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Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2013
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The Coming Conflict
Kimball Corson
01/28/2013, Pago Pago, American Samoa

(photograph of older, less sophisticated robots)

The Coming Conflict

A rock and a hard place are coming together. The precondition to make their crack up inevitable is the new wave of technology about to descend upon us. Robots and sophisticated computerized processing with huge memory and hyper-complex algorithms that can do the work of financial analysists, legal research associates, surgeons, accountants, production line employees, architects, drivers, salesmen and myriad other occupations are going to replace literally millions and millions of us. On net, most employees will be eventually displaced from our labor markets.

At the turn of the century, many if not most of us were employed in agriculture. Mechanization replaced us and we migrated into urban areas and took jobs in factories. That was the way it was through WWII which got women into the labor market and kept them there. Then more lately, when American businessmen shipped American jobs and factories overseas, the push to get rid of the American labor began in earnest. The service sector of the economy filled to over-flowing with people struggling to find work and wages dropped substantially. Many left the labor market at that time, unable to find work, suitable or not. You know, the lazy shiftless bums that Republicans love to talk about. But now something else is happening.

After the 2008-2009 recession when so many were laid off, business orders of robots, computerized equipment and software went through the roof rising more than 25 percent over trend lines. Why, because capital managers decided to take advantage of the situation and seriously began in earnest replacing more labor with new machines that can do their work. Millions upon millions of robots are being order now for installation in the next few years and the new wave of technology is beginning to descend on us in earnest and quickly. More people are being shoved out of the labor markets. The percentage of our working age population to those employed is under 58 percent now and falling. It was over 64 percent more recently.

Are these just more of what Republicans call lazy, shiftless bums or is America truly failing to generate adequate employment for its population. In the last decade, on net, America has generated no new jobs and yet it needs 18 million new jobs each decade just to accommodate its population growing at 30 million a decade.

If jobs aren't available, how will America survive? How will families earn income to buy goods and services? What will they do? One answer is to transfer income from the rich to the unemployed in one manner or another. But the rich have seen this coming for decades and have conditioned our thinking not to ask for more money in the form of taxes or to tolerate socialism. They have built up an income defense industry and have propagandized the population. All are supposed to be John Galt's. They have lobbied government for lower taxes which are now very low by historical standards. So where is the slack in this system? How are people to get by?

Labor markets bleed labor. The rich defend and hoard their income and wealth. The ranks of those without a source of income swell. The economy sags for want of buyers with income to buy all the goods and services. In time, profits will slip as it become harder to find markets without undisplaced labor and buyers with income. What happens when a desperate and unsustainable stalemate develops well beyond where it is. What is our government bought off by the oligarchs to do?

Tokenism will undoubtedly be the initial response. Our standing army so abhorred by Jefferson and others is too much at the ready to move against us and suppress our resistive elements and protect the property of the rich and wealthy. But what is government to do -- placed as it is between a rock and a hard place, just as we will be? Will it circle the wagons and align with the don't-give-a-shit Plutocrats or will it represent the people after an initial bout of tokenism? Alternatively, will democracy fail and our government be taken over in a relatively bloodless coup by the oligarchs, making real and tangible their present financial alignments? But would it be so easy? Romney came close.

Or does the popular vote and taxation stand a real chance to fashion, say, a Scandinavian solution along the lines I have discussed, or will we just go to a bare bones negative income tax system and fight about the subsidy amounts? To be sure, the rich capitalists are going to want to hang onto as much as possible but aside from continuing to buy votes, how will they do that, and if successful, how dangerous will Americans become in their situation? While not the optimal mix for fighting a revolution, there are no shortage of guns in America.

Blood could well flow in this situation and in larger quantities. We are hitting a brick wall, folks. Much is going to have to give.

Ryan is a Mad Dog and Nuts
Kimball Corson
01/28/2013, Pago Pago, American Samoa

Ryan is a Mad Dog and Nuts

He says not only is sequestration going to happen but more, HE FAVORS IT. That is crazy. Not even the nuttiest other Republicans share his position (except maybe a few other wrecking ball teabaggers).

