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What Marx got right


 
This is a guest post from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

The crisis of capitalism has not been resolved; it’s simply been papered over.

First, a disclaimer: this is an interpretive discussion of some aspects of Marx’s analysis (which was based on the capitalism he observed in the late 19th century) applied to present-day cartel-state capitalism. It is not a scholarly or academic presentation.

The discussion covers a lot of ground, though, so please refill your beverage container and strap in….

That Marx’s prescription for a socialist/Communist alternative to capitalism failed does not necessarily negate his critique of capitalism. Marx spent hundreds of pages analyzing capital and capitalism and relatively few sketching out a pie-in-the-sky alternative that was not grounded in historical examples or working models.

So it is no surprise that his prescriptive work is an occasionally risible historical curiosity while his critique stands as a systemic analysis.

Marx got a number of things right, one of which appears to be playing out on a global scale. You probably know that Marx expected capitalism to experience a series of ever-larger boom-bust cycles that would eventually precipitate revolution and overthrow of the existing financial-political order.

One driver of these cycles was the interplay of increasing production and declining labor costs. In broad-brush, Marx recognized that industrial capital (as opposed to finance capital) could only increase profits and accumulate more capital by raising production and/or establishing a price-fixing cartel or monopoly.

Mechanization characterized industrial capitalism in the late 19th century, and Marx observed that as mechanization increased productivity, the marginal value of labor decreased on a per unit basis.

Here is a real-world example: When I first visited China in 2000, there was a massive glut of television production: the capacity to manufacture TVs had expanded far beyond China’s domestic demand for TVs. To wring out a profit in a highly competitive industry, manufacturers had to ramp up production while lowering the unit cost of labor and the unit cost of each TV to undercut the competition.

If an assembly line of 100 workers could produce 1,000 TVs a day, the only way to lower the price of the TV is to either lower the wages paid to the workers or invest capital in machinery that enables the same 100 workers to produce 2,000 TVs a day.

At 2,000 TVs a day, the per unit labor cost falls in half. For example, at 1,000 TVs a day, the labor cost per TV might be $40. At 2,000 TVs per day assembled by the same 100 workers, the labor cost per unit drops to $20.

The key point here is that labor’s share of the total production cost declines. If workers had taken home $1 million in pay to make 100,000 TVs at the old production rate of 1,000 TVs/day, they now take home $500,000 to make 100,000 TVs at the new production rate.

In other words, labor’s share of value creation constantly declines as mechanization boosts productivity. Marx described the impact of another factor: oversupply of labor. As rural agricultural workers flooded into cities for jobs that paid cash, there was an abundance of factory labor. Competition for jobs pushes wages lower, so workers faced a double-whammy: their share of production relentlessly declined as productivity rose, and the pressure on wages constantly rose as per unit labor costs declined.

The competition to outproduce industrial rivals with cheaper per-unit production costs and labor’s competition for jobs both generate a structural crisis in capitalism: as production of goods rises, both the cost per unit and the number of workers earning enough to buy the goods declines.

Keep reading ‘What Marx Got Right’ from Charles Hugh Smith after the jump…

Posted by Richard Metzger | Discussion
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‘1962 Cost of Living’ list will make you weep
07.11.2013
08:18 am

Topics:
Economy
History

Tags:
Cost of Living


 
To be honest, I’m kinda surprised a gallon of milk was that expensive back then.

Via Copyranter

Posted by Tara McGinley | Discussion
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The NEXT American revolution: Concentrated wealth and power will either implode or fade way
07.04.2013
11:33 am

Topics:
Class War
Economy
History
Thinkers

Tags:
Charles Hugh Smith


 
Some July 4th thoughts on revolution as a process rather than an event from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

The next American Revolution will not be an event, it will be a process. We naturally turn to the past for templates of the future, but history has a way of remaining remarkably unpredictable. Indeed, all the conventional long-range forecasts made in 1900, 1928, 1958, 1988 and 2000 missed virtually every key development—not just in the distant future, but just a few years out.

The point is that extrapolating the present into the future fails to capture sea changes and developments that completely disrupt the supposedly unchanging, permanent Status Quo. The idea that the next revolution will take a new form does not occur to conventional forecasters, who readily assume the next transition will follow past critical junctures: armed insurrection against the central authority (The first American Revolution, 1781), civil war (1861) or global war (1941).

I submit that the next American Revolution circa 2021-23 will not repeat or even echo these past transitions. What seems likely to me is the entire project of centralization that characterized the era 1941-2013 will slip into irrelevance as centralization increasingly yields diminishing returns.

