Are robots and technology behind the income gap?

[RebbePete]

Re: Airline agents and other clerks

The clerks aren't there to scan your boarding pass, although they do that.

They're there because of many other reasons:

1) Problems with the flight - communicating to passengers
2) Enforcing FAA regulations on carryons
3) Providing gate customer service (like rerouting should a flight be cancelled)
4) Enforcing boarding queues
5) Enforcing boarding security (i.e. preventing those without correct boarding passes from getting on the plane)
6) Upgrades
7) Standbys

There are many other duties a gate agent must fulfill - none of which your magic $5K scanner will.

When I used to travel, years ago when I arrived at the airport ticket desk, there were ten agents behind the counter and no kiosks. Now there are four agents and ten kiosks/scanners, so it has had an impact. Out at the gate, agents are still needed, but less, since they're going to automated boarding pass scanning at the ramp. At some point, I can imagine a high proportion of rerouting and changing flights could be done through kiosks, once the software is developed.

Same automation process is occurring at the supermarket - there used to be 12 lanes open, each one with a cashier and a bagger. First to go were the baggers, now there are 8 cashier lanes and 4 automated checkouts. I'm sure in the years to come, there will be 4 cashiers and 8 automated checkouts.

Need I mention gas stations? Remember when the attendant pumped the gas and took your money?

Then there are all the in-store sales clerks not needed because of internet commerce. Don't even try to find a human being at Amazon.

[aaron]

Re: Airline agents and other clerks

I just had to comment on this. I HATE those auto-check-outs. They suck for all but a purchase of 2 items.

I have found I am the average joe. If I hate them, a lot others do to.

I like kiosks at the airport, however. They have done it right. It is very convenient and fast. You do not have to wait in long lines.

[c1ue]

Re: Airline agents and other clerks

At some point, I can imagine a high proportion of rerouting and changing flights could be done through kiosks, once the software is developed.

I'd say that if the programming can be made robust enough to handle all the whacky and weird stuff people do/want to do, then you may be right.

From my perspective, the low hanging fruit has already been picked. Once you've computerized the fare basis, flight schedules, and loads - which has been done - the rest is getting prohibitively harder to predict and thus program for.

Same automation process is occurring at the supermarket - there used to be 12 lanes open, each one with a cashier and a bagger. First to go were the baggers, now there are 8 cashier lanes and 4 automated checkouts. I'm sure in the years to come, there will be 4 cashiers and 8 automated checkouts.

Don't forget the extra security needed to watch the automated checkouts.

And you still need someone to bring the shopping carts back from the parking lot, and/or to unlock the shopping carts that strayed past the 'zone' and had their wheels frozen, and to help the less physically fit move bags of groceries, etc etc.

Need I mention gas stations? Remember when the attendant pumped the gas and took your money?

The primary reason we don't see these types of jobs anymore isn't because of automation. It is because the cost of employing a person is so high. And that cost is so high due to FIRE as much as 1st world wealth. In Japan, for example, they still have gas station attendants.

Then there are all the in-store sales clerks not needed because of internet commerce. Don't even try to find a human being at Amazon.

While I do think Amazon provides value, at the same time we're about to find out just how much of Amazon's sales are due to the sales tax avoidance rather than their other services.

I just had to comment on this. I HATE those auto-check-outs. They suck for all but a purchase of 2 items.

I actually like them - but only because I can go at my own pace and see if all my discounts were credited. In a line, I'll suck it up more often than not so that I don't slow down things for everyone else.

I like kiosks at the airport, however. They have done it right. It is very convenient and fast. You do not have to wait in long lines.

Sure, we've replaced the lines at the checkin counter with the much longer lines at the security kiosk.

[DSpencer]

Re: Airline agents and other clerks

"But rather than our subsidising those who have lost jobs to technology, so as to spread that manna wealth that’s literally dropped onto the surface of the earth at no-one’s physical disadvantage, companies are using monopoly power to extort rents on the capital that is creating all that free wealth."

Since when does manna wealth drop onto the surface of the earth? Does this person think technology creates itself? Capital creating free wealth?

This is absurd.

[shiny!]

Re: Airline agents and other clerks

Same automation process is occurring at the supermarket - there used to be 12 lanes open, each one with a cashier and a bagger. First to go were the baggers, now there are 8 cashier lanes and 4 automated checkouts. I'm sure in the years to come, there will be 4 cashiers and 8 automated checkouts.

