Are robots and technology behind the income gap?

[santafe2]

Re: Odds of Automating

Of course, Economists are safe as kittens.

There is hope, only not for us.

Not true! Keep reading....425. 0.77 0 45-3021 Hunters and Trappers

You are totally safe Woodsman.

[Woodsman]

Re: Odds of Automating

"Obama and US socialists aim at perfect income equality. ...

Okay, so my jaw dropped a little.

Then again, he does hold a prestigious professorship at "John Wiley & Sons" and is an expert in "Islamic Capital Markets," so what choice do I have but to defer to the received wisdom of the good professor.

NOT!

http://www.zoominfo.com/p/Noureddine...ene/1280063731

A perfect example of Doublethink, in my humble opinion:

The power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them... To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just as long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies – all this is indispensably necessary. Even in using the word doublethink it is necessary to exercise doublethink. For by using the word one admits that one is tampering with reality; by a fresh act of doublethink one erases this knowledge; and so on indefinitely, with the lie always one leap ahead of the truth.
-- George Orwell, "1984"

To parapharase Lloyd Bentsen, "I knew socialists, I worked with socialists. Mr. President, you're no socialist."

Indeed, I'm happy to remain a minority of one. Truth needs no defense and 2+2 will never be 5 even if there is only one person left in the world still able to add. Although I might be induced to change my mind one day.

[don]

Re: Odds of Automating

the punch line . . .

an economist with a PhD from UCLA

[gwynedd1]

Re: Odds of Automating

Robots are a form of capital, and I hardly consider them the main cause. In fact robots cause huge demands in skilled labor meaning a middle class is a given. It must be designed, manufactured , distributed and marketed. Robots will open up opportunities not possible before in much the same way the Internet killed the Post Office. Do we have fewer jobs because of the Net? Japan for example is well ahead of the US in robots, and their gap is much smaller than ours.

The main source of inequality is that which throws off cash in one's sleep. Monopolies always leave a surplus. Ya don't need to hire anyone. It never goes away. If it was worth something in Roman times than you can be sure land, politics, and money are behind the wealth gap. Those are the same things the wealthy are scrambling to secure now. The very wealthy are more or less parasites that cling to things that have value but are not a product of labor. Only when the wealthy happen to use their wealth for industry and venture capital is this not the case. Unfortunately most of them after a few generations are alienated from it. The dynasty created by Henry James Sr is a good example or creating two notable sons while the vast majority of them idled themselves in the leisure class. I can certainly see why they are looking for a scapegoat ,so lets blame capitalists and the productive classes....


"Economists" are laughing stock incompatible with any other discipline with an empirical basis. A history book and a newspaper is all it takes.

If its correct then:

No income gap in Rome.

CAT caused this already.

[santafe2]

Re: Odds of Automating

Robots are a form of capital, and I hardly consider them the main cause. In fact robots cause huge demands in skilled labor meaning a middle class is a given. It must be designed, manufactured , distributed and marketed. Robots will open up opportunities not possible before in much the same way the Internet killed the Post Office. Do we have fewer jobs because of the Net? Japan for example is well ahead of the US in robots, and their gap is much smaller than ours.

The main source of inequality is that which throws off cash in one's sleep. Monopolies always leave a surplus. Ya don't need to hire anyone. It never goes away. If it was worth something in Roman times than you can be sure land, politics, and money are behind the wealth gap. Those are the same things the wealthy are scrambling to secure now. The very wealthy are more or less parasites that cling to things that have value but are not a product of labor. Only when the wealthy happen to use their wealth for industry and venture capital is this not the case. Unfortunately most of them after a few generations are alienated from it. The dynasty created by Henry James Sr is a good example or creating two notable sons while the vast majority of them idled themselves in the leisure class. I can certainly see why they are looking for a scapegoat ,so lets blame capitalists and the productive classes....


"Economists" are laughing stock incompatible with any other discipline with an empirical basis. A history book and a newspaper is all it takes.

If its correct then:

No income gap in Rome.

CAT caused this already.

So, you disagree with the conclusion of the paper that automation will cause an overall reduction in jobs? In the idiom of the '60s, we should eat the rich and everything will be OK?...

[jpatter666]

Re: Odds of Automating

Robots are a form of capital, and I hardly consider them the main cause. In fact robots cause huge demands in skilled labor meaning a middle class is a given. It must be designed, manufactured , distributed and marketed. Robots will open up opportunities not possible before in much the same way the Internet killed the Post Office. Do we have fewer jobs because of the Net? Japan for example is well ahead of the US in robots, and their gap is much smaller than ours.

