kleptomania is a mental illness where ppl feel the need to steal,
and in mental research wall street traders were hooked up to
brainwave scanning devices and seen to have the same
mental pattern as a cocaine addict every time they make a
great deal even if it screws someone else.
When the entire system and government is shaped to loot the
masses at every layer of the system I call that government
by kleptomaniacs, or Kleptocracy.
Kleptocracy is government for thieves, by thieves.
There are some signs as to the level of looting as seen in the
insane numbers of 1,500 trillion associated with global derivatives,
and $32 trillion parked offshore that the IRS refuses to investigate.
google “32 trillion offshore needs IRS attention”.
The entire system of corporations, government, stock markets has
turned into a numbers racket which used to be illegal.
The truly sad thing is the old numbers racket was less rigged then
the current scam.
This subject – stuff more bodies into the population to create more workers to pay more taxes, etc. – has been addressed here before. Societies require neither useless eaters nor people with jobs that will not exist in 20 years. Growth of everything, except debt, is finished. Now, we have to cope with “negative growth”.
Here is my summary of an article, which was called my attention on Wolf Street just two months ago:
Imagine an economy in which the 0.1 per cent own the machines, the rest of the 1 per cent manage their operation, and the 99 per cent either do the remaining scraps of unautomatable work, or are unemployed. That is the world implied by developments in productivity and automation.
hyper-capitalist dystopia. There’s capital, doing better than ever; the robots, doing all the work; and the great mass of humanity, doing not much.
the disappearance of 47 per cent of jobs in two decades:
In the next two decades, 47 per cent of employment is ‘in the high-risk category’, meaning it is ‘potentially automatable’.
The theme is clear: human-to-human interaction and judgment is in demand, routine tasks are not.
it is mainly less well-paid workers who are most at risk.
By contrast, high-skill and high-wage occupations are the least susceptible to computer capital.’ So the poor will be hurt, the middle will do slightly better than it has been doing, and the rich – surprise! – will be fine.
This is year of Monkey according to Chinese.
Don’t be surprised we are in for monkey business.
Unbalanced global trade means unbalanced global economy, apparently common sense is rocket science now
Just came back from Singapore. Perhaps it’s the Chinese New Year, but restaurants everywhere were bursting with activity. Chinese tourists were all over the place seemingly spending with abandon. Hard to tell that there’s a slowdown of economic activity.
Prior to the 2008 collapse, I recall restaurants being very full as well.
I recall a friend visiting the US in the months prior and coming back to Asia and commenting how the country seemed so prosperous.
That’s the thing with crises – all seems well one day — and then the next day all hell breaks lose
What a superifical touristy opinion made out of ignorance.
Food there in general is cheap, everything else certaintly isnt. Try living there as an everyday man even after generous subsidies and meet the sticker shock especially if you are raising kids. It may certainly be a better place to live than most but even then there is still great financial pressure to save and cut costs to make ends meet.
Combine massive diminishing returns in technology, peak global debt, aging global demographics and a kleptocractic aristocracy and you would be thankful to just have stagnation while narrowingly averting a crash of biblical proportions.
We went from boundless optimism of Back to the Future II in the 80s to current science fiction where we are depicted to still be driving boring 4 wheelers in the latter half of the 21st century. Even the authors themselves are admitting defeat to a wave of pessimism to come.
Patriotic Americans break automation. I refuse to use ATMS or buy anything online. It’s nice to talk to the bank tellers and the message I put forth is “if they get rid of you guys and gals, I will take my money out of this bank”. Ordering things over the phone is a good opportunity to talk to people and ask them about their job situation.
We checked into a hotel the other day and the desk clerk pointed to a keyboard on the counter asked us to type our information into their system.
“I will if you give a ten percent discount on the room. You type it in, I’m not doing your job so that they can fire you.” Big smile from the clerk who typed it in for us.
This is the attitude that all Americans should manifest when confronted with automation.
An powerful alinco magnet can do wonders for touch screens and Google Wallet terminals. Just keep it away from your watch and cell phone. :-)
Your strategy has been anticipated by about 200 years. The Luddites opposed any innovation in cotton spinning most of all the machine that replaced the spinning wheel.
They smashed many of them.
The creation of jobs is easy- you could just prohibit earth moving machines- everything would have to be done by hand.
The only problem is that productivity falls and the cost of preparing a foundation would at least triple.
One of the problems is that commenters with a computer, internet, power, leisure, and a roof (unless you are tenting) did I mention running water? I wonder how many have ever not have running water- don’t realize how wealthy (compared to historic levels) they are.
Oh so they’re not 1 % ers- back then it never occurred to the 99% to compare their situation with THEIR 1% -royalty.
BTW: unless you are young there was a comparable innovation in banking- the elimination of manual ‘posting’- doing the books at the end of a bank’s day. now done by computer.
Banks in the 1950’s HAD to close at 3 PM -to update all the transactions.
We could go back to that- but your bank would close at 3 PM
We could go back to whole bunch of things
Every time I see one of these “robots will be taking over” stories, I just laugh.
The Plutocrats have managed to eff up every genuine productive industry in America; What makes anybody think that they will pull this off successfully?
The one that really makes me laugh is the assertion that “automation is good, in that manufacturing jobs will be replaced by software designers, engineers, and highly skilled maintenance techs to maintain the robots….”
If the aviation industry is any sort of guide:
-The software designers and engineers will all be newbie college grads in China and India.
-The on-site maintenance staff will transition to members of the wretched refuse; guys who due to language or intelligence issues (or both) can’t cut it in (even liberal arts) college, and end up going to the local, friendly, for-profit Vo-Tech and sign up for $50K worth of marginal training.
And who, upon graduation, will make a small premium over the $10-15/hour McJob.
For twenty years, they’ve been bitching about “a lack of skilled aircraft mechanics”. The Free Market BS propaganda would suggest that “the market” needs to pay more to attract these people back.
(There are tens of thousands of guys with experience who aren’t turning wrenches anymore………..mainly because they have found other jobs that pay more, with less BS to deal with)
Instead, you have:
– Management lobbying of the FAA to lower training/experience standards.
– Lobbying to require the FAA to accept maintenance done by Third World shops with no oversight.
Its easy to say what is happening and why, we can all see it.
But what is the answer (we dont want a war)
Housing costs and prices need to fall all round the western world, so that consumers will have some money to spend.
Just a quote from Einstein: he was asked what would be the weapons of the Third World War. He replied I’m not sure but I know the weapons of the Fourth World War; “Sticks and stones”
If you are in awe how fast the ponzi scheme is becoming unraveled you never understood how fragile it was in the first place.