The sequester is a batch of very onerous automatic spending cuts set to take effect March 1st. The cuts were designed during the 2011 debt ceiling talks to be so onerous and disastrous as to absolutely force both parties to balance the budget. They were supposed to go into effect on January 1st, 2013, but Congress quite sensibly voted to delay them. The CBO says they will cause a shock to the economy and recession they are so terrible.

But Wrecking Ball Ryan favors the sequester regardless. He is beyond reason. Everything he touches is to destroy it, render it inoperable and do so with arithmetical misunderstandings and mistakes. That he has a single fan left now in America staggers the imagination. Never has one man sought to destroy so much and do it with incomprehensibly. He should be jailed for the balance of his term as a clear and present danger to our country. Then his staff could not be forced to read Ayn Rand's Atlas Shrugged as he requires.

On Our Economic Situation
Kimball Corson
01/26/2013, Pago Pago, American Samoa

On Our Economic Situation

If not inherited, wealth is indeed created. For every Gates or Jobs, there are too many of the hyper-wealth who got that way, not by true engineering cleverness, but by receiving unearned income or rents from several sources, often by having their lobbyists seek amendments to the CFR's or other governmental favors that squarely put money in their pockets. Too, off shoring jobs and factories to hustle the advantage of a material wage differential isn't really rocket science. Neither is it, when bankers, enfranchised by our government, create new money at a nominal paper shuffling cost in making a new loan and pocket the interest income free and clear. Like hustling capital gains, my lazily pursued forte and livelihood, these are all unearned income in the sense that no product or service is created and provided to another in exchange for a reasonable price. Monopoly rents in our economy are legion now that the antitrust laws have been destroyed. They are also unearned income. Too much of the income of the super rich derives from rent seeking behavior as they pursue unearned income. The value of the marginal product of their true, individual productive efforts, as I define them, is rarely close to the income they receive which they accumulate as wealth.

The suggestion we start thinking about where it all came from and how to get more -- that's how life gets better for everyone -- simply isn't true. It ignores the distributional problem where too many are simply left worse off, as now, and as with the technological revolution about to hit us. To consider only the prosperity of the top end and to ignore the rest is bad public policy, yet that is what is happening. The income defense industry works hard to block policy changes, maintain the status quo and fight sensible reforms at all cost. Our bought off federal government too much buys into that agenda.

The further suggestion the less productive are so by choice, daining to be lazy and shiftless instead, as the buried implication, is likewise wide of the mark. Endowed with IQ's hovering about the mean and lacking the funds or abilities to access top university training on how to seek rents, they are who they are and do what they do. Their incentive to work is not fundamentally undermined by government, say in the form of unemployment compensation. It is more destroyed by the economy denying them employment opportunities. Indeed to the point where they tire of looking for work. See the included graph. The notion we should all different, as oppose to behave differently, simply doesn't fly.

However, we do produce more now than we did in 1955. I would certainly hope so. Our population then was less than half of what it is now. But it is not true than more production means higher living standards. It depends upon 1) production relative to population size, and 2) the distribution of that production, including employability to acquire a share in that production. There is many a slip between the cup and the lip and the income defense industry plies them all.

We are all headed toward a brick wall here as I have suggested with the technology that is in the wings. (Here is but a tiny example: Terry Gou is the founder and chairman of Foxconn, an electronics manufacturer. Foxconn announced its plan this year to buy over 1 million robots over the next three years to replace most of its large workforce that is engaged in welding, spraying paint and assembly. It has 10,000 robots now, with 300,000 more expected to be in place in the next 12 months. Foxconn is our coming problem in microcosm.) The obvious implications are 1) a collapsing employed to working age population ratio, 2) a hugely growing skew in the distributions of income and wealth, 3) diminished aggregate demand for consumer goods and services, 4) a tremendous strain on government, 5) a disturbed and menacing population, 5) astronomical wealth in the hands of the rich and the wealthy and more problems than we know what to do with.