Everything centralized, from the Federal Reserve to the Too Big To Fail Banks to Medicare to the National Security State depends on the Federal government being a Savior State that must ceaselessly expand its share of the national income and its raw power lest it implode. All Savior States have one, and only one trajectory—they must ceaselessly expand and concentrate wealth and power or they will fail.

They are like the shark, which dies once it stops moving forward: the Savior State must push forward on its trajectory of expansion or it expires.

Stasis is not possible, nor is contraction; the promises made to the citizenry cannot be withdrawn without political instability, but the promises cannot be kept without fatally disrupting the neofeudal financialized debtocracy.

You see the dilemma: The Savior State cannot stop expanding, but the financial system that generates its revenues can no longer support its vast machinery of debt and phantom collateral. This is why I suggest all the centralized concentrations of wealth and power will either implode or fade into irrelevance.

If all the phantom wealth and collateral vanishes in a market clearing event, the Federal Reserve will simply become irrelevant to the vast majority of people. A handful of nimble speculators may well benefit by picking over the carcass of financialization and centralized omnipotence (i.e. central banking), and perhaps the 1/10th of 1% will still have enough assets influenced by the Fed to care, but the forces of disruption will replace centralization with decentralization.

Here is another example: Medicare may not cease to exist, but it will become increasingly irrelevant to most people because it will not longer function. The remaining doctors willing to treat Medicare patients will be working 13-hour days for sketchy pay, and as each one burns out and leaves the system, the system contracts. Eventually it contracts to the point of irrelevance.

The revolution will be in work and social innovations enabled by technology. The conventional view is that technology will magically enable the permanence of the present; this will be proven incorrect, as what technology enables is not the waste, entitlement and centralization that characterize the present but social innovations, some of which are already visible.

If we sought to summarize the profound transformation ahead in one sentence, it would be this: Wages are no longer an adequate model for distributing the surplus generated by the economy.

The current Savior State model responds to this by increasing taxes on the dwindling minority with fulltime jobs and increasing entitlement payments to all those without government or private-sector jobs. This model will collapse, politically, socially and economically, as no society or economy can squander half or more of its productive labor force while increasing the burden on the dwindling cohort of productively employed. The inevitable result of this dynamic is a destabilizing tyranny of the majority.

Technology is not just disrupting old industries and companies, it is disrupting the entire Savior State/cartel-capitalism model. The disruption has barely begun, but it will pick up speed over the next decade.

I suspect the next American Revolution will begin in the 2015-16 timeframe. A series of interlocking crises will lead to reforms that preserve the Savior State/ cartel-capitalism for another few years, at a lower level of consumption, i.e. burn rate.

But the process of revolution will be far from complete; this initial response of the centralized neofeudal debtocracy will buy time for the Status Quo, and every conventional onlooker will be infused with optimism and hope that the system established in the Great Depression, World War II and its Cold War aftermath—the secular religion of consumerism (i.e. aggregate demand), permanent war footing and the National Security State, and universal dependence on the Savior State and its ceaseless expansion of concentrated wealth and power—will continue.

But this Springtime for the Savior State/cartel-capitalism partnership will be brief, and by 2018-19 all the systemic flaws and disruptive trends will reassert themselves with renewed vigor.

The entire current model of governance, social order and the economy will be revolutionized not by overthrow but by the process of irrelevance. What will become relevant will no longer be in the control of the Savior State or its partner, financialized cartel capitalism.

Those currently holding all the concentrated power and wealth cannot believe they will become irrelevant, but that’s the result of projecting the present as if it is permanent and immutable.

The new system will be better, more humane, more flexible, more transparent, with more opportunity, for it will be everything the current corrupt, sclerotic, parasitic and exploitative system is not.

Previously on Dangerous Minds from Charles Hugh Smith:
Concentrated wealth and power are intrinsically sociopathological by their very nature

Global Crisis: The Convergence of Marx, Orwell and Kafka

Will crushing student loan debt and worthless college degrees radicalize the Millennial generation?

Wage Slaves: Are You Loving Your Servitude Yet?

Posted by Richard Metzger | Discussion
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Capitalism’s latest heist: Big banks skim insane profits from minimum wage workers’ pay!
07.01.2013
09:00 am

Topics:
Class War
Economy

Tags:
capitalism


Image via Trustocorp

Great reporting in the New York Times today from Jessica Silver-Greenberg and Stephanie Clifford about an increasingly annoying, not to mention inherently immoral, problem faced by the lowest income American workers.