The main source of inequality is that which throws off cash in one's sleep. Monopolies always leave a surplus. Ya don't need to hire anyone. It never goes away. If it was worth something in Roman times than you can be sure land, politics, and money are behind the wealth gap. Those are the same things the wealthy are scrambling to secure now. The very wealthy are more or less parasites that cling to things that have value but are not a product of labor. Only when the wealthy happen to use their wealth for industry and venture capital is this not the case. Unfortunately most of them after a few generations are alienated from it. The dynasty created by Henry James Sr is a good example or creating two notable sons while the vast majority of them idled themselves in the leisure class. I can certainly see why they are looking for a scapegoat ,so lets blame capitalists and the productive classes....


"Economists" are laughing stock incompatible with any other discipline with an empirical basis. A history book and a newspaper is all it takes.

If its correct then:

No income gap in Rome.

CAT caused this already.

When the Roman Emperor Vespasian was shown a device that would greatly reduce the amount of labor required for construction projects he refused it saying "I must feed my poor".

Robotics are just a small portion of the technological wave displacing many of the poor and less educated -- but I expect it to dramatically increase in the next decade. Both robotics and AI are both showing every sign (IMHO) of roughly following Moore's Law (double in power every 18 months) [yeah I know that's for hardware, but you get the idea] and they are rapidly reaching the breakout level where they go well beyond simple tasks. The same thing happened in computers -- playthings, then somewhat useful, then essential business equipment -- and then this explosion where they are embedded in every part of our lives. We are somewhere between somewhat useful and essential business equipment on the curve for robotics. I'd call it mid-late 1980s in computer history.

And I think you're missing the point on your analogy on the Net. Did the Net create a bunch of jobs -- you bet. Did it destroy a bunch of jobs -- you bet (and it's not done yet). But this was to the advantage of the young and technologically savvy and wiped out many older people who could not (or would not) see the train coming right at them; where are those individuals now? And I'm not so certain the net gain in jobs was a positive number.

It used to be that you could make a good living in the US without having a college education. Now it's hard to get a good job without a college education based in the sciences or an essential service job (plumbers and mechanics for example). In some ways we are reverting to the robber-baron society of 1880s where the only people able to make it in the humanities were the children of the elite who could do it because they did not need the income.

[Woodsman]

Re: Odds of Automating

...The very wealthy are more or less parasites that cling to things that have value but are not a product of labor. Only when the wealthy happen to use their wealth for industry and venture capital is this not the case.

Ooh, snap. You done and said it now, gurl.

[don]

Re: Odds of Automating

Only when the wealthy happen to use their wealth for industry and venture capital is this not the case.

a recent case in point . . .

By DAVID GELLES

In the topsy-turvy world of private equity math, what at first glance looks like a multibillion-dollar loss can in fact be a huge gain.

Such is the case with the Blackstone Group’s investment in the Hilton hotel group, which on Thursday returned to the public stock markets.

When Blackstone took Hilton private in 2007, paying a headline-grabbing price of $26 billion, it appeared to have been badly mistimed. One of the biggest deals during the last buyout boom, it came just months before financial markets seized up and travel — and hotel bookings — fell into a prolonged slump.

And when Hilton Worldwide Holdings’ stock began trading again on Thursday, the company had a market capitalization of just $20 billion. Doing the back-of-the-envelope math, that would suggest a loss in value of $6 billion.

But in fact, Blackstone has increased the value of its investment by nearly $10 billion through a combination of lucky timing, smart financial engineering and disciplined management.

“They paid a premium price at the peak of the market,” said Robert M. La Forgia, the chief financial officer of Hilton at the time of its sale, who now runs Apertor, a hospitality consultant firm. “But they were able to ride out the downturn, a significant real estate crisis and a financial crisis, and still come back and have a successful I.P.O.”

In buying Hilton, Blackstone contributed about $5.5 billion of cash to the deal, and borrowed about $20.5 billion from big banks.

It is an arrangement not unlike that of individuals who pay for homes with a down payment in cash coupled with a large mortgage.

“When they bought Hilton for $26 billion, it was like buying a very big house,” said Steven Kaplan, a professor at the University of Chicago Booth School of Business. “And they financed it like a house, taking on debt.”