Finally, we do have a short fall in consumer demand, at least in a sense. To be sure, the markets for goods and services do clear, but, notwithstanding, equilibrium is maintained by idling productive resources: laborers become unemployed; plant and equipment are commensurately not used and become idled. There is a very real short fall in demand presently and, worse, federal and state governments are cutting back, all at the time this new wave of robotics and computerized processes are descending upon us, if not to increase production, at least to displace more labor to the rolls of the unemployed. We face a production glut and a short fall in demand. No easy solution attends, at least none conservatives care to talk about.

The last and current entry, not shown on the graph above, is under 58 percent.

Krugman, Keen and Stiglitz: So Who is Correct?
Kimball Corson
01/26/2013, Pago Pago, American Samoa

Krugman, Keen and Stiglitz: So Who is Correct?

Krugman disagrees with Stiglitz that the cause of our economic malaise is the badly skewed distribution of income. Krugman sees the problem as a deficiency of aggregate demand. Keen, the promoter of the debt jubilee solution, believes instead that high debt loads on consumers are the problem. So Keen wants debt relief or forgiveness programs to increase aggregate demand, not the stimulus program Krugman wants. He too doesn't see income inequality as the problem either.

Krugman's, Keen's and Stiglitz's views are all consistent, with Stiglitz coming much closer to the mark. Here is why. Compromised aggregate demand results when the income distribution is skewed because rich people spend a lower percentage of their income on consumer goods and services than poorer people. So there is a resulting deficiency in demand and consequently national income which Krugman and Keen both observe. (That in turn compounds the results from the skew.) Krugman doesn't understand why aggregate demand has been compromised and Keen doesn't see the cause and effect relationship. I explain.

Because of the results of the income distribution skew, consumers in America went on a borrowing binge in an effort to retain their standard of living to the point where now their debt loads are cutting into their purchases of goods and services because they have to now service that debt. This too further reduces aggregate demand. Keen wants a debt jubilee to relieve consumers of their debt load so they can go back to spending more on goods and services and so improve aggregate demand. But they still then face reduced income from the skew and the same standard of living problem that got them into trouble in the first place. Aggregate demand is still compromised. Krugman thinks a stimulus program will fix it. It won't.

What Krugman and Keen don't well see that Stiglitz does is that the skewing of the income distribution is the root cause of our problems here with compromised aggregate demand and with the resulting debt loads.

Personal News
Kimball Corson
01/26/2013, Pago Pago, American Samoa

Personal News

The second of the two felons who were out on parole and who burgled my boat and attempted to murder me has pled guilty. There will therefore be no trial, only a sentencing hearing for the two of them at which I may speak if the prosecutor and I decide I should. The judge here is an American judge under contract.

Both felons pled to the charge which is a class A felony, carrying a minimum of ten years. More importantly, the burglary and attempted murder charge both specifically pled to carries a sentence of from 20 to life. The prosecutor's office expects a sentence of from 15 to 30 years for each. We will see. Sentencing should occur in about two months.

Hopefully I can get some of my things out of evidence then. It has been an adventure.

NOAA's Local Forecast for Pago Pago Was Hugely Wrong
Kimball Corson
01/22/2013, Pago Pago, American Samoa

NOAA's Local Forecast for Pago Pago Was Hugely Wrong

NOAA provided a local weather forecast for Pago Pago, American Samoa, predicting the effects of adjacently passing Cyclone Garry, to be 55 to 70 mph winds for Monday night (21st) and for Tuesday morning (22nd). The Port Captain believed it, ordered vessels over 200 tons to leave the harbor before midnight , closed the harbor and told smaller craft not to leave port. . The Coast Guard believed it and took their precautions. Many cruisers here believed it and we all prepared accordingly. The forecast was very terribly wrong.

In fact, here is what happened in Pago Pago, according to NOAA's own web site on the last three days of weather history in Pago Pago: highest sustained wind for that period is 21 mph. Highest gust is 23 mph. These figures are from NOAA's own weather history. Not exactly the 55 to 70 mph NOAA forecast for Monday night and Tuesday morning.