In an effort to save money, many businesses with lower paid workers, such as fast food franchises and retail chains, are resorting to paying workers with prepaid debit cards that often come with extremely hefty fees (like $1.75 each time you make a withdrawal at an ATM or a $7 penalty for not spending your own money before a specified date). Just getting a regular check or direct deposit at a bank isn’t even an option anymore for some workers, as well as many people on public assistance programs. Some states, like California, put unemployment insurance benefits on prepaid ATM cards subject to these sorts of fees also.

As Silver-Greenberg and Clifford point out, these charges just to get at your own money can often be so onerous as to mean that the workers who are paid this way end up making less than the minimum wage. As an increasing number of consumer attorneys, state and Federal regulators and of course the workers themselves are starting to realize, these “fees,” to put it in plainer English, amount to legal confiscation:

Taco Bell, Walgreen and Wal-Mart are among the dozens of well-known companies that offer prepaid cards to their workers; the cards are particularly popular with retailers and restaurants. And they are quickly gaining momentum. In 2012, $34 billion was loaded onto 4.6 million active payroll cards, according to the research firm Aite Group. Aite said it expected that to reach $68.9 billion and 10.8 million cards by 2017.

Companies and card issuers, which include Bank of America, Wells Fargo and Citigroup, say the cards are cheaper and more efficient than checks — a calculator on Visa’s Web site estimates that a company with 500 workers could save $21,000 a year by switching from checks to payroll cards. On its Web site, Citigroup trumpets how the cards “guarantee pay on time to all employees.”

GOOD TIMES! And hey, now that $21,000 AND THEN SOME can get pushed onto the worker’s backs and off the corporation’s bottom line! You have to wonder if Taco Bell, Walgreens and Wal-Mart are skimming micro-payment kickbacks every time one of these cards is swiped. It’s one thing for a company with 500 employees, imagine the kinds of “arrangements” that are in place between the big banks and these mega-corporations.

Many low income Americans do not have bank accounts at all, but the “innovation” of the payroll ATM cards effectively allows the big banks to pick their pockets anyway, applying a surcharge—let’s call it a “Capitalist free market tax” shall we?—to give people access to their own money. In poorer rural communities where the only ATMs might be in a mini-mart or liquor store,  the fees would also be charged by the ATM provider (and split with the owner of the store). All in all, you gotta hand it to them, it’s a damned clever, if outrageously morally reprehensible, way for the banks to make up for all those various gravy-trains that the Dodd-Frank legislation effectively ended:

For banks that are looking to recoup billions of dollars in lost income from a spate of recent limits on debit and credit card fees, issuing payroll cards can be lucrative — the products were largely untouched by recent financial regulations. As a result, some of the nation’s largest banks are expanding into the business, banking analysts say.

The lack of regulation in the payroll card market, while alluring for some of the issuers, can potentially leave cardholders swimming in fees. Take the example of inactivity fees that penalize customers for infrequently using their cards. The Federal Reserve has banned such fees for credit and debit cards, but no protections exist on prepaid cards. Cards used by more than two dozen major retailers have inactivity fees of $7 or more, according to a review of agreements.

Some employees can also be hit with $25 overdraft fees, called “balance protection,” on some of the prepaid cards. Under the Dodd-Frank financial overhaul law, banks with more than $10 billion in assets are barred from levying overdraft fees on customers’ checking accounts.

That’s great if you’ve got enough money to actually put into a checking account, but if you’re already waking up every morning on the wrong side of capitalism, these vampires can legally bleed you dry and clearly have every intention of just taking whatever they can.
 

 

Posted by Richard Metzger | Discussion
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The (In)Dignity of Labor: Top Senate Republican wants to abolish minimum wage!


“Goldman Sachs 2020 Slave Labor Camp International” by Lee Harvey

Considering the appalling number of Americans these days who are paid as little as their bosses can possibly get away with paying them, you would think that citing opposition to the notion that hard work should, you know, pay a living wage and provide for some level of human dignity in the world’s richest country, would be perceived as a toxic issue by the elders of the Republican Party. Something you wouldn’t want to touch with a ten foot pole…

But you would be wrong.

During a hearing on raising the minimum wage to $10.10 an hour, Sen. Bernie Sanders got Lamar Alexander, the ranking Republican on the Senate Health, Education, Labor, and Pensions (HELP) Committee to admit that he wants to abolish the minimum wage.

It was remarkably easy—he wasn’t even trying—for Sanders to provoke a remarkable reaction to this statement:

“There are certain conservatives who do not believe in the concept of the minimum wage. The concept of the minimum wage. In other words, if the economy as such, and I offer you three dollars an hour.”

Alexander took the bait, interrupting Sanders (“Let me jump in. I do not believe in it” he says) and offering his two unsolicited cents:

Sanders: So you do not believe in the concept of the minimum wage?