Over the next couple of years, Blackstone used profits from Hilton to pay down that debt.

Often, private equity firms will take profits and borrow additional money to pay themselves special dividends, resulting in an early windfall that hedges their risk.

But by opting against dividends, and instead paying down debt, Blackstone was slowly but surely increasing the value of its equity in the company.

Then the financial crisis hit.

Hotel visits plunged, banks got nervous and Blackstone wrote down the value of its investment by more than half. This caused the value of the banks’ debt to plummet. In 2009, it looked as if the Hilton deal could be a disaster for the ages.

But in 2010, Blackstone approached its lenders and offered to restructure the deal. Led by its global head of real estate, Jonathan Gray, Blackstone offered to buy back some of the bank debt at a discount. Some lenders received just 35 cents on the dollar.

Other lenders converted their debt into preferred equity, receiving shares to sell in an eventual I.P.O. As part of the deal, Blackstone agreed to inject more capital into the business, bringing its total equity investment to around $6.5 billion.

“It was like refinancing your mortgage when interest rates were low,” Mr. Kaplan said. “They basically paid off their debt when it was very cheap to do so, because everybody was frightened and the price of their debt went very low.”

Since then, Blackstone has continued to pay off Hilton’s lenders with profits from the business. It has also cut costs from Hilton, expanded its international strategy and focused on the more profitable franchise model.

Through the I.P.O. on Thursday, Hilton raised about $2.4 billion. Some proceeds from the I.P.O. will go toward paying down the debt further, while some of it will go to the debt investors who converted their shares into preferred equity during the restructuring in 2010. Blackstone is not selling any of its shares.

Hilton today is larger and more profitable than it was when Blackstone bought it out, and the outlook for the hotel industry is good. The company is also in sound financial shape.

Between its regular debt servicing, the restructuring in 2010 and proceeds from the I.P.O. that will be used to pay lenders, Hilton will have about $12 billion in debt, down from $20.5 billion at the time of the buyout.

“They’ve accomplished a lot through leverage,” Mr. La Forgia said. “They almost lost the company, and might have without the debt restructuring.”

On Thursday, Hilton’s first day of trading, shares were up 7.5 percent to $21.50, giving the company a market capitalization of $21.2 billion. Adding the remaining $12 billion of debt gives it an enterprise value of about $33 billion. In other words, the overall value of the business actually increased by about 27 percent.

But by aggressively paying down its debt and renegotiating with the banks at an opportune time, Blackstone’s gains have been much more substantial.

With 76 percent of the equity, Blackstone’s stake in Hilton is worth $16.1 billion. That is a profit, on paper at least, of more than $9.5 billion.

That sounds like a lot of money, but on Wall Street, everything is relative.

Mr. Kaplan of the University of Chicago said that compared to an investment in the public markets, Blackstone’s investment in Hilton has been good but not great. Since the start of 2007, the Standard & Poor’s 500 stock index is up 25 percent. Blackstone more than doubled its money.

“This is a good deal if you’re measuring it relative to the public market,” Mr. Kaplan said. “But it’s not a home run.” Other alternative investments and asset classes have performed better over the last six years.

Even against Blackstone’s internal expectations, the Hilton deal, while an enormous winner, may not tick every box. Most private equity firms aim for an annual internal rate of return of about 18 to 20 percent. Spread over six years, the investment in Hilton looks to have yielded about 16 percent for Blackstone. “If you look at it against target returns, it’s not amazing,” Mr. Kaplan said.

But with its commanding stake in a newly public Hilton, Blackstone has nonetheless engineered one of the most successful deals in the firm’s history.

“In dollars, a $10 billion profit is a lot of money,” Mr. Kaplan said. “Even to them.”

[don]

Re: Odds of Automating

initial impressions:

Seeing Blackwell take a few shots and work their way clear seemed laudatory in our FIRE-ridden environment - what, no bailouts.

I find this always of interest . . .

Most private equity firms aim for an annual internal rate of return of about 18 to 20 percent.

and the prevailing mute button response, especially in light of pensions that plan on a frequently ridiculed 7 or 8%.

oy vey

[gwynedd1]

Re: Odds of Automating

When the Roman Emperor Vespasian was shown a device that would greatly reduce the amount of labor required for construction projects he refused it saying "I must feed my poor".

Is that what he said about siege engines?