I have never seen a forecast so poorly done and badly off. NOAA's forecast also disagreed consistently and at all times with those of the US Navy, Windguru, Passage Weather, US Grib, zyGrib, Intellicast, Weather Channel, Weather Underground, Accuweather and others which called for maximum wind gusts of 26 knots or 30 mph.

It is hard to get more wrong than that.

Private Health Care and Insurance vs. a Single Payor National Health Care System
Kimball Corson
01/22/2013, Pago Pago, American Samoa

Private Health Care and Insurance vs. a Single Payor National Health Care System

Comparing Medicare to private health insurers, insurers have 22 percent of gross as overhead; Medicare, 1 percent. Insurers have profit margins that are very hard to gauge because they are experts at burying and hiding profits from regulators. Nominally, they average under 5 percent, but a better measure is return on capital which is about 16 percent. Medicare's profit margin is zero percent.

And we wonder why health care is so expensive in America and how single payor national health care in other countries could possible work and provide good health outcomes.

Our per capita costs are about $7,000 per annum. The comparable and average figure for other advanced nations with single payor national health car systems is about $2800. Doctor hours spent with patients in the US is only about .6 times that figure in other advanced nations. Health outcomes, as recently reported, are significantly worse in the US, comparatively.

Our system costs too much, provides too little care and yields worse health outcomes. What's not to hate about it?

Human's Race Against Machines: We Are Losing
Kimball Corson
01/22/2013, Pago Pago, American Samoa

Human's Race Against Machines: We Are Losing

Since 2000, the American economy, on net, has produced no new jobs. For those created, as many were lost.

Sophisticated robotics and computerized processes are replacing the jobs lost. Machines are outdoing us and this trend of machines replacing people in the markets for labor is expected to accelerate substantially in the coming decades from what we know of the technology in the wings. Mid and higher level jobs are next slated to be eliminated by machines.

Here is an example of where we are now. Terry Gou is the founder and chairman of Foxconn, an electronics manufacturer. Foxconn announced its plan this year to buy over 1 million robots over the next three years to replace most of its workforce, engaged in welding, spraying paint and assembly. It has 10,000 robots now, with 300,000 more expected to be in place in the next 12 months.

When you consider that our population has grown and is growing, this lack of new job creation is very disturbing. Our population grew by 30 million the last decade, so we needed to create 18 million new jobs to just stay even and have the same percentage of our population remain working. The economy on balance created none. This set of trends has reduced the employment to population ratio from over 64 percent to barely 58 now, in 2013.

And these trends will accelerate. Yet where is our thinking? Where is Washington's? We should be thinking ahead and planning how to handle this situation. Unemployed people have very little income. How will they buy what they need? Who will buy the goods and services our economy will produce? Are we running headlong into the problems Marx predicted? What shall we do? Nothing, until machines start displacing mid-level and high level jobs? Will we wake up then? What does it take?

The 2nd Amendment and Right to Bear Arms
Kimball Corson
01/21/2013, Pago Pago, American Samoa

The 2nd Amendment and Right to Bear Arms

There is little doubt the 2nd Amendment protects the private right to own and keep guns. But what guns? Recreational and defensive guns are not the tools to over throw, in Jeffersonian fashion, an oppressive, tyrannical government. True assault rifles are; those which fire fully automatic, in three round bursts and also in semi-automatic mode, e.g., AR16A3. But such real assault rifles were banned in 1986 and getting one is tough, to say the least.

What we are left with are semi automatic rifles dressed up like Barbie Dolls to look like assault rifles. Regrettably, they are wholly inadequate, but now our government now wants to take those away, too.

Seems we are being pre-empted.