Alexander: That’s correct.

Sanders: You would abolish the minimum wage?

Alexander: Correct.

Sanders: If someone had to work for two bucks an hour, they would work for two bucks an hour?

Senator Alexander is not a stupid man. He’s a graduate of Vanderbilt University and NYU’s law school. He’s been in government since the Nixon administration, he was the 45th Governor of Tennessee from 1979 to 1987 and he served as George H. W. Bush’s Secretary of Education. He’s run for president twice.

Alexander was not caught off guard and this was not exactly a trick question that Senator Sanders posed to him, either. He volunteered this information: Alexander really means this shit.

Oy vey. When will these Republicans ever learn?

The exchange between Sanders and Alexander starts (after Sanders lays the groundwork discussing the situation that fast food workers find themselves in making $7 bucks an hour) at the 5:48 mark. At the end of it, the asshole from the conservative Heritage Foundation asserts that the minimum wage hurts “the beneficiaries”!
 

 
Via Politics USA

Posted by Richard Metzger | Discussion
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Irish town erects fake shop fronts for G8 summit


 
I shit you not. Apparently the G8 leaders and their entourages are such delicate flowers that they can’t bear to see the effect of the global recession on the towns they drive through, such as upcoming host Enniskillen in Northern Ireland.

Via RTÉ, the Irish national broadcaster:

Local councils in Northern Ireland have painted fake shop fronts and covered derelict buildings with huge billboards to hide the economic hardship being felt in towns and villages near the golf resort where G8 leaders will meet this month.

Northern Ireland’s government has spent £2m (€2.3m) tackling dereliction over the past two years, the environment department said. Some buildings have been demolished and others have been given a facelift in an attempt to make areas more attractive.

Almost a quarter of “dereliction funds” were freed up for local councillors in Co Fermanagh in anticipation of Britain hosting the annual Group of Eight leaders’ summit there on 17-18 June. More than 100 properties have been spruced up. In the one-street town of Belcoo, the changes are merely cosmetic.

At a former butcher’s shop, stickers applied to the windows show a packed meat counter and give the impression that business is booming. Across the street, another empty unit has been given a makeover to look like a thriving office supply shop.

Locals are unimpressed. “The shop fronts are cosmetic surgery for serious wounds. They are looking after the banks instead of saving good businesses,” said Kevin Maguire, 62, an unemployed man who has lived all his life in Belcoo.

Full story here.

Posted by Niall O'Conghaile | Discussion
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Will crushing student loan debt and worthless college degrees radicalize the Millennial generation?


 
This is a guest post from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

The existing social and financial order is crumbling because it is unsustainable on multiple levels. The central state is not the Millennials’ friend, it is their oppressor.

No generation of young people is ever politicized by hunger in distant lands or issues of the elderly. It’s no rap on youth that self-interest defines what issues have the potential to radically transform their political consciousness; the transformative cause must reveal the system is broken for them and that it intends on sacrificing their generation to uphold the status quo.

The Millennial generation, also known as Gen-Y (Gen-Y comes after Gen-X), is generally defined as those born between 1982 and 2004.

The oldest Millennials were children during the first Iraq War in 1991 (Desert Storm) and just coming of age in 2001 (9/11 and the war in Afghanistan) and the start of the second Iraq War (2003).

The Millennials have entered adulthood in a era characterized by permanent low-intensity wars and central-bank/state managed financial bubbles—2001 to the present. In other words, the only experience they have is of centralized state mismanagement on a global scale.

The gross incompetence of the government and central bank—not to mention the endless power grabs by these centralized authorities—has not yet aroused a political consciousness that the system is irrevocably broken, not just for older generations but most especially for them.

Anecdotally, it appears the Millennial generation is still operating on the fantasy that all they need to do to get a secure, good-paying job and a happy life is go to college and enter the status quo machine of government/corporate America.

There are two fatal flaws in this fantasy: the $1+ trillion student loan industry and a transforming economy. The higher education industry in the U.S. operates as a central state-enabled and funded cartel, limiting supply while demand (based on the fantasy that a college degree has critical value) soars. This enables the cartel to keep raising prices even as the value of its product (a diploma) sinks to near-zero.
 

 
Since the Federal government issues and guarantees all student loans, the higher education cartel is (like sickcare, national defense and the mortgage industry) effectively socialized, i.e. funded and managed by the central state.
 

 
If you understand the student loan system is predatory, parasitic and exploitive, you have reached first base of a meaningful political awareness. If you understand the central state (Federal government) funds and enforces this system, you’ve reached second base. If you understand the vast majority of college degrees do little to prepare you to be productively employed in the real economy, you have reached third base.

