By: James Lyman
Economic & Finance Report
Have you noticed how some products have been disappearing from the grocery store shelves? For the last several months there have been several products I use that are no longer stocked, which has raised my suspicion they were ‘slow in selling’. One product is Goya’s Yellow Rice Mix, which for several weeks I had checked for at several stores, but found nothing, so I made inquiries at one store. My suspicions were confirmed! The store no longer carried the rice mix because it wasn’t moving fast enough, that is, they were not selling enough of them.
So why would that be of any real importance to you?
Well, when retailers encounter poor economic conditions, one basic strategy is to purge their inventories of items which are not selling quickly therefore not bringing in as much revenues, then concentrate on selling products which sell fast. It’s a strategy of pulling your horns in and hunkering down until a storm passes. So, while the professional politicians sing, ‘All is alright, the economy is just great, so vote for me!’ businesses are saying to themselves, ‘Things don’t look all that good, so lets brace ourselves for tougher times!’. This is a strategy used many times in the past to good effect. More importantly, it’s a portent of where the professional economic analysts think things are really going.
So just what does this mean for you and me?
Well, most people already consider the economy is troubled, so this additional ‘red flag’ isn’t anything to panic over. But when businesses begin earnestly looking for ways to reduce cost, they quickly start looking seriously at new technologies for reducing their operating cost by reducing their labor cost- and that very often means technology displacement of people and their jobs. Economic troubles is a breeding ground for robots and automation, and that means lower pay and loss of jobs. Like Stephen J Gould’s Punctuated Equilibrium, when the environment is stable and unchanging, then there are few changes to life, but when the environment changes, there is a flurry of changes as life adapts to the new environment. It’s the same with the job market- when the economy (environment) is stable and quiet, then technology displacement tends to be slow in adopting new technologies, because businesses tend to be satisfied with just leaving the status quo as is. But when the economy is in turmoil, businesses look for any means to cut cost and improve productivity. This means looking at their labor cost and how that cost can be reduced to keep the company viable.
This is when there is a frenzy of developing new technologies for newly opened markets, to sell as much as possible, thereby staying in business. Poor economic times is the time when technology displacement flourish, when people are pushed further down and out of the social economic system. Like fertile soil, seeds easily take root and quickly grow into stout plants and strong immovable trees. And there is never any going back!
So what it means for us, for each and every individual, is fewer job opportunities, with less pay and a smaller future. So each time there’s an economic downturn, then there’s a rush of new technologies, because anytime you use technologies that reduces the skill and intellectual requirements to do a job, you reduce your labor cost. More people are able to do that job and for a constant demand . . . an increased supply always means a reduction in cost.
Thus, technology displacement –
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