I do most of my grocery shopping at Albertson's because they got rid of the automated checkouts and went back to using real live human beings. They also don't require those special cards to get sale prices. I hate those things. Use them in conjunction with a debit card and your purchases are tracked. Fry's, OTOH, keeps increasing their automated checkout lanes and requires the cards to get the discounts.

[jpatter666]

Re: Airline agents and other clerks

There are certainly cases where I completely approve of the technology.

ATMs -- probably 80-90% of transactions were simply to get cash. Now you can do this nearly worldwide at any time.
Gas pumps -- I *hated* having to wait in line to pay for gas
Toll transponders -- saves me waiting in line (most of the time) and frantically digging in the seat for a quarter (stopped quarter hoarding as well)

[aaron]

Re: Airline agents and other clerks

Wow, the Albertson's here did not get the memo. Prices are cheaper than elsewhere, but at some point it is not worth it.
They still have 1 or 2 lanes with real people.

The problem with the automated system is that it is designed to prevent theft, not for usability. If you do not put your bag in the right place, with the right weight, then it will yell at you. Got a lot of items? They will not fit in the collection area. You will need approval to continue after you make space. Want wine or cigs? That will also involve a wait for somebody to walk over and "approve" you.

[don]

Odds of Automating

There’s plenty of data on unemployment rates and salaries by undergraduate major (the majors with the lowest unemployment rates and highest salaries: computer, chemical, electrical, civil and mechanical engineering; math/physics; and economics. Drama and film majors are a recipe for living at home). A more important long-run issue to think about may be how technology affects your career. Researchers at Oxford just published an analysis assessing what jobs might be computerized in the future. Their conclusion: a staggering 47% of the US workforce, spanning a range of career types. There are vigorous debates about outsourcing, but increasingly, computerization may grow as a factor affecting employment conditions.

In The Man in the White Suit, Alec Guinness invents a suit that never has to be cleaned or replaced. London’s tailors and dry cleaners angrily chase him down in the street to destroy his invention. They are relieved when the suit finally starts to unravel, since the fiber’s design is flawed. Productivity improvements are great things, but there might be a point at which too much power shifts to capital over labor. Anyway, when you think about a career, remember that in some professions, eventually a computer might be able to do it too, or reduce the economic value of you doing it (e.g., the impact of the internet on print journalism).

JPM

[RebbePete]

Re: Odds of Automating

That graph, taken out of context, is a lot of pretty colors, signifying... ???

Here's a link to the original report that's referenced, with pages of explanation of that one graph.

From the report:

According to our estimate, 47 percent of total US employment is in the high risk category, meaning that associated occupations are potentially automatable over some unspecified number of years, perhaps a decade or two. It shall be noted that the probability axis can be seen as a rough timeline, where high probability occupations are likely to be substituted by computer capital relatively soon. Over the next decades, the extent of computerisation will be determined by the pace at which the above described engineering bottlenecks to automation can be overcome. Seen from this perspective, our findings could be interpreted as two waves of computerisation, separated by a “technological plateau”. In the first wave, we find that most workers in transportation and logistics occupations, together with the bulk of office and administrative support workers, and labour in production occupations, are likely to be substituted by computer capital. As computerised cars are already being developed and the declining cost of sensors makes augmenting vehicles with advanced sensors increasingly cost-effective, the automation of transportation and logistics occupations is inline with the technological developments documented in the literature. Furthermore, algorithms for big data are already rapidly entering domains reliant upon storing or accessing information, making it equally intuitive that office and administrative support occupations will be subject to computerisation. The computerisation of production occupations simply suggests a continuation of a trend that has been observed over the past decades, with industrial robots taking on the routine tasks of most operatives in manufacturing. As industrial robots are becoming more advanced, with enhanced senses and dexterity, they will be able to perform a wider scope of non-routine manual tasks. From a technological capabilities point of view, the vast remainder of employment in production occupations is thus likely to diminish over the next decades.

