Limit Technology Displacement- It’s Been Tried!

People’s first reaction to obsolescent and technology displacement is to limit those technologies and save the jobs. But it’s already been tried!

James Lyman BSAE, BSEE, MSSM

In the early 1800’s, German Christians emigrated to America seeking religious freedom and prosperity, like so many other emigrants. This was when the industrialization of America was starting, which made the problem of technology displacement of people clearly apparent. One group of these emigrants became know as the Amish, who resolved that any machine (technology) which diminished the value of a man, by doing the work he did and therefore replacing him, was bad and should be avoided. And so, for about 200 years, this quaint religious sect has lived a philosophy aimed at avoiding the problems of obsolete people by scrupulously rejecting any and all technologies they deem harmful to the value of a man. They would pick and choose good technologies verses those they decided were bad. They did what more and more people in our technologically advanced society of today are advocating.

Today, we are going head long into the problem of technology displacement to the point that now 32% of America’s young people still live with their parents, unable to support themselves. A college degree is no longer adequate for many, with 20 to 25% college graduates unemployed or underemployed, as technology provides the machines and technologies to do the jobs once held by them. With technology expanding exponentially, this displacement is happening at an increasingly faster pace leaving a growing number of young Americans with little to nothing for a future. As expected, many people advocate limiting new technologies when they threaten the jobs of people.

They advocate the same strategy for taming technology as the Amish did.

But the trouble is, the Amish themselves also continue to be displaced by technology, only at a much slower rate. Where once they farmed as was done in the early nineteenth century, using draft animals and hand implements thereby maintaining the dignity and value of the individual, they’ve had to slowly adopt modern machinery in order to maintain their economic stability. This is at a time when small farms are being press out of the system because their productivity is too low to be self sustaining. This has resulted in such weird concoctions such as a modern hay bailing machine having a gasoline engine attached powering it while being pulled by a team of horses.

The Ordnung or order is the governing body of each Amish community, which determines what is and isn’t acceptable in the community including which technologies are permitted and which are not. Therefore, one community might use tractors (while still using horse drawn allowed or not allowed in Ordnungs is a graphic illustration of the difficulties trying to choose which technologies are good and which are not.

The PBS series American Experience had an excellent two hour documentary about the Amish 1, and brought out one interesting fact, that since their arrival in America, when a boy reached manhood and married, he’d buy a farm and continue with the Amish way of life. Trouble is, an Amish young man now needs about a million dollars to start his own farm, something well beyond the reach of most young people today, regardless of their religious convictions. Therefore, the Amish young have had to seek employment other than the farms of old, and this has lead them to those industrial factories, which their forefathers shunned as being degrading to men. Others have gone west to seek out ranching, but the distances are much too great to use horse drawn wagons, so they’ve been forced to adopt automobiles and trucks into their lives.

Good and noble as their intentions are, the Amish are nevertheless trying to maintain an artificial world within the real world, but without design, each day their world is being encroached upon.

People like to think of technology as these little discrete blocks neatly setting side by side, each independent of the other. A mass of blocks where one can decide if a block is good technology or bad, and if bad simply lift it out of the array of blocks thus ridding it from society. In actuality, various technologies merge and spread into one and another. Much like colored blocks of soft clay or wax, over time they spread into each other, merging into a rainbow of diffused blocks. Deciding to extricate a block that is perceived as bad means trying to follow filaments of that block into other blocks for removal without destroying adjacent blocks. This was the central theme in James Burks series ‘Connections’ 2. Not only are you unable to isolate one technology from all the others, but you cannot forecast which technologies are now good but will become bad, or which technologies that you now consider bad will evolve into good.

Technology doesn’t mean that which baffles, befuddles, perplexes and confuses you . . . it’s the sum of all the methods and means used to bring comfort and sustenance to humanity. It covers everything from taking a stone of flint and flaking it into an arrowhead up to and including the latest gene, computer and medical technologies . . . and everything in between.

Technology isn’t something you can successfully control.

