Technology

Gadgetopia: Chasing After an Elusive Dream

Sam Pizzigati — Sun, 29 Apr 2012 10:55:31 -0400

Bits and bytes would be doing a lot more to help make our lives less nasty, brutish, and short if we shared wealth as routinely as bandwidth. From San Francisco, a new lesson in that reality.

A brick factory makes 10,000 bricks a day. But then the factory happens on a new brick-making technique, reorganizes production, and starts making 15,000 bricks a day, with the same workers working the same hours.

Those workers have, in economic terms, become more “productive.” Who should benefit from this increased productivity? Should the benefits flow to the factory owner, as higher profits, or to the workers themselves, as higher wages? Or should that increased productivity translate into lower prices for consumers?

Or should all of the above — owner, workers, and consumers — benefit?

America's answer in the decades right after World War II: all of the above.

Corporations did just fine in the immediate postwar decades as the nation’s productivity rose steadily. But so did average Americans, as both workers and consumers. Over the course of the postwar years, Americans shared the wealth that higher productivity created. The nation would experience the greatest epoch of middle class prosperity the world had ever seen.

What happened next? That’s the story that Lawrence Mishel, the president of the Washington, D.C.-based Economic Policy Institute, tells in his just-released preview on productivity from the upcoming new edition of EPI’s biannual economic factbook series, The State of Working America.

Mishel tells his story with lots of useful numbers. But we can sum up his data in just three quick words. The sharing stopped. Since 1973, average Americans have realized little benefit from rising U.S. economic productivity.

Between 1973 and 2011, that productivity most certainly did rise substantially, by 80.4 percent. That increase, EPI's Mishel notes, would have easily been “enough to generate large advances in living standards and wages if productivity gains were broadly shared.”

But those gains would not be shared. Average hourly compensation in the United States increased by just 39.2 percent between 1973 and 2011, less than half the increase in productivity.

This 39.2 percent figure actually overstates the increase in compensation average Americans realized — because this hourly compensation total includes the pay of all “employees,” from CEOs to day laborers.

Median U.S. workers — the nation's most typical workers — didn’t come close to that 39.2 percent. Their pay increased only 10.7 percent from 1973 to 2011.

We have, Mishel explains, two different dynamics at play here. That “wedge” between productivity (up 80.4 percent) and overall hourly compensation (up 39.2 percent) reflects “an overall shift in how much of the income in the economy is received in wages by workers and how much is received by owners of capital.”

Between 1973 and 2011, owners clearly won. Much more of the gains from productivity went to profits and dividends than to wages and salaries.

The second wedge — the gap between “average” hourly earnings (up 39.2 percent) and median hourly earnings (up 10.7 percent) — reflects the exploding gap between executive pay and typical worker pay. Between 1973 and 2011, CEOs clearly won. Their sky-high rewards jacked up our “average” pay figures.

And what about consumers? Average Americans as consumers, like average Americans as workers, haven’t done so well since 1973. Workers have suffered, Mishel relates, as “the prices of things they buy (i.e., consumer goods and services) have risen faster than the items they produce.”

What accounts for all these “wedges” since 1973? Average American working people simply no longer have the economic and political clout they held back in the middle of the 20th century. The shrinking percentage of Americans who belong to trade unions has left collective bargaining a rarity in the private sector.

And without strong unions on the nation’s political stage, basic labor standards — like the minimum wage — have lost much of their capacity to guarantee workers a fair share of the wealth that increasing productivity creates.

So what does the future hold? Probably continued higher productivity. But that higher productivity, EPI's Mishel reminds us, won’t translate into better lives for all Americans — unless we share the wealth that higher productivity creates.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Institute for Policy Studies. Read the current issue or sign up here to receive Too Much in your email inbox.