If you understand the status quo is unsustainable and does not operate according the the fantasy model you’ve been told, congratulations, you’re close to home base.

I have covered all the salient issues repeatedly:

The Fatal Disease of the Status Quo: Diminishing Returns

College Grads: It’s a Different Economy

Bernanke’s Neofeudal Rentier Economy

Degrowth and Anti-Consumerism

Centralization and Sociopathology

Present Shock and the Loss of History and Context

Generation X: An Inconvenient Era

The Nearly-Free University

The central state is not your friend, it is your oppressor. The loan shark that won’t let you discharge your student loan debt without appealing each ruling against you three times is the government (and its hired-gun proxies).

The oppressor who demands you work your entire life to pay interest on public debt squandered on neocolonial wars and various cartels (sickcare et al.) is your central state.

The entity who demands you pay higher taxes so the generation entering retirement gets all that it was promised, even though the world has changed and the promises are no longer sustainable? The central state.

The oppressor that will devote its enormous resources to investigate and crush you if you actively resist the bankers and financiers who pull the political lackeys’ strings? The central state.

At some point, the Millennial generation will have to awaken to the fact that the only way to change its fate is to grasp political power and redirect the policy and mindset of the nation. Centralization is the black hole that is destroying the nation’s social and economic vigor. Decentralization, transparency, accountability, adaptability, social innovation, a community-based economy—these are the key features of a sustainable social order.

The existing social and financial order is crumbling because it is unsustainable on multiple levels. The status quo will cling to its false promises and corrupt centers of power until the moment the whole thing implodes.

Related links of interest:

Dear Class of ‘13: You’ve been scammed: How the College-Industrial Complex drove tuition so high

Overdue Student Loans Reach Record as U.S. Graduates Seek Jobs

Bureaucrats Paid $250,000 Feed Outcry Over College Costs

Welcome, Robot Overlords. Please Don’t Fire Us?

My Generation’s Disease

Podcast with Mike Swanson of WallStreetWindow.com on student loan debt and the Nearly Free University: Charles Hugh Smith On the Forces of Centralization and Soaring Education Costs. I always enjoy discussing issues with Mike, a polymath with a wide range of interests and experiences.

This is a guest post from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It
 

 

Posted by Richard Metzger | Discussion
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Concentrated wealth and power are intrinsically sociopathological by their very nature


 
This is a guest post from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

Centralization and Sociopathology: The Consolidation of Control

I have long spoken of the dangers inherent to centralization of power and the extreme concentrations of wealth centralization inevitably creates.

The Master Narrative Nobody Dares Admit: Centralization Has Failed (June 21, 2012)

The Solution to Concentrated Power: Decentralize, Diffuse and Devolve Power (June 22, 2012)

To Fix Healthcare, Let 100 Solutions Bloom (February 26, 2013)

C.D., a longtime contributor to my blog, Of Two Minds, recently highlighted another danger of centralization: sociopaths/psychopaths excel in organizations that centralize power, and their ability to flatter, browbeat and manipulate others greases their climb to the top.

In effect, centralization is tailor-made for sociopaths gaining power. Sociopaths seek power over others, and centralization gives them the perfect avenue to control over millions or even entire nations.

Even worse (from the view of non-sociopaths), their perverse abilities are tailor-made for excelling in office and national politics via ruthless elimination of rivals and enemies and grandiose appeals to national greatness, ideological purity, etc.

As C.D. points out, the ultimate protection against sociopathology is to minimize the power held in any one agency, organization or institution:

After you watch these films on psychopaths, I think you’ll have an even greater understanding of why your premise of centralization is a key problem of our society. The first film points out that psychopaths generally thrive in the corporate/government top-down organization (I have seen it happen in my agency, unfortunately) and that when they come to power, their values (or lack thereof) tend to pervade the organization to varying degrees. In some cases, they end up creating secondary psychopaths which is kind of like a spiritual/moral disease that infects people.
If we are to believe the premise in the film that there are always psychopaths among us in small numbers, it follows then that we must limit the power of any one institution, whether it’s private or public, so that the damage created by psychopaths is limited.

It is very difficult for many people to fathom that there are people in our society that are that evil, for lack of a better term, and it is even harder for many people in society to accept that people in the higher strata of our society can exhibit these dangerous traits.

