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The Late, Great Wage Economy

Robotics and AI are eliminating lower wage jobs, and will continue to do so. No economist of any standing disputes this claim any longer. Instead, the rear guard of the status quo has changed its tactic from denial outright to that of the lullaby. Sure, the precipitous drop in the cost of automation is affecting employment, but it’s all going to be ok. Trust us. We’re the experts. Thus goes the tune. Bedside, liberal academics offer charming fairy tales such as “re-skilling” and “up-skilling” -all based on a presumption of IQ equality, or at least its mutability. But the former doesn’t exist and the latter is highly limited. By contrast, professional pols on the left are afflicted by a malady one might call Panglossism. More specifically, that there is nothing whatever wrong with the U.S. economy apart from the bugaboos of income inequality and intractable privilege, which we might expect to be remedied in the next pogrom against microaggressors. Thus academia is beginning to admit what politicians yet dare not. But this is political survivalism, and serious people don’t take it seriously. Yet the growing split between population geneticists and ever-optimistic policy makers is becoming a gulf. And the cost of capitulation by pols is ruinously high. After all, progressives have over a century (and trillions of dollars) invested in the theory of human plasticity -that is, in social determinism. It goes something like this: humans are like a batch of pancake batter. Homogeneous. If we simply fry it right, it makes perfect little cakes and everyone is happy, and I receive academic or political immortality for being correct. But reality is a harsh scullery wench. Humans are less like pancake batter and more like 4 different kinds of cookie dough. No matter how well or badly you cook that dough, it will always be peanut butter, or chocolate chip. No variables of time or temperature will make one the other. And if people are different, then they will behave differently.

I’ve mentioned elsewhere my belief that denial of reality is the defining characteristic of liberalism, and that it’s a bad thing. Worse is that most of the liberal elite are well aware of IQ realities and other biology-based limits on human potential, but pretend otherwise. Ordinarily we call pathological denial of reality a psychosis. So, let’s apply economic psychosis to our example of “up-skilling” and “re-skilling.” A world full of genetic designers and AI engineers is impossible. The idea that government can bring about this state through gyrations of policy is a special kind of lunacy. Even were some inventive soul able to “up-brain” the majority of the human population (the ones that fit within the 1st standard deviation of the mean population IQ), some of those populations would be starting from a base too low to matter. The others—well there’s only so much demand for anything that humans can produce, and a world full of genetic designers and AI engineers is one in which no employer profits enough from robotics and AI to employ millions to do it. This is the classic Catch-22 of liberal economics: the more we attempt to move the mean rightward in denial of biological inequality, the more the 2nd and 3rd standard deviations on the right of the Bell Curve elude us, because moving the mean doesn’t eliminate IQ gaps. They will always exist since their cause is located in the biological hardware, not the social software, of humans. The problem of income inequality can’t be fixed because IQ inequality can’t be fixed. What’s more, income inequality isn’t a real problem. It’s only a problem from the perspective of a fantastical ideology. But what if the goal isn’t to move the mean to alleviate the effects of productivity gains, but something else entirely? What if the goal isn’t to fix the issue, but instead to make it worse? You run across the term dysgenic sometimes in right wing literature on population genetics. Roughly, it refers to something that causes the quality of genetic information to become degraded. What if the goal of leftist economic and social policy was intentionally dysgenic. Pause for a moment to contemplate that. In any event, the effects of productivity will affect everyone in the world, but it will affect some populations more than others. The day is approaching where nothing will be able to be done about it. It’s humorous to see the “party of science” guilty of flat-earthism where population genetics and their effect on economics is concerned. We must force public schools to teach neo-Darwinism, and then deny its impact on economics. We might think it a lark if they weren’t so dreadfully serious.

Recent research indicates that as much as 75% of intelligence in Caucasians is heritable, meaning IQ is mostly fixed. Certainly environment is a factor, and no important population geneticist denies this. Just as certainly, there are various intellectual gifts, such as verbal adroitness, that are not always reflected precisely in IQ testing. But as a general indicator of fitness for an advanced technological economy, mean population IQ is a good indicator. Consequently, because they deny this finding of science, liberals (and by liberal I’m referring also to Austrian and Neo-liberal economists, not merely to academic Keynesians and socialists) have all the wrong answers. That’s why they never seem to quite fix anything. On the rare occasion they are correct in their diagnoses, they are accidentally so, as when you “Christmas-tree” a standardized test, and receive a score of 40 instead of a zero. They’ve failed the only test that matters in their profession, of course -that of predicting the outcome of policy changes. Yet somehow they still retain their prestigious titles and tony addresses because efficacy is inversely proportional to success in the guild of economic Magi -that is, the worse your performance, the more successful you are. The point is this: demographics is destiny. If you lower the mean IQ of a country through dysgenic immigration policy, you will cease to be competitive in a technological world economy. But there’s more bad news. Even eugenic immigration and family policy are not enough to keep pace with technological change. Failing to keep pace will have very noticeable effects in the near future.