China Says It Doesn't Steal, Gets Caught Stealing

Dave Johnson — Tue, 23 Nov 2010 12:52:02 -0500

China claims it originated or bought technology for their high-speed rail projects, and didn't steal it. This is a Google translation -- Refuting the State Intellectual Property Office of China's high-speed rail:

China news agency, Chengdu, November 22 (Xu Yangyi) - Intellectual Property Office of China on the 22nd Tian said that China's high-speed rail technology with their own reality, so that the integrated innovation, formed their own characteristics, the foreign "China High Speed Rail Technology, plagiarism "accusations totally realistic. China can now only repair in the mountains, high-speed rail.

. . . Speaking outside the Chinese self-developed high-speed rail technology challenge, Tian sharp-tongued. "We buy the technology plus Germany and Japan Law, which is paid in accordance with international rules of patent fees, this is legal. Digesting other people's technology, combined with their own situation and created something new, how is it plagiarism?"

Also in the news, Chinese National Stole Ford Secrets Worth More Than $50 Million:

A ten year veteran of the U.S. automaker Ford Motor Company pleaded guilty in federal court on November 17 to charges that he stole company secrets, including design documents, worth more than $50 million and sharing them with his new employer: the Chinese division of a U.S. rival of Ford's.

Xiang Dong ("Mike") Yu admitted to copying some 4,000 Ford Documents to a external hard drive, including system design specifications for Ford's cars after surreptitiously taking a job with a competitor in 2006.

. . . According to the Plea Agreement, Yu obtained documents containing prized Ford design documents... Yu was a Product Engineer at Ford, where he had worked since 1997, but the documents taken had no connection to his work at Ford.

... Yu later accepted a job with a Chinese based competitor of Ford's, Beijing Automotive Company, of Shenzhen, China, in November, 2008

Look, people are people. People do what people do. China is desperate for technological advance, and they will do what people do everywhere. They will innovate, purchase, license ... and steal.

Keep your eyes wide open when working with Chinese companies. And French companies, German, British, Russian ... even Canadian?

(H/T Slashdot)

Our Worsening Technology Trade Deficit

Isaiah J. Poole — Sun, 15 Aug 2010 22:53:51 -0400

Bob Jacobson

Bob Jacobson — Wed, 11 Aug 2010 13:24:24 -0400

I currently blog for Huffington Post and Smirking Chimp. I am deeply involved in exposing corruption in the State Department's outsourcing of its public diplomacy function.

I enjoy most of all good reading, travel, and bodysurfing.

Too much else to go into here. Ask.

Fixing Jobs: Normal Isn’t An Option

Dave Johnson — Wed, 02 Dec 2009 06:32:04 -0500

The “Jobs Summit” is Thursday. Are they going to try to get things back to normal? I hope not!

“Normal” isn’t an option anymore, because it is what led to where we are.

The financial sector bailout is based on the idea that things will get back to “normal” if the credit machine is restarted and consumers and businesses are able to borrow more. The stimulus is based on the idea that the economy is an engine that runs smoothly and just needs to be restarted and things will get back to “normal.” While we wait for “normal” to return the government is stepping in to make up the slack in demand, and to help those hit hardest by the downturn. (Never mind that COBRA subsidies start expiring as you read this and unemployment has been extended and extended.)

The idea that you can get the financial sector and the economy back to “normal” desperately assumes that a sustainable “normal” existed in the structure of the 20th-century western economy. It assumes that there really is an “invisible hand” that takes care of things without human intervention. It assumes that perpetual growth of consumers and their incomes and of consumables could just go on and on.

This all assumes that “normal” was OK. This is such a nice, comforting idea. It is wrong.

What if that “normal” system really was unsustainable and that is what led to its collapse? What if there was a limit to how many jobs can be outsourced, wages cut, factories closed, people born, trees cut down, fish taken from the sea, nutrients taken from the soil, water taken from the aquifers? And, of course, the big one: what if there is a limit to how much carbon can be put into the atmosphere?

If people and nature and markets finally reached a limit, and things broke down -- what then? What then is we need to give up on returning to that “comfortable” dream and get to work designing a sustainable system that benefits and respects all of us and the planet we rode in on.

We need a restructuring, a redesign, a new direction. Our "normal" system has turned into a low-wage, everything-to-the-top economy and this must be restructured.