So as new technologies continue to press millennials and generation-Z out of old jobs, suggestions of limiting certain technologies to preserve jobs is a fantasy dream of those who have no real understanding of the world that they live in. A prime example is the new artificial intelligence technology Watson, shown in the above picture, that was developed by IBM, which beat the two top winning champions on the TV game show Jeopardy. IBM’s declared target markets are medicine and the law, leaving many people wondering if this technology shouldn’t be suppressed. This technology is already commercially available, television commercials touting its use by companies such as H & R Block for doing people’s income tax. So Americans are left to ask the question, ‘Could I even qualify to be a contestant on Jeopardy, and if not . . . then why couldn’t this technology do my job?’

And this is just the start, not the finish of AI (Artificial Intelligence).

China has already declared their intention to dominate the artificial intelligence field and market, intending to capture 90% of the market by 2025. Two other technologies just over the horizon is ATS (Automated Teaching Systems) and automatic driving vehicles. Both the truck drivers and school teachers are already on the way out, and trying to stop that will only pass the initiative over to others such as the Chinese, with technology being the real bases for a nation’s power and position in the world order.

Suppressing new technologies will only leave you behind and at the mercy of others.

1 – “Amish’, American Experience Season 24 Episode 5, David Belton, director and writer, Callie T. Wiser producer and writer, WGBH PBS station, 2012.

2 – “Connections”, James Burk executive producer and writer, Mick Jackson director, BBC and PBS, 1978.

14 June 2019

1) Two tankers have been attacked near the Iran coast, which has caused oil prices to surge with fears that Iran may try to close the Gulf of Oman, which transports oil out of the Middle East. The choke point of the Strait of Hormuz is only 21 miles wide and handles 80% of the oil destined for Asia. Last month four other tankers were attacked near Fujairah using sabotage, which further fueled fears that Iran may become very aggressive in the region and against exports of oil.

2) With voters no longer showing a strong concern for the federal debt, the political support for reining in Federal spending and controlling the growing national debt is melting away with Republicans willing to accept a large deficit in exchange for tax cuts and Democrats making big spending promises in the 2020 campaigns. Some experts, who had once augured against the government growing debt, now say it may not be as critical a problem as they once thought.

3) The mega-retailer Target is upping the ante for e-commerce by offering same-day delivery on thousands of items for just $9.99. Using the delivery startup Shipt, which Target purchased nearly two years ago, the retailer is positioning itself to compete against Walmart and Amazon in what is becoming a ‘delivery time’ war of the major maga-retailers. The one day service will cover 65,000 items from 1,500 stores out of 1,800 stores in 47 states.

4) Stock market closings for- 13 JUN 19:

Dow               26,106.77    up    101.94
Nasdaq            7,837.13    up      44.41
S&P 500           2,891.64    up      11.80

10 Year Yield:    down   at    2.09%

Oil:    down   at    $52.11

13 June 2019

1) Demand for oil is shrinking as the trade war causes the world economies to retract. China’s economy is slowing faster than experts had expected, with the EU and US also not growing in oil demand. Fears that oil prices will drop below $40 a barrel fuel fears of a continual global slowing of economies. The U.S. boom in domestic oil production using fracking is dependent on high oil prices, and with American petroleum stocks at an all time high, it may not be feasible to continue fracking.

2) With mortgage rates dropping to their lowest level in nearly two years, there has been a surge in refinancing applications. In just one week, applications increased 26.8%, which is 41% greater than a year ago. Refinance mortgages are the most rate-sensitive because when low, people rush to refinance while they can get the lower rates.

3) For the second straight month, Boeing aircraft reports no new aircraft sales. The drop isn’t just because of the 737 MAX grounding, but the company already has a massive 5,000 aircraft backorder to fill, so many customers don’t need to place additional orders. With the airline Jet Airways halting operations, their pending sales contracts have been canceled, which totaled 71 aircraft.