Shooting Skills and the Lack of Need for Large Clips
Kimball Corson
01/21/2013, Pago Pago, American Samoa

Shooting Skills and the Lack of Need for Large Clips

Five rounds is not a joke even when the shit hits the fan, as someone has suggested. The Colt .45 Model 11 clip was usually filled with just five rounds. Big clips are the modern forte of amateurs who either want to kill a lot of people up close or who lack shooting skills and fire a lot hoping to hit something.

Combat pistol shooters are trained to wait until the last 1 1/2 seconds in a tense situation and, if under a steady demeanor, it does not defuse naturally to draw their pistol (even from a concealed carry), fire and put two rounds in the chest at up to 10 meters WITHIN that time frame. This is the minimum acceptable level of competence for basic combat pistol training.

Slinging lead or hosing down the neighborhood hoping to hit something is absolutely amateurish and movie nonsense. Shooters are always trained to hit timely and accurately, whether they be snipers (who more take their time and shoot at distance) or combat pistol shooters for whom accuracy and speed closer in are at a premium (they usually fire within 15 yards).

Trained shooters do not just fire away, eating up ammo and hoping they will hit something. That is silly. In combat, suppression fire can be used that way, but rarely in any other situation. Toting many rounds, again, means 1) you plan to kill a lot of people or 2) you plan to miss a lot. Good shooters DO NOT miss a lot, indeed very rarely.

Sniper kill rates in Vietnam at great distances were 1.3 rounds per kill on average. Combat pistol kill rates, for those trained as such, in live situations are closer to 1.2 where the first shot was fatal which was in over 92 percent of the time. Combat shooters are trained to always fire two to the chest and, if they think a vest is being worn, also one to the head.

For well trained shooters, a ten round clip is a lot of ammo. For the inept, no clip or magazine is big enough.

The NRA is Fighting Over Make Believe
Kimball Corson
01/21/2013, Pago Pago, American Samoa

The NRA is Fighting Over Make Believe

What is being banned is not real assault weapons. They are already largely banned. You know the real full automatics that shoot from 500 to 750 rounds per minute, like the AR16A3, which are used in actual combat where combatants really fight and really get killed. ["An assault rifle is a selective fire (either fully automatic and/or burst, and semi-automatic as well) rifle that uses an intermediate cartridge and a detachable magazine." ]

No, what is being banned are semi-automatic only Barbie Doll look alikes that have the same pistol grips, muzzle brakes/flash suppressors, barrel shrouds and thumb thru stocks like real assault rifles. They are not assault weapons. They are semi-automatics, like I had as a kid as a .22, dressed up to look like assault rifles. They are lethal enough to be sure, but by no means in the same league as real assault rifles. No one in their right mind would want to take a look alike into real combat. The photograph is of a Barbie Doll. Looks real, no?

The goal, you see, is too have your gun look cool, like the big bad ass real thing. That is what the NRA and its fantasy members are fighting over, the right to look like a real SEAL team bad ass. No matter most can't shoot worth a fig, its the cool look that matters.

On a real assault rifle, the copy-catted features serve a real purpose that they don't on copy cat rifles. The pistol grip and thumb through stock help you better hold what amounts to a real bucking bronco in full automatic mode (keeps firing as long is trigger stays depressed). The barrel shroud is so you don't burn yourself by touching the barrel, which gets really hot from shooting fully automatic. The muzzle brake/flash suppressor helps keep the muzzle from rising which happens shooting fully automatic and keeps the enemy from seeing your muzzle flash. Big clips are imperative for the number of rounds full autos can shoot, even in burst mode. A tag along ammo feeder is more like it with a real assault rifle.

None of these features are needed on semi-automatics. But gun cowboys want their semi-automatic rifles to look like the real full auto assault rifles. It really is about having a Barbie Doll. A fantasy toy that is not really a toy. A tough guy look alike implement. To seem like a real bad ass.

That is what the fight is about. A silly make believe fantasy. For that, the NRA and its members want to go to the mat.

Kind of silly, I think.

