Carrier, Jobs, and automation!

[DanieltheDragon]

One thing that is simply not being talked about is automation while traditionally has created more jobs by freeing up capital spent on mundane tasks will continue to move up taking jobs on the economic ladder. A complaint often heralded by protectionists and those against free trade is we don't manufacture things anymore. There is a reason for that. The outsourcing of jobs to countries that have lower wages than here at home allow companies to be competitive and offer their products at lower prices. Americans won't work at these wages either. United technologies CEO spelled this out in an interview with Jim Kramer. Mexican Jobs cost 80% less in wages and the turnover rate is far lower. At the Indiana manufacturing plant they pay workers more money than the Mexican counter parts and they experience higher turnover.

Trump convinced Carrier to keep these jobs via huge tax incentives in the millions.

United Technologies CEO spelled out the end fate of the carrier plant.

GREG HAYES: Right. Well, and again, if you think about what we talked about last week, we're going to make a $16 million investment in that factory in Indianapolis to automate to drive the cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with lower cost of labor? No. But we will make that plant competitive just because we'll make the capital investments there.

JIM CRAMER: Right.

GREG HAYES: But what that ultimately means is there will be fewer jobs.

The savings from the tax incentives will ultimately be reinvested into automating the plant. Yes carrier will still have some jobs at the Indiana plant and they will likely be high wage jobs to boot. But people won't be building things the plant will be automated.

The cost of automation is and will be cheaper than hiring people training people and paying them wage that will incentivize them to work productively.


My question for debate is how do you see world economies coping with increased automation?

Those manufacturing jobs in China, India, Mexico will eventually face the same fate as American manufacturing when automation becomes cheaper than the rock bottom wages they pay out.

[catnip]

[Replying to post 1 by DanieltheDragon]

You're right. We have supposedly been transitioning to a service based economy since the 80s. Jobs like that are generally low pay and often minimum wage.

If the Carrier plant can't manage to keep prices down, they won't be competitive and will go out of business.

It is pretty basic economics.

But I would like to know why with all these unemployed people around, I can't find an electrician.

[DanieltheDragon]

[Replying to post 2 by catnip]

You got to go to the Genius Bar for an electrician and they will update your iWorker to do the electrical,work without shorting. I reckon this will be like the shift to from agriculture to industrial and it's gunna be painfffffulll for low class and middle class earners.

[Divine Insight]

Trump convinced Carrier to keep these jobs via huge tax incentives in the millions.

Not only that, but how is that fair to the decent patriotic American companies that aren't even thinking of moving jobs out of the country? Where's their reward for being patriotic companies?

A lousy unpatriotic company like Carrier gets REWARDED by a BRIBE from Trump for basically being a traitor to American commerce.

And then Trump is slated as a "Hero" who saves American jobs.

Trump's entire administration is going to be the worse disaster that ever hit Americas economy.

[Rufus21]

My question for debate is how do you see world economies coping with increased automation?

Technology has always been the future of design and production. Automation has been making many of the low-paying low-skilled jobs of the past obsolete, but it has also increased the demand for high-paying high-skilled jobs. Companies are laying off factory workers and replacing them with engineers. We aren't losing any jobs, they are just being displaced. It's a zero-sum situation. The low-paid jobs that everyone complains about are being replaced. People with the skills to design, build, operate and maintain new equipment are the new working class.

At this point, some incredibly powerful production and design tools are available to anyone - even the homebrew hobbyistst. The consumer market is full of CAD software packages, CNC machines, laser cutters and 3D printers that can be bought very cheaply. You need a 3-axis accelerometer? You need an LCD touchscreen? You need a microprocessor with built in wifi and bluetooth? You got it. All delivered to your home. You see college undergrads starting their own companies and producing their products at home.

Automation isn't hurting the economy. If anything, it's helping it blossom by offering more high-paid jobs to anyone who has the interest.

[DanieltheDragon]

[Replying to post 5 by Rufus21]

Much of this is already outlined in the OP, nor did I say it would be harmful to the economy. However it would be naive to think that past results is indicative of future results. As automation moves up the economic ladder the requirements of the available need for labor increase as well. To say more high paying jobs will be available to anyone of interest is shortsighted not everyone can be an engineer, not everyone has creative talents, not everyone can be a doctor, a nurse etc.

The issues I am pointing out are not what will harm the economy but what will future economies look like. What will future labor forces look like. Is the current economic models compatible with a high degree of automation? The shrinking middle classes and expanding wage gaps would suggest that there are underlying issues for certain brackets of the populace.

The carrier deal was posed to hilight this. Where automation will both generate some high paying jobs to manage the automated workforce. Yet at the same time the more numerous manufacturing jobs will all but disapate. So how will the town adapt to the changes involved?

What happens when nearly all of your labor force can be replaced with automation? when machines can self manage? See machine learning, neural networking, and advanced AI. This frees up a tremendous amount of capital, how that capital will be used is the more interesting question.

[Willum]

Interesting:

I'd have to ask - if protectionist laws weren't set up to safeguard Europe and the Americas from the asian labor market, in other words, human capital was literally reduced to slave wages, and equitably; would this change your opinion?

[DanieltheDragon]

Interesting:

I'd have to ask - if protectionist laws weren't set up to safeguard Europe and the Americas from the asian labor market, in other words, human capital was literally reduced to slave wages, and equitably; would this change your opinion?

That would only temporarily stave off automation. The Asian labor market won't be able to compete against cheap automation. Their greatest asset for manufacturing a superfluous labor market will soon become a burden. Humans require training housing food clothing etc. Even reducing everything down to slavery still has a higher cost in the long run as machines become cheaper and more reliable.

So really when all the low wage easily accessible jobs are gone and the bar for meaningful employment is higher than which most people can reasonably attain, what will happen when more people cannot find employment than those who can?

This could have some benefits by freeing up capital to be spent on creative, philosophical, and scientific endeavors. Instead of performing mundane repetitive tasks people would be free to pursue other interests. Which would probably change how we think of taxes,economics, and the role of government.

[Willum]

[Replying to post 8 by DanieltheDragon]

I think you have answered my question by amplifying the problem.
To take a step forward - there are obviously jobs men can perform cheaper than automation; ones requiring mobility and flexible motion.

It begs the question... what do men do when they are un-needed?
It is a question that has bollixed me for a while now, and one our politicians should be taking seriously:

Utopia is within our grasp.
However, utopia and economics are not compatible.

What are we to do?

[DanieltheDragon]

[Replying to post 9 by Willum]

For me the problem is for our children's generation. Mass unemployment is clearly not feasible, just ask Syria Egypt and Lybia what mass unemployment looks like. Even the most staunchest wealth holders will concede to avoid this issue.What I do for see is a restructuring of the tax code inclusive of a negative tax bracket. I suspect there will be a phase of adjustment preceding this that will be difficult. Afterwards we might be on the brink of a modern Renaissance.

The one thing I am particularly interested in is automation will make goods cheaper, more reliable, and of higher quality. How will this impact commerce and how we think of currency when more than 50% of jobs are replaced?