The same goes for criminal behavior. From my studies, it’s pretty clear that criminality is fairly constant throughout the different levels of our society and yet, it is the lower classes that are subjected to more scrutiny by law enforcement. The disparity between blue collar and white collar crime is pretty evident when one looks at arrests and sentencing. The total lack of effective enforcement against politically connected banks over the last few years is astounding to me and it sets a dangerous precedent. Corruption and psychopathy go hand in hand.

A less dark reason for avoiding over centralization is that we have to be aware of normal human fallibility. Nobody possesses enough information, experience, ability, lack of bias, etc. to always make the right decisions.

Defense Against the Psychopath (video, 37 minutes; the many photos of political, religious and secular leaders will likely offend many/most; if you look past these outrages, there is useful information here)

The Sociopath Next Door (video, 37 minutes)

As C.D. observes, once sociopaths rule an organization or nation, they create a zombie army of secondary sociopaths beneath them as those who resist are undermined, banished, fired or exterminated. If there is any lesson to be drawn from Iraq, it is how a single sociopath can completely undermine and destroy civil society by empowering secondary sociopaths and eliminating or marginalizing anyone who dares to cling to their humanity, conscience and independence.

“Going along to get along” breeds passive acceptance of sociopathology as “the new normal” and mimicry of the values and techniques of sociopathology as the ambitious and fearful (i.e. almost everyone) scramble to emulate the “successful” leadership.

Organizations can be perverted into institutionalizing sociopathology via sociopathological goals and rules of conduct. Make the metric of success in war a body count of dead “enemy combatants” and you’ll soon have dead civilians stacked like cordwood as proof of every units’ outstanding success.

Make lowering unemployment the acme of policy success and soon every agency will be gaming and manipulating data to reach that metric of success. Make higher grades the metric of academic success and soon every kid is getting a gold star and an A or B.

Centralization has another dark side: those ensconced in highly concentrated centers of power (for example, The White House) are in another world, and they find it increasingly easy to become isolated from the larger context and to slip into reliance on sycophants, toadies (i.e. budding secondary sociopaths) and “experts” (i.e. apparatchiks and factotums) who are equally influenced by the intense “high” of concentrated power/wealth.

Increasingly out of touch with those outside the circle of power, those within the circle slide into a belief in the superiority of their knowledge, skills and awareness—the very definition of sociopathology.

Even worse (if that is possible), the incestuous nature of the tight circle of power breeds a uniformity of opinion and ideology that creates a feedback loop that marginalizes dissenters and those with open minds. Dissenters are soon dismissed—“not a team player”—or trotted out for PR purposes, i.e. as evidence the administration maintains ties to the outside world.

Those few dissenters who resist the siren song of power soon face a choice: either quietly quit “to pursue other opportunities” (the easy way out) or quit in a blast of public refutation of the administration’s policies.

Public dissenters are quickly crucified by those in power, and knowing this fate awaits any dissenter places a powerful disincentive on “going public” about the sociopathology of the inner circle of power.

On rare occasions, an insider has the courage and talent to secure documentation that details the sociopathology of a policy, agency or administration (for example, Daniel Ellsberg and The Pentagon Papers).

Nothing infuriates a sociopath or a sociopathological organization more than the exposure of their sociopathology, and so those in power will stop at nothing to silence, discredit, criminalize or eliminate the heroic whistleblower.

In these ways, centralized power is itself is a sociopathologizing force. We cannot understand the present devolution of our civil society, economy and ethics unless we understand that concentrated power and wealth are intrinsically sociopathological by their very nature.

The solution: a culture of decentralization, transparency and open competition, what I call the DATA model (Decentralized, Adaptive, Transparent and Accountable) in my book Why Things Are Falling Apart and What We Can Do About It.

This is a guest post from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

Posted by Richard Metzger | Discussion
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We’re screwed: How will we survive in a future without jobs?
05.17.2013
07:23 am

Topics:
Economy
Thinkers

Tags:
capitalism
robots


 
This is a guest post by New Delhi-based social media consultant, Kartik Dayanand.

“We’re getting closer to a world where technology takes care of the hard work—discovery, organization, communication—so that you can get on with what makes you happiest… living and loving. It’s an exciting time to be at Google.”

These are the concluding lines of a recent announcement by the CEO of Google, Larry Page. It sounds great: technology will make our lives easier and we don’t have to work hard anymore. The machines, or rather ‘technology,’ they say will run our world. But…

I think we’e in the middle of an unfolding horror story!

It can’t simply be some bizarre coincidence, can it, that as we scale ever higher peaks of technological innovation, the USA is going through its worst recession in 97 years? The story is not too different in Europe and most of the rest of the world; there must be something seriously wrong somewhere. Stands to reason, right?