According to the most prevalent hypothesis, as technological change makes obsolete the skills of lower wage workers, they will retrain and acquire the knowledge to compete in emergent industries. The reality is that the uptake of new skills is more often too slow, and many who’ve been displaced by innovation simply do not have the intelligence to acquire more challenging skills. The result is that increasing numbers of people who were marginally employable are now left out of the economy altogether. This is complicated by the disappearance of domestic industries, such as garment production, when a foreign workforce can do it a little cheaper. Again, the hypothesis predicts that new industries will emerge. Sometimes they do. But what is the consequence when they don’t do so rapidly enough, or the workforce is ill-equipped to gain employment in them, or can’t afford to? What is our answer when emerging industries are immediately overtaken by foreign competition, as in electronics manufacture? It is well and good to claim that there is no strategic value to any of these industries, therefore we may as well import such goods and services. After all, the Austrian School economist will simply claim that there is nothing to protect, that the nation-state is simply a vestige of bad economics. In a world of free and open competition, there is no need any longer for the things we call “nations,” which merely impede the free migration of goods, jobs, and capital. I’m sure this is a familiar tune. Is there any remnant of social stability that does not have to be sacrificed in this scheme? One can envision a population of nomads, peopling international auctions of temporary engineering and scientific labor. The most likely scenario is that the remainder will be on the “compassionate” dole. Employment is not the only measure of economic success, nor is it even the most important. Quality of life, measured in real wages, is declining across the West, and we are told that our expectations are too high and that it’s only fair that the world get a slice of our pie.

New industries don’t emerge rapidly enough for those displaced by predatory labor markets, as is ceaselessly claimed by the Austrian School theorists who lard the political right. Instead, they flow into the burgeoning ranks of the “service economy,” later to be eliminated by “efficiency” (the lowering of service standards), replaced by a robot (automation) or a cheaper offshore resource (e.g. the migration of call centers), or they drop from the workforce altogether and become economic public wards. But the laissez faire economists are not alone in error. Like trained gorillas, the Keynesians impatiently mash the big red stimulus button, but the reward pellets tumble down the chute into the waiting mouths of banksters. The Trickle-downers are presenting with symptoms of enlarged prostate, as corporate profits soar (from productivity increases due to automation and native worker replacement) and real wages fall. As the labor participation rate tumbles to historic lows, the Fabians are running out of productive subjects from whom they can expropriate the funds to prevent a restive entitlement class from burning cities to ash, and looting what’s left standing.

That’s in the U.S. In France and Germany, New Year’s Eve festivities are illuminated by burning cars, as an imported proletariat revels in the certainty that enervated European governments lack the will to stop them. The hard news is that there will be no jobs for an already impatient and violent underclass, as fewer are needed to do the same work, and familiar classes of employment disappear. This phenomenon is often attributed to below-replacement level reproduction by native Europeans, but this is more falsehood. The advanced European economies all suffer from structural unemployment caused by productivity increases, and manufacturing outflows, while immigration boosterism likely has a cultural-demographic rather than an economic explanation. Technological pessimism is not a new genre of social critique for either the right or the left, but in the era of the Late, Great Wage Economy, where only two-thirds of the U.S. population is both able to work, and can find employment, the genie of productivity demands a closer interrogation in the context of now-structural unemployment and the facts of population genetics.

Domestically, the left and the ersatz right proffer immigration as a solution to a fictional brain drain caused by infertility, with the typical admixture of naivete and sanctimony: not only is the world brimming with oppressed engineers every bit as good as native-born American ones, but they have a God-given right to sell their labor in the U.S. market. Again, sleight-of-hand. Karen Zielger and Steven Camarota of the Center For Immigration Studies produced a study refuting the oft-repeated claim that the U.S. has a shortage of Science, Technology, Engineering, and Mathematics (STEM) graduates, and demonstrating that their wages are stagnant, indicating an oversupply of workers with these skills. Howling commenced from all the expected quarters. One reason why STEM wages are stagnant is the flood of H-1B tech workers recruited from overseas, with whom U.S. companies are replacing native-born employees, at a significant discount. This is a trend nearly all current U.S. Presidential candidates agree is a good thing. It seems that foreign workers have more right to employment than American workers, millions of whom have simply ceased looking for work, as the economy has found ways to function without them.

Yet the importation of foreign STEM workers, by all appearances, is a solution in search of a problem -which means its proponents are very likely to have ulterior motives. It’s probably an ill portent when the left and the right reach consensus on anything of importance, as in the case of the economic need for massive 3rd world immigration. The explanation for this incongruity is simply a variation on a theme found in all pro-immigration talking points: these are jobs that “Americans won’t do.” In actuality, however, they’re merely jobs Americans won’t do at 3rd world wages. In a low tech era, the camp of Adam Smith idolaters are probably right. In a high tech era, hyper-specialization, multiplied against automation, is devastating labor markets, not merely here at home, or in Europe, but across the globe. Runaway productivity is a world-wide issue. Combine this phenomenon with the variable fortunes of international competition and you have the ingredients of disaster for wage earners, at which both economists left and right simply shrug their shoulders, saying, “Those are the breaks.” So reliant on unfailing corporate ingenuity, and so committed to economic internationalism are they that native feeling and loyalty to countrymen are tertiary concerns. If one’s country is gobbled up in the increase of unrestrained productivity, or in economic combat with state-sponsored predatory corporatism, so be it. The stuff we consume will be cheap. But, as evidenced in the onset of a new economic slowdown on the heels of the Great Recession, the absence of good jobs means no one can buy anything, no matter how cheap. Economists forget that Schumpeter’s Unternehmergeist tend to hire people like themselves, and are often lacking in the fellow-feeling that might temper their most destructive policies.