More surprising, at first sight, is that a substantial share of employment in services, sales and construction occupations exhibit high probabilities of computerisation. Yet these findings are largely in line with recent documented technological developments. First, the market for personal and household service robots is already growing by about 20 percent annually (MGI, 2013). As the comparative advantage of human labour in tasks involving mobility and dexterity will diminish over time, the pace of labour substitution in service occupations is likely to increase even further. Second, while it seems counterintuitive that sales occupations, which are likely to require a high degree of social intelligence, will be subject to a wave of computerisation in the near future, high risk sales occupations include, for example, cashiers, counter and rental clerks, and telemarketers. Although these occupations involve interactive tasks, they do not necessarily require a high degree of social intelligence. Our model thus seems to do well in distinguishing between individual occupations within occupational categories. Third, prefabrication will allow a growing share of construction work to be performed under controlled conditions in factories, which partly eliminates task variability. This trend is likely to drive the computerisation of construction work

[santafe2]

Re: Airline agents and other clerks

There are certainly cases where I completely approve of the technology.

ATMs -- probably 80-90% of transactions were simply to get cash. Now you can do this nearly worldwide at any time.
Gas pumps -- I *hated* having to wait in line to pay for gas
Toll transponders -- saves me waiting in line (most of the time) and frantically digging in the seat for a quarter (stopped quarter hoarding as well)

Many non-human, automated transactions are much better but not all...yet. Buying a hammer at Home Depot +1, apples at the grocery store, not so much but that won't last forever. Offshoring might be currently in the spotlight but automation/robotics will make many/most current jobs go away this century. Thanks to RebbePete for publishing a link to the original Frey & Osborne paper, much appreciated.

[thriftyandboringinohio]

Re: Airline pay

The point I was aiming at was IMHO nonsense patents -- like Apple's rounded corners on a cell phone (might be wrong, but I think that was one....)

REALLY? Patentable?

Those are almost certainly "design patents" as opposed to "utility patents".

A design patent protects the decorative appearance of your product.
They protect you from competitors springing up and offering a look-alike product that steals your market share and ruins your reputation.

Wikipedia shows that the original shape of the Coca-Cola bottle had a design patent number D48,160


This protection is pretty important.
In the late 1800's, IBM was trying to enter the market for mechanical cash registers, but NCR was first to market and dominated.
IBM manufactured fake NCR cash registers that were intentionally awful quality and guaranteed to fail quickly.
IBM sold them cheaply around the mid west claiming to be NCR salesmen.
As planned, the cash registers broke down quickly and angered shop owners.

When the IBM salesmen came around the following few years, all those shop owners gladly bought IBM cash registers, and NCR was suddenly facing a horrible reputation for making and selling junk.

[santafe2]

Re: Odds of Automating

That graph, taken out of context, is a lot of pretty colors, signifying... ???

Here's a link to the original report that's referenced, with pages of explanation of that one graph.

From the report:

For those who have no intention of reading the paper, here's a list of jobs most likely to go the way of the milkman. The least likely group is also interesting as many require direct interaction with other humans. The top 1% is almost exclusively in this area of work. Like #4...Mental Health and Substance Abuse Social Workers. That sounds like a growth area.