Plenty of words have been written on the topic of machines taking away jobs from humans, and the twin threat of outsourcing, but this time things are different, really different. They are so different that…

I have no hesitation in saying that the world is on the verge of screwing itself in a spectacular fashion!

Here is the proof…

The invisible robots

As a kid I used to imagine a future where robots would do things for us. That day has arrived but these robots don’t look like anything I imagined they would as a child. They don’t have arms or legs, they are computers and smartphones with the Internet acting as their brains. The talk about machines replacing humans is an age old story and we have managed pretty well so far, but this time things are different for two reasons: Distribution and Convergence!
 

 
Distribution

Since the Industrial Revolution, even before, machines have replaced human jobs but they never had this ability to multiply and spread across the global with almost zero additional costs through the Internet. Take the case of the mailman vs email or traditional books vs Kindle books. In the later case, it costs next to nothing to distribute something that used to take time and effort, printing, warehousing, shipping and retail outlets in the past. Time and effort that was spent by real people doing real jobs which are simply not necessary anymore.

From bank clerks to airline ticketing attendants, there are many classes of jobs that are going extinct. Read this article: A look at jobs replaced by technology. Where do all these people go now?

But isn’t capitalism, to a certain extent supposed to be “destructive”? Isn’t that where innovation comes from? In the battle between man and machine there is an old argument that goes instead of a candle we now have light bulbs and in place of a horse and carriage we have cars, so “disruption” is good. But now we are faced with a new problem: Convergence.

Convergence

Due to convergence of technologies, multiple tasks are now doable with but a single device. The smartphone and tablet are effectively destroying the calculator, camera, flashlight, alarm clock, wrist watch, notepad, audio player and multiple other industries. I am not merely talking about the things one can do via the Internet for the scale of disruption is unimaginable. Real people were making those products. They are now not needed anymore. And it’s not merely job loss, the products themselves won’t exist anymore.

And who manufactures these new converged products?

Most probably some company like Foxconn in China where Apple and many other companies build their products at dead cheap rates. Almost none of those manufacturing jobs are in the USA or anyplace in Europe. No wonder the Eurozone is in tatters right now, Greece is at 60% unemployment and Spain has 55% of its youth between the ages of 18 and 25 unemployed right now; forget manufacturing, they might never ever get a job that involves soft skills, all thanks to outsourcing.

Ousted by outsourcing

Outsourcing, while taking away jobs from many, has provided employment to millions in another part of the globe. This led to an increase in earning potential as well as spending capacity for millions who could now aspire to “things” and a lifestyle unimaginable earlier. New doors have opened where none existed earlier. However, there are dangerous pitfalls on this side too. There are already two main patterns one can notice emerging– Obsolescence and Cannibalism.

Obsolescence

All the pitfalls of disruptive technology apply here too. You can never say when a particular piece of technology or service will become obsolete. The skills that we learn today might not be needed tomorrow; this applies to software professionals who are dime a dozen out there specializing in skills that could be without economic value tomorrow.

Very few people specialize in “real” skills anymore, right from a commerce graduate to a science student to a mechanical, civil or chemical engineer; all want to become Software-IT Professionals.That’s where the easy moolah is. Those who continue in the pursuit of conventional professions often find themselves in a unique fix, not able to compete with their counterparts in the IT industry in terms of fat paychecks. But there is an even bigger issue in play here, cannibalism.

Cannibalism

In the modern world of outsourcing, cannibalism is a rampant practice. No one is eating anyone else alive but everyone is eating away at everyone else’s jobs.

Organizations are always looking at doing things the fastest and cheapest way. They achieve it by employing smarter technology, but where manpower is still essential they are always on the lookout for a cheaper option that can accomplish the same task in a shorter time-frame—the primary reason why outsourcing exists in the first place. Why bothering hiring and paying an experienced hand when a trainee will suffice?

For a country like India, that boasts of a massive youth population that is ready to be employed, the future can be quite unsettling. It is a win-win situation for the bosses, but the same can’t be said for the employees as job security simply does not exist anymore.

Even worse, in the modern age there are no trade unions to protect the workers, they are all dead or dying out, and each man is on his own. The best you can do is change your profile picture on Facebook as a sign of protest, like how some of my friends from the VFX industry did after Rhythm and Hues won the Oscar for best VFX this year against the backdrop of imminent bankruptcy.

Implications of the above two patterns:

So basically, technology and outsourcing are screwing the west and the rest are hell bent on screwing themselves . To put it simply…

The West is already screwed and the rest are hellbent on screwing themselves by cannibalising themselves to obsolescence

So what is the solution?