4) Stock market closings for- 12 JUN 19:

Dow           26,004.83    down    43.68
Nasdaq        7,792.72 down    29.85 
S&P 500          2,879.84    down      5.88 

10 Year Yield:   down   at    2.13% 

Oil:    down   at    $51.08

12 June 2019

1) For the sixth straight month of a gold buying spree, China continues to add to it’s gold reserves under the protracted trade war. China added 58 tons of gold to its reserves in the five months to April, then added 15.86 tons in May. At this rate China could buy as much as 150 tons of gold in 2019, as they diversify away from the U.S. dollar.

2) The retailer giant Amazon has opened a second cashier-free store in New York, which makes the thirteenth ‘Amazon Go’ store to open in America. The convenience robot store is about 1,700 square feet with Amazon announcing its fourteenth store will open in San Francisco. By 2021, Amazon may open as many as 3,000 of these robot retailing stores which threaten other retailers like 7-Eleven shops, CVS and Walgreens.

3) Ten state attorney generals plan to jointly file a lawsuit to stop the merger of Sprint and T-Mobile. The $26 billion dollar merger will reduce the number of nationwide wireless carriers to three. So far, the deal has won the backing of the majority of the FCC, which makes the Federal Government in favor of the move.

4) Stock market closings for 11 JUN 19:

Dow            26,048.51    down    14.17
Nasdaq         7,822.57    down      0.60
S&P 500        2,885.72    down      1.01

10 Year Yield:    down   at    2.14%

Oil:    down   at    $53.05

7 June 2019

1) Years of slow economic progress, where the South nearly reach equality with northen and western neighbors, has reversed. Since 2009, the South’s growth in output and wages has slowed so the South is now receding compared with the rest of America. The twin forces of automation and globalization have wiped out millions of factory jobs where the lower wages and taxes were instrumental in the South drawing those businesses. The net result is the South’s economy is falling behind.

2) The discount retailer chain Costco announced they will be raising prices, stating the tariffs on China as the reason. Costco joins other retailers such as Walmart, Target and Macy in having to raise prices to consumers. There are fears that the wave of retail store closures will further increase as consumers retract from their spending habits.

3) Presidential candidate’s promise of free college to alleviate the growing student debt problem is facing problems of implementation. Low income students need more than just free tuition for gaining a college degree, and therefore the presidential plans will aid those who least need the financial help. The tuition accounts for half or less of college expenses. Presently, student debt stands at $1.6 trillion dollar, where presently 20 to 25% of new college graduates are unemployed or underemployed.

4) Stock market closings for 10 JUN 19:

Dow            26,062.68    up    78.74
Nasdaq         7,823.17    up    81.07
S&P 500        2,886.73    up    13.39

10 Year Yield:    up   at    2.14%

Oil:    up   at    $53.42

10 June 2019

1) Many consider that it is no longer a question if the Fed will cut interest rates, but rather when. With the apparent softening of the job market, many investors firmly believe the Federal Reserve  will move to cut interest rates this year possible as soon as this July. The markets bounced up on the expectation.

2) The job numbers are in for May, with job creation slowing dramatically. There were just 75,000 new jobs added to the economy, about 100,000 less than economist expected. Both March and April job numbers were lower than expected leading experts to conclude a downward trend in the American economy is beginning. There are fears that we may see a recession as early as next year.

3) The book seller Barnes & Noble has closed a deal to sell itself to Elliott Management Corp, a hedge fund based in New York. The news sent Barnes & Noble stock surging upward as much as 36%. Like many other retailers, Barnes & Noble has struggled with little success to counter the power house e-commerce giant Amazon. It’s Nook e-book device was a bust, which the company had heavily invested in. Barnes & Noble has 600 brick and mortar retail stores.

4) Stock market closings for 7 JUN 19: The Dow has had its best week since November.

Dow                   25,983.94    up    263.28
Nasdaq                7,742.10    up    126.55
S&P 500               2,873.34    up       29.85

10 Year Yield:    down   at    2.08%

Oil:    up   at    $54.04

7 June 2019

1) The outlook for retailers continues to get grimmer with earning reports shrinking. Three major retailers, Michaels, Home Group and Zales have shown a slowdown in their sales, and these companies sell very different products, indicating this slowdown is not market specific, but rather a general economic slowdown. There is an emerging trend of decline for consumer based companies despite record unemployment.