532. 0.9 1 43-4161 Human Resources Assistants, Except Payroll and Timekeeping
533. 0.9 29-2011 Medical and Clinical Laboratory Technologists
534. 0.9 47-2171 Reinforcing Iron and Rebar Workers
535. 0.9 47-2181 Roofers
536. 0.9 53-7021 Crane and Tower Operators
537. 0.9 53-6041 Traffic Technicians
538. 0.9 53-6051 Transportation Inspectors
539. 0.9 51-4062 Patternmakers, Metal and Plastic
540. 0.9 51-9195 Molders, Shapers, and Casters, Except Metal and Plastic
541. 0.9 13-2021 Appraisers and Assessors of Real Estate
542. 0.9 53-7072 Pump Operators, Except Wellhead Pumpers
543. 0.9 49-9097 Signal and Track Switch Repairers
544. 0.91 39-3012 Gaming and Sports Book Writers and Runners
545. 0.91 49-9063 Musical Instrument Repairers and Tuners
546. 0.91 39-7011 Tour Guides and Escorts
547. 0.91 49-9011 Mechanical Door Repairers
548. 0.91 51-3091 Food and Tobacco Roasting, Baking, and Drying Machine Operators and Tenders
549. 0.91 53-7071 Gas Compressor and Gas Pumping Station Operators
550. 0.91 29-2071 Medical Records and Health Information Technicians
551. 0.91 51-9121 Coating, Painting, and Spraying Machine Setters, Operators, and Tenders
552. 0.91 51-4081 Multiple Machine Tool Setters, Operators, and Tenders,Metal and Plastic
553. 0.91 53-4013 Rail Yard Engineers, Dinkey Operators, and Hostlers
554. 0.91 49-2093 Electrical and Electronics Installers and Repairers, Transportation Equipment
555. 0.91 35-9011 Dining Room and Cafeteria Attendants and Bartender Helpers
556. 0.91 51-4191 Heat Treating Equipment Setters, Operators, and Tenders, Metal and Plastic
557. 0.91 19-4041 Geological and Petroleum Technicians
558. 0.91 49-3021 Automotive Body and Related Repairers
559. 0.91 51-7032 Patternmakers, Wood
560. 0.91 51-4021 Extruding and Drawing Machine Setters, Operators, and Tenders,Metal and Plastic
561. 0.92 43-9071 Office Machine Operators, Except Computer
562. 0.92 29-2052 Pharmacy Technicians
563. 0.92 43-4131 Loan Interviewers and Clerks
564. 0.92 53-7031 Dredge Operators
565. 0.92 41-3021 Insurance Sales Agents
566. 0.92 51-7011 Cabinetmakers and Bench Carpenters
567. 0.92 51-9123 Painting, Coating, and Decorating Workers
568. 0.92 47-4031 Fence Erectors
569. 0.92 51-4193 Plating and Coating Machine Setters, Operators, and Tenders, Metal and Plastic
570. 0.92 41-2031 Retail Salespersons
571. 0.92 35-3021 Combined Food Preparation and Serving Workers, Including Fast Food
572. 0.92 51-9399 Production Workers, All Other
573. 0.92 47-3012 Helpers–Carpenters
574. 0.93 51-9193 Cooling and Freezing Equipment Operators and Tenders
575. 0.93 51-2091 Fiberglass Laminators and Fabricators
576. 0.93 47-5013 Service Unit Operators, Oil, Gas, and Mining
577. 0.93 53-7011 Conveyor Operators and Tenders
578. 0.93 49-3053 Outdoor Power Equipment and Other Small Engine Mechanics
579. 0.93 53-4012 Locomotive Firers
580. 0.93 53-7063 Machine Feeders and Offbearers
581. 0.93 51-4061 Model Makers, Metal and Plastic
582. 0.93 49-2021 Radio, Cellular, and Tower Equipment Installers and Repairs
583. 0.93 51-3021 Butchers and Meat Cutters
584. 0.93 51-9041 Extruding, Forming, Pressing, and Compacting Machine Setters, Operators, and Tenders
585. 0.93 53-7081 Refuse and Recyclable Material Collectors
586. 0.93 1 13-2081 Tax Examiners and Collectors, and Revenue Agents
587. 0.93 51-4022 Forging Machine Setters, Operators, and Tenders, Metal and Plastic
588. 0.93 1 53-7051 Industrial Truck and Tractor Operators
589. 0.94 1 13-2011 Accountants and Auditors
590. 0.94 51-4032 Drilling and Boring Machine Tool Setters, Operators, and Tenders, Metal and Plastic
591. 0.94 43-9051 Mail Clerks and Mail Machine Operators, Except Postal Service
592. 0.94 0 35-3031 Waiters and Waitresses
593. 0.94 51-3022 Meat, Poultry, and Fish Cutters and Trimmers
594. 0.94 13-2031 Budget Analysts
595. 0.94 47-2051 Cement Masons and Concrete Finishers
596. 0.94 49-3091 Bicycle Repairers
