I know that 90% of economists are "rear view mirror economists". What is that, you ask? It is someone who can only look backwards to try to predict the future. It would be like riding on a train going west that just went thru Chicago at 8:00 in the morning and then expecting to go thru Chicago again at 8:00 the nest morning. I think that that city out the window just might be Salt Lake City. Let me show you how this concept affects economics and the trash you see and hear on the TV news.
The latest news from the economists is that the US economy just grew by an annualized rate of 4%. They then predict that good paying jobs are on the way. Not true and here is why. As I have blogged in the past, the name of the game has been changing. The reward for physical labor has gone down, while the rewards for intellectual labor has gone up. Further, the rewards for intellectual labor has and will continue to accelerate. The reason is that the productivity of the intellectual portion of our labor force has gone up so much is that, as I have pointed out in the past, is several times that of old style labor. The intellectual group builds and uses automation to eliminate the need for old style labor. If you notice there are many new technical companies who have billions in net worth, yet they only have a few employees. Years ago, the first thing that I would check to see if a company was viable was, "What is your sales per employee?" I could have asked for profit per employee, but the answer would end up about the same.
Look at a brick and mortar store compared with an Internet store like Amazon? Once the programs are up and running, it required "zero" humans to book the orders. Rather than trucking the good to a store and putting them on the shelf, Amazon ships the product directly out of the original warehouse or from the manufacturer. At least 75% of the old style employees are eliminated, so when the GNP goes up by 4%, it only produces new jobs like it went up by 1%. If the growth in the workforce is 1%, then the unemployment rate does not change. The name of the game has changed. Productivity is good, but it mostly rewards those with intellect. The size of the pie is larger, but the intellectual works get the largest share. That is the way is going to be so get used to it.
When you see all the personal computers being purchased, it has a secondary affect besides retail sales. With higher the volume the computers get cheaper, right? When the computers get cheaper, it is much easier for companies to justify buying automated equipment to replace low skilled workers. The cheaper computers "help" the intellectual portion of the work force while they "destroy" the low skill portion. I can remember when is was difficult to justify the purchase of programmable equipment, but not now. You hear the word CNC all the time. In the old days, it took a long time to program one of these machines to make a new part, but not now. The programming part is almost automatic too. If you don't know what CNC means, you wasted your time reading this blog.
The bottom line is that economists can't just look back and try to predict the future, they have to look at the "causes" and how those "causes" have and will continue to change. Remember when calculators were very expensive? They had thousands of gears. I was at a NCR plant in Ithaca, NY that made mechanical calculators. They were so proud of the rows of precision dies that they used to stamp out the parts. I told them that they should watch the scrap metal prices and get ready to dump those expensive dies. Two years later the buildings were empty, and their product replaced by $10 throw away computers. Only a small percentage of those layed off ever found another job and few paid as much as their old jobs.
Unless you are blind like most economists, you have to see what has changed and how you will have to change too if you want to have any type of quality of life. No government can give you or your children a high quality of life. Which of the groups will you be in? "Old style" or "intellectual"?