2) Job cuts soar to 46% in May, worst than last year’s May. The tech sector and retail suffer significantly, with retail cutting more jobs than any other sector. The auto segment is also suffering as a result of lower new car sales. Since the tech sector accounts for the highest paying jobs and from some of the most sought after jobs, this doesn’t bode well for America’s economic outlook.

3) The expanding trade war may result in an 1970’s style supply shock as reliable supplies of cheap imports of manufactured goods are suddenly curtailed. In the 1970’s it was the supply of cheap oil curtailed from the 1973 oil embargo that cause a drastic economic decline. A similar sharp drop in consumer and industrial goods could have the same effect to America’s economy today.

4) Stock market closings for 6 JUN 19:

Dow             25,720.66    up    181.09
Nasdaq          7,615.55    up      40.08
S&P 500         2,843.49    up      17.34

10 Year Yield:    up   at    2.12%

Oil:    up   at    $53.03

6 June 2019

1) The trade war continues to escalate as China takes action against American companies operating in China proper. China is levying fines on Ford’s joint venture for antitrust violations. Changan Ford Automobile Co. will be fined $23.6 million dollars for restricting retailers sale prices. Fed-Ex has recently come under Chinese scrutiny for ‘wrongful’ deliveries. China has threaten to blacklist foreign firms which damage domestic companies’ interests. Chinese citizens are being warned against travel to America, thereby restricting income from tourism and business reaching America.

2) The video game retailer GameStop, with over 5,700 retail outlets, is in decline, and was the place to go to buy video games and virtual reality products. But their sales have been in significant decline, with attempts to use e-commerce to counter the downward slide being of no help. Their forecast for next year show little improvement to its deteriorating business as their business migrates over to Amazon.

3) Bernie Sanders has made good his promise to take his fight for the common worker to Walmart’s annual stockholders meeting, to demand that Walmart workers be given a place on their board of directors. He introduced a shareholder proposal which would make roughly 1.5 million hourly workers eligible for board nominations. Sanders’ consider this move a way to separate himself and his policies from the democratic presidential nomination pack. Walmart is one of the huge American retailers pushing for new robotic technology to use in their stores.

4) Stock market closings for 5 JUN 19:

Dow             25,539.57    up    207.39
Nasdaq          7,575.48    up      48.36
S&P 500         2,826.15    up      22.88

10 Year Yield:    up   at    2.12%

Oil:    up   at    $51.69

5 June 2019

1) The tech giants Apple, Google, Facebook and Amazon are facing antitrust troubles. The government is stepping up scrutiny of these big four with possible new rules, regulations and law suits. The investigative efforts will be split between the Justice Department and Federal Trade Commission driven by mounting criticism over political bias, disinformation and privacy breaches. This could spell years of troubles and law suits and possible breakup of the companies.

2) The threat of tariffs on Mexican imports has American oil refiners worried, since Mexico is the number two source of foreign oil to the United States. American produced oil is a light oil which is a poor match for Gulf Coast refining facilities, while the Mexican oil is a heavy oil that when blended with the America optimizes the refinery’s output.

3) The Medicaid system is still suffering from the Great recession, so there are fears than another recession could be devastating for the system. This is at a time when state spending on Medicaid is still high with no signs of subsiding. In a recession, payrolls decrease from people unemployed or underemployed, so contributions are down. This means less buildup of reserve funds needed for the future, and a second recession so soon, could seriously deplete those reserves quicker, leaving the future of the system in doubt.

4) Stock market closings for 4 June 2019: Jump in Dow comes from Fed signals flexibility on rates.

Dow               25,332.18    up    512.40
Nasdaq             7,527.12    up    194.10
S&P 500            2,803.27    up      58.82

10 Year Yield:    up   at    2.12%

Oil:    down   at    $52.95