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Tuesday, September 11, 2012

When the rich get poorer, we're going to regret it.

I haven't posted in a while and for that I apologize.

I'm taking a class on Maintaining a Microsoft SQL Server Database(2008 Release 2) It's five days of non-stop eight hour classes. I'm currently taking this 40 hour class and also later that night I go to work and complete my various assignments which typically takes an additional 40 to 60 hours. Also did I mention that my wife wants our storm damaged fence rebuilt? Also, my two younger boys need me to take them to their first cub scouts meeting. This doesn't leave me much time for sleep much less blogging, but I have a few minutes during my lunch break so here's what I've got:

There's something I've been thinking about recently. Assuming the ever-growing role of automation in all areas of the world economy, whether that be industry with robots assembling products, or whether that be customer service with computers answering phones, or even perhaps the logistical side with perhaps soon, robot-operated delivery vehicles, eighteen wheelers, taxis, who knows?, one thing is certain, the need for unskilled labor seems set to diminish more and more.

In 2008 we saw a massive resettling of the working infrastructure. Looking back twenty years, the labor participation rate has consistently stayed above 66 percent, even during the various recessions in that time period. Today that rate is at 63 percent. Nine million people are no longer in the labor force. Some of them retired; some of them went on disability, and some of them are living on food stamps and other government assistance.

Yet in spite of this massive downsizing of our labor force, American Gross Domestic Product is as high as it's ever been. How is this possible? When I look at what happened with me where I work, I expect that a similar model was followed throughout the economy. Lay-offs happened, but tasks needing completion stayed the same. I stepped up and so did those of us who were left. We managed. We found short-cuts and methods to automate various repetitive tasks that until then had been done by hand. This happened in every area of the private sector. We grew leaner, meaner, and after a while we realized we didn't need all those extra hands, after all.

Honestly, looking forward at a future where more and more, the boring daily repetitive tasks that any high school graduate could do will slowly but surely be replaced by automated machinery of one sort or another, I can't predict the ultimate results. More robots working means more people unable to find work. Production—or supply—will remain undiminished because of automation, but demand necessarily must drop due to the lack of purchasers able to afford the good or service. Less people working means less people receiving pay which means less money to purchase the undiminished supply of goods and services. So the rich will get poorer. Right?

Our Dear Leaders may go through some sort of misguided "Atlas Shrugged" moment and pass laws attempting to limit or slowdown the automation replacement movement, but in so doing all they will accomplish is bankrupting American businesses competing in the world market.

I don't have any answers here. What do you guys think?

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