James Altucher, one of the most exciting writers I have come across online recently, wrote a post on TechCrunch titled “10 reasons why 2013 will be the year you quit your job.” In it Altucher advises his readers to turn into entrepreneurs to save themselves. He makes some terrific points to support his case, but I wonder if it’s realistic to expect that everyone can become an entrepreneur? Someone has to be at the bottom of the foodchain and even if someone dares to do something on his own, the big daddies will give them sleepless nights. Also in an open economy where everyone has equal opportunities, it is the big corporations that have the maximum leverage. Everyone else is just part of the crowd.

Take the case of movies. The top hits today make more money than ever while the bottom is a horror story with the vast majority of films not even finding any avenues of release or exhibition; it is a problem of plenty. It is the same with businesses and tech start ups. The big corps capture the bulk of the market and the smaller fish are in the game only to be hooked or to be eaten by the biggies. No wonder income inequalities are growing wider across the globe between the rich and the rest of us.

The Rich becoming richer and the poor becoming poorer has never been truer than it is today!

Forgetting for a moment, the poorer countries where wealth inequality is extraordinary and the bottom of the pyramid is unimaginably huge. Instead take the case of America, which in everyone’s opinion is an advanced and wealthy nation. Truth is, top 1% of America’s wealthy elite control 40% of their nation’s wealth. You should check the video below to see the scale of this phenomenon.
 

 
The middle class is almost non-existent now. We might as well rename it the “temporary class.”

We aspire to reach the top, but in reality most of us are just a part of the vast bottom that is feeding the top!

Technology is wonderful, it really does help us to live better lives. It is good that most things are becoming automated, wonderful that we don’t have to work as hard anymore, but here is the catch:

How do we survive in a world where our worth is only determined by our last paycheck?

And if all the jobs are handled by technology, who will give us those checks? We have yet to figure out a way to live in this world without money. Somewhere this cycle of the world’s productive labor and capital going to the 1% has to be broken.

That reminds me of the famous line by Charles Bukowski:

“How in the hell could a man enjoy being awakened at 6.30 a.m. by an alarm clock, leap out of bed, dress, force-feed, shit, piss, brush teeth and hair, and fight traffic to get to a place where essentially you made lots of money for somebody else and were asked to be grateful for the opportunity to do so”

How in the hell did we end up here? I wonder too. It is high time we all started to talk about this. A global conversation. Until then, we shall continue to be willing and invisible participants in the mission to screw ourselves and our world over (and to what end? We already know the answer). We have done a pretty great job of it until now. It is high time we figured out newer (and BETTER) ways of living and surviving in this world that are not dependent on us working ourselves to death so that the 1%‘s kids can sit on golden toilet seats and have a servant wipe their asses with 600 thread count Egyptian cotton napkins. In the future we’re heading for, your kid won’t have a pot to piss in.

I hope Google has some ideas for that too. Maybe you have one. Let me know.

This is a guest post by New Delhi-based social media consultant, Kartik Dayanand.

Previously on Dangerous Minds:
How much longer can capitalism last when robots will do all the work?
 

 

Posted by Richard Metzger | Discussion
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Racist, idiotic Tea party meme exposes a certain rather pathetic lack of self-awareness…


 
Have you seen the offensive meme that the Tea Party.net people put up on their Facebook page? Cute ain’t it?

It got liked by over 68,000 people. In case you’ve got a 2x4 wedged in your eye socket, let me spell it out to you, the “people who vote for a living” are African-Americans, who proportionately outvoted Caucasian Americans for the first time ever in 2012.

It would be (too) easy to whip up an editorial tirade about this, but why bother when the “party” is going to be over soon enough anyway?

The glaring twin ironies at play here seem to be missed entirely by the dum-dum tea baggers: First, that the folks who consider themselves Tea partiers correspond pretty faithfully to the same demographic who still read newspapers in printed form and who are receiving, or who soon enough will receive Social Security benefits and Medicare.

Why not try to elect Republican candidates who will cut your own benefits so that billionaires can amass greater and great hordes of cash? Psst, hey Tea party people, the Republican party wants to cut benefits for white seniors too! [And guess what: SO DO MOST OF THE FUCKING DEMOCRATS—INCLUDING OBAMA!]

I don’t think those ‘baggers have really thought any of this stuff through.

The other thing is, who will replenish the Tea party ranks when these dickheads die off? Will this message resonate much with all of those recent college grads with debt up to their eyeballs, and no job prospects that pay higher than ten bucks an hour?

Some of the comments are pretty classic. What do you think?

See also:
Moms Working At Walmart Earn Less Than They Need To Feed Their Kids

Posted by Richard Metzger | Discussion
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