Another Word on Labor's Plight
Kimball Corson
01/19/2013, Pago Pago, American Samoa

Another Word on Labor's Plight

The idea that workers displaced by machines can go into other productive endeavors is an important one but diminishing marginal results attend the notion. We have played this card for decades and its utility is now wearing thin. That is what it means when the labor/population percentage drops as it has. We only need so many hamburger flippers.

The MIT economist authors of Race Against Machines argue the next wave of technology in the wings will result in 1) a huge net displacement of workers (labor/pop percentage to fall further and much), 2) a worsening in the skew in the income distribution, 3) a further drop in labor's share of income, and 4) permanently reduced aggregate demand with a new attending lower normal.

Aggregate demand has held up as long as it has because 1) government bought more ( two silly wars, etc.) and transferred buying power via the social safety net, and 2) consumers borrowed hugely to hold their standard of living (and are now saddled with too much debt). But now consumers are too much stuck with debt and stagnant or falling incomes and government is cutting back. The economy is too much stuck at a new lower normal.

We are not generating enough jobs to employ even the new entrants to the labor market, much less those displaced by the last recession. Median income has been falling and has been in trouble since the 1970's.

The hand-writing is on the wall. Another dot com, housing or other bogus boom can lift us for a bit, but booms have busts which usually hurt worse than the booms make us feel better. Too, policy makers are learning that and are inclined to meddle less. So expect fewer booms.

It seems that Marx got more correctly than we earlier thought. He may get the last laugh yet.

More on Labor's Share and Position
Kimball Corson
01/19/2013, Pago Pago, American Samoa

More on Labor's Share and Position

" Labor is producing more goods and services per worker but are not receiving a commensurate share of the income produced. Why not? "

Because the productivity of labor has increased hugely (from using more capital = machines), less labor is needed and the demand for labor being somewhat inelastic (for any given level of machines = capital) means that labor's share of national income and the number employed is falling. Labor is being displaced from labor markets by capital improvements and its loss of income share, both in relative and absolute terms -- is impacting its demand in markets for goods and services.

Think of it this way, reducto ad absurdum, when machines can do everything, what are human laborers to do? With all unemployed, where is their income to buy things going to come from? Who will buy things? Markets for goods and services will collapse for want of buyers. This is the extreme position, now in your thinking back away from this position a bit. The same forces are involved, just not as strongly.

Labor's share of income still falls. Unemployment is still high. Aggregate demand is still low. The economy is still depressed. Profits or income to capital remains high for now, but worry is setting in. The fact unemployment is still under 10 percent is meaningless because if you tire of looking for a job and stop, you are no longer counted as unemployed. The correct figure to look at is the percentage of the working age population that is employed and that figure first flattened out and is now falling sharply.

Worse a new wave of the industrial revolution will hit us in the next several decades where robots and computerized machines, using much more sophisticated algorithms, will displace huge amounts of middle and higher level labor on net and skew the distribution of income even more.

And we are sleep at the wheel, arguing about the debt ceiling.

Labor's Share of Total Income
Kimball Corson
01/19/2013, Pago Pago, American Samoa

Labor's Share of Total Income

O.K., so aside from the technical recession when they fell, profits have been sky rocketing, as Fed data show. But now the question is what has been happening to Labor's share of total income? You guessed it. It has fallen.

Citing data from the Bureau of Economic Analysis, one of three data sources used in the report, the Cleveland Fed said labor's share of gross national income had declined to 63.8 percent now after fluctuating around 67 percent during the late 1980s, 1990s, and early 2000s.

This has resulted in a spike in income inequality, the dispersion of annual incomes across households. But, of course, Washington has no policy to address the matter except to discuss the earnest desire of Republicans to not tax the rich at higher rates and to complain about the deficit and how social services should be cut, including Social Security and Medicare.

Worse, Obama goes along, lets them frame the discussion and throws them crumbs from the poor end of the income distribution. It is nuts and reprehensible. We are becoming socially bifurcated.

The Poor Rich
Kimball Corson
01/19/2013, Pago Pago, American Samoa

But don't tax the overworked rich; they don't have enough. They are barely getting by.

 

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