The Restructuring

The core of what needs to be restructured is that we have a system where people with power and wealth benefit when they figure out how to cause other people to receive lower pay and benefits -- or just lose their jobs. The incentives come down to this: if someone can figure out how to cut your pay and benefits or just get rid of you (“eliminate your position”) they get to pocket what you were making, and you get nothing. If you don't own the company you're out of luck.

Now that is a perverse incentive if there ever was one. (Another perverse incentive: People with power and wealth benefit when they "externalize" costs like environmental or health damages. If they figure out how to hurt you or the planet without having to pay the costs of healing those harms, they get to pocket the savings.)

In the past this perverse incentive was mitigated by people banding together in governments and/or unions and forcing the wealthy and powerful to share. But modern marketing science has been successful at making people believe that government and unions are bad for them.

This was also mitigated by the ongoing need to find people to do the jobs that needed to get done. But with continual improvements in technology this need is reduced. For example, here is a story about a factory that builds large-screen TVs without any employees.

Also, this perverse incentive assumes an infinite pool of customers to sell to, ignoring that the transaction of benefiting from eliminating a job also eliminates a customer. But modern business has become so efficient at job elimination that this comes into play. Who will be able to buy theTVs that the employee-eliminating factory makes, if all the employees are eliminated and have no income?

Three decades ago productivity and wages decoupled. Where wages used to always increase along with productivity Reagan initiated an era where that increase was no longer shared, and the benefits of our economy now increasingly flow to the few at the top. Now they have all the money, and everyone else is loaded with debt from just trying to keep things "normal."

You might be lucky enough to still have a job today but you probably haven’t had a raise for a long time. And if you did rising costs of health care, etc. took it back. But even if you are ahead, what about tomorrow? Do you have a job that absolutely can't be outsourced or replaced by technology? If you think so I have news for you, millions of newly-unemployed can see that you have a rare necessary job, and they're all going to try to get it from you.

So good luck with the Jobs Summit. But if we don't hear about a fundamental restructuring that involves changing basic ideas of what work means and who "owns" the companies and shares the wealth in a technologically advanced, overpopulated and overproducing world, well, I won't think we're hearing the answers we need to hear. Put more simply, my example of the employee-eliminating TV factory is becoming more and more real. But certainly something can be done with a situation where there are plenty of TVs being made, and everyone has a lot of free time because there aren't enough jobs. How obvious is the answer to that?

Yes, I'll be posting ideas so check back for future posts on this. In the meantime please leave a comment with your ideas.

john elfrank-dana

john elfrank-dana — Fri, 08 May 2009 23:14:54 -0400

George Wiman

George Wiman — Sun, 17 Feb 2008 12:15:00 -0500

Born same year as space age, former Christian minister and former Christian, always fascinated with science, now work for state university in system support.

Ian Mishalove

Ian Mishalove — Wed, 12 Dec 2007 20:39:32 -0500

I'm currently the Director for Online Communications at the Campaign for America’s Future, where I've been since July 2004. Prior to CAF, I worked for seven years at the National Wildlife Federation, first as their webmaster and then as their technical director for activist development. I received an M.E.S from Yale’s School of Forestry and Environmental Studies and a BA from Princeton University -- and in both places focused research on how to empower progressive social movement networks -- esp. through online technology. Outside of computers and activism, I co-own and help to run Flow Yoga Center with my beautiful wife Debra, play the bass, enjoy mes animeaux -- Carmen, Maggie and Maxie -- and try to spend as much time as possible playing outdoors.

Eric Mills

Eric Mills — Tue, 11 Dec 2007 18:36:07 -0500

I'm currently the Controller at the Campaign for America’s Future, where I've been since March 2005. Prior to CAF, I worked for thirteen years at the College and University Professional Association for Human Resources, first as their senior accountant, controller and then as their chief financial officer. I received an B.S from Bowie State University in accounting. I received my CPA in 1989.

Profits Higher At Military Contractors

Terrance Heath — Thu, 25 Oct 2007 10:06:03 -0400