Robotics are just a small portion of the technological wave displacing many of the poor and less educated -- but I expect it to dramatically increase in the next decade. Both robotics and AI are both showing every sign (IMHO) of roughly following Moore's Law (double in power every 18 months) [yeah I know that's for hardware, but you get the idea] and they are rapidly reaching the breakout level where they go well beyond simple tasks. The same thing happened in computers -- playthings, then somewhat useful, then essential business equipment -- and then this explosion where they are embedded in every part of our lives. We are somewhere between somewhat useful and essential business equipment on the curve for robotics. I'd call it mid-late 1980s in computer history.

And I think you're missing the point on your analogy on the Net. Did the Net create a bunch of jobs -- you bet. Did it destroy a bunch of jobs -- you bet (and it's not done yet). But this was to the advantage of the young and technologically savvy and wiped out many older people who could not (or would not) see the train coming right at them; where are those individuals now? And I'm not so certain the net gain in jobs was a positive number.

I think perhaps I always miss the point of any theory lacking empirical evidence. Until I see an example, I won't believe it. Progress has never resulted in the elimination of jobs. The day I am wrong is the day everyone has a personal chef and a butler.

It used to be that you could make a good living in the US without having a college education. Now it's hard to get a good job without a college education based in the sciences or an essential service job (plumbers and mechanics for example). In some ways we are reverting to the robber-baron society of 1880s where the only people able to make it in the humanities were the children of the elite who could do it because they did not need the income.

Post hoc ergo proctor hoc fallacy.

[gwynedd1]

Re: Odds of Automating

So, you disagree with the conclusion of the paper that automation will cause an overall reduction in jobs? In the idiom of the '60s, we should eat the rich and everything will be OK?...

The rich , especially old money, does most of the eating as it is renting out what was already there. Yes I disagree. There is no historical precedent to support it and scores upon scores of ones over thousands of years that support my view of rejecting it.

[santafe2]

Re: Odds of Automating

The rich , especially old money, does most of the eating as it is renting out what was already there. Yes I disagree. There is no historical precedent to support it and scores upon scores of ones over thousands of years that support my view of rejecting it.

Let me see if I at least loosely follow your logic. A worker at the widget shop is replaced by a widget machine because it increases productivity by X. The worker, and one assumes all other workers in this area of work will have to find new areas of employment but the company will make some combination of additional profit, pay higher wages and/or will sell widgets for less money making the economy more efficient thus enabling the fired worker to find a better job in this more robust economy. The problem however is that the fat cats who don't need any more money put their additional cash derived from automation into unproductive asset classes that do not directly move the economy forward.

[suki]

Re: Odds of Automating

Both robotics and AI are both showing every sign (IMHO) of roughly following Moore's Law (double in power every 18 months) [yeah I know that's for hardware, but you get the idea] and they are rapidly reaching the breakout level where they go well beyond simple tasks.

IMHO robotics is not going to follow Moore's Law even if computing power continues to do so. I believe this because the algorithms for seeing and understanding the world must improve for robotics to improve, and they are not moving at anywhere near this rate. Where robotics will explode is in situations where an unstructured environment can be made structured. This is happening in warehousing, will happen in agriculture because incentives to do so exist, but many unstructured environments will be difficult to structure.

[jpatter666]

Re: Odds of Automating

Is that what he said about siege engines?




I think perhaps I always miss the point of any theory lacking empirical evidence. Until I see an example, I won't believe it. Progress has never resulted in the elimination of jobs. The day I am wrong is the day everyone has a personal chef and a butler.





Post hoc ergo proctor hoc fallacy.

1 ) No. It was moving large columns into Rome for a new construction project.
2 ) I've given you an argument, it's not my responsibility to find you an understanding. Re-read your answer.
3 ) See above.

[gwynedd1]

Re: Odds of Automating

Let me see if I at least loosely follow your logic. A worker at the widget shop is replaced by a widget machine because it increases productivity by X. The worker, and one assumes all other workers in this area of work will have to find new areas of employment but the company will make some combination of additional profit, pay higher wages and/or will sell widgets for less money making the economy more efficient thus enabling the fired worker to find a better job in this more robust economy. The problem however is that the fat cats who don't need any more money put their additional cash derived from automation into unproductive asset classes that do not directly move the economy forward.

Thus the cause is underlined.

And those assets are legislatively created.

See the problem with the productivity will doom us scenario , besides never having been observed, is if X is dirt cheap from automation the level of subsistence falls, which means people drop out of the labor market for one and demand for new products rises for another.