Eventually the low-wage labor mercantile system runs out of human raw material, as we are seeing in China, where (practically) indentured factory workers are losing their slave-wage jobs to robots, or to more miserable and abject slaves elsewhere. Ah, the wonders of globalism! One task these cheap foreign brains we’re discussing have ostensibly not been put to is answering the question of employment in a world of soaring productivity and automation, and why more foreign workers is going to solve the problem of too few good jobs. The revolutionary insights are head-scratchingly elusive. The immigration solution, as with all others that rely solely on supposedly autonomous (there’s that word again) markets or some combination of markets and liberal economic policy, is either delusional or it is predatory. And the prey is the white male American worker, of all economic strata. Even the coveted “white collar” jobs are proving less immune to rises in productivity than anticipated -those that haven’t already been outsourced to China, such as Boeing’s 737 engineering jobs. Automation and AI in software development threaten millions of high-paying jobs once thought almost invulnerable.

Denial of reality produces ludicrous policy prescriptions, and, what’s more, the feverish perseveration to follow them until they destroy a civilization. We could attribute this to sentimentality, and there is something to be said for this in a civilization that is now dominated by feminism, which is a kind of weaponized sentimentality concerning the nature and capacities of women, combined with inverted Electra, where the Father-tyrant is a competitor with the child for the affections of the idolized mother-goddess-victim. But the sad truth is that many liberal elites understand quite well the empirical facts, yet prescribe disastrous policy anyway, doing so from a deep animus toward the civilization in which they were nurtured. Beyond this, some, perhaps many, social elites are simply sociopaths, possessing no scruples that deter them from chasing pleasure and power in the demise of traditional white Western culture, which they view as, at best, an inconvenience to be swept aside. In either case, the “party of science” is no such thing, and its continued denial of empirical evidence must be viewed as either foolhardy or malevolent.

Comments

  1. Efficiency, automation and AI (what economists call "productivity") will eventually create such widespread structural unemployment that a national basic income will be necessary to prevent pervasive rioting. The Austrian School economists are whistling past the graveyard. New industries will NOT emerge to absorb the excess labor of the bottom layer of the working class. They do not have the intelligence (or the economic surplus) to "upskill." But this trend will not only affect the "proletariat," it will also begin to affect the entry level white collar positions was well. Even now in my own industry, innovative software companies are producing "plug and play" enterprise analytics software that does not require a systems integrator's services to install and configure. Truck and taxi drivers will begin to be phased out within 10 years, as problems with automated transport are sorted out. The economic incentives are simply too great not to follow this siren song of "profitability." When profit is your only motive, the theoretically ideal number of employees is zero. Not everyone can be an entrepreneur, as the Jack Kemps of the world insist. It is a lower capital investment for them to become drug dealers. Or dog walkers. A national rise in the minimum wage will bankrupt millions of small business owners, who will then also be added to the roles of individuals seeking work, who can't find it.

    The structural issues inherent in finance capitalism will become very evident in the next 10 years. Already a third of the workforce is now completely surplus, which is why the Federal government must doctor the unemployment statistics. Substantially over 90 million people are out of work and no longer looking for work. Though corporate profits are rising, and have been for some time now, wages are stagnant. I and others like me have been saying for some time now that capitalism is not simply broken, it is fundamentally flawed, in its essence. Consumerism is unsustainable. When consumers are eaten up with debt and can no longer buy, when credit dries up, the capitalist economy fails.

    The way out is the family based economy of independence. The engines of technology have to be turned to the production of the means of economic independence. Automation of food production; energy generation, home manufacture via 3D printing, etc. Land reforms are needed. Every man his under his vine and fig tree (Micah 4:4). This is biblical economy. Markets aren't destroyed. They are transformed into engines that fuel independence. Tractors are more highly valued than 80 inch HDTVs. If we don't undertake this transformation, socialism is not only inevitable, its arrival is much sooner than anyone thinks. Look at the Sander's crowd. When these 20-something have-nothings reach their 40's, and the problems have worsened, there will be no stopping the stampede to socialism. The corporations want it. The Federal government wants it, and a gigantic underclass of entitled children whom capitalism has failed want it. It will happen. The baby boomers (the so-called Greatest Generation) paved the way. They made this outcome nearly inevitable. The 60's radicals killed the West. We will have to go through the fires of transformation and many of us will not make it through. On the other side of those fires, those lakes of blood, is a chance at a new beginning. But anyone thinking we'll paper out way out of this mess doesn't understand economics.

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