597. 0.94 49-9091 Coin, Vending, and Amusement Machine Servicers and Repairers
598. 0.94 51-4121 Welders, Cutters, Solderers, and Brazers
599. 0.94 1 43-5021 Couriers and Messengers
600. 0.94 43-4111 Interviewers, Except Eligibility and Loan
601. 0.94 35-2015 Cooks, Short Order
602. 0.94 53-7032 Excavating and Loading Machine and Dragline Operators
603. 0.94 47-3014 Helpers–Painters, Paperhangers, Plasterers, and Stucco Masons
604. 0.94 43-4081 Hotel, Motel, and Resort Desk Clerks
605. 0.94 51-9197 Tire Builders
606. 0.94 41-9091 Door-to-Door Sales Workers, News and Street Vendors, and Related Workers
607. 0.94 37-1011 First-Line Supervisors of Housekeeping and Janitorial Workers
608. 0.94 45-2011 Agricultural Inspectors
609. 0.94 1 23-2011 Paralegals and Legal Assistants
610. 0.95 39-5092 Manicurists and Pedicurists
611. 0.95 43-5111 Weighers, Measurers, Checkers, and Samplers, Recordkeeping
612. 0.95 51-6062 Textile Cutting Machine Setters, Operators, and Tenders
613. 0.95 43-3011 Bill and Account Collectors
614. 0.95 51-8011 Nuclear Power Reactor Operators
615. 0.95 33-9031 Gaming Surveillance Officers and Gaming Investigators
616. 0.95 43-4121 Library Assistants, Clerical
617. 0.95 47-2073 Operating Engineers and Other Construction Equipment Operators
618. 0.95 51-5113 Print Binding and Finishing Workers
619. 0.95 45-2021 Animal Breeders
620. 0.95 51-4072 Molding, Coremaking, and Casting Machine Setters, Operators, and Tenders, Metal and Plastic
621. 0.95 1 51-2022 Electrical and Electronic Equipment Assemblers
622. 0.95 51-9191 Adhesive Bonding Machine Operators and Tenders
623. 0.95 37-3011 Landscaping and Groundskeeping Workers
624. 0.95 51-4033 Grinding, Lapping, Polishing, and Buffing Machine Tool Setters, Operators, and Tenders, Metal and Plastic
625. 0.95 43-5051 Postal Service Clerks
626. 0.95 51-9071 Jewelers and Precious Stone and Metal Workers
627. 0.96 43-5032 Dispatchers, Except Police, Fire, and Ambulance
628. 0.96 43-4171 Receptionists and Information Clerks
629. 0.96 43-9061 Office Clerks, General
630. 0.96 11-3111 Compensation and Benefits Managers
631. 0.96 1 43-2011 Switchboard Operators, Including Answering Service
632. 0.96 35-3022 Counter Attendants, Cafeteria, Food Concession, and Coffee Shop
633. 0.96 47-5051 Rock Splitters, Quarry
634. 0.96 43-6014 Secretaries and Administrative Assistants, Except Legal, Medical, and Executive
635. 0.96 17-3031 Surveying and Mapping Technicians
636. 0.96 51-7031 Model Makers, Wood
637. 0.96 51-6064 Textile Winding, Twisting, and Drawing Out Machine Setters, Operators, and Tenders
638. 0.96 53-4011 Locomotive Engineers
639. 0.96 1 39-3011 Gaming Dealers
640. 0.96 49-9093 Fabric Menders, Except Garment
641. 0.96 35-2014 Cooks, Restaurant
642. 0.96 39-3031 Ushers, Lobby Attendants, and Ticket Takers
643. 0.96 43-3021 Billing and Posting Clerks
644. 0.97 53-6011 Bridge and Lock Tenders
645. 0.97 51-7042 Woodworking Machine Setters, Operators, and Tenders, Except Sawing
646. 0.97 51-2092 Team Assemblers
647. 0.97 51-6042 Shoe Machine Operators and Tenders
648. 0.97 51-2023 Electromechanical Equipment Assemblers
649. 0.97 1 13-1074 Farm Labor Contractors
650. 0.97 51-6061 Textile Bleaching and Dyeing Machine Operators and Tenders
651. 0.97 51-9081 Dental Laboratory Technicians
652. 0.97 51-9021 Crushing, Grinding, and Polishing Machine Setters, Operators, and Tenders
653. 0.97 51-9022 Grinding and Polishing Workers, Hand
654. 0.97 37-3012 Pesticide Handlers, Sprayers, and Applicators, Vegetation
655. 0.97 45-4023 Log Graders and Scalers
656. 0.97 51-9083 Ophthalmic Laboratory Technicians
657. 0.97 1 41-2011 Cashiers
658. 0.97 49-9061 Camera and Photographic Equipment Repairers
659. 0.97 39-3021 Motion Picture Projectionists
660. 0.97 51-5111 Prepress Technicians and Workers
661. 0.97 41-2021 Counter and Rental Clerks
662. 0.97 1 43-4071 File Clerks
663. 0.97 41-9021 Real Estate Brokers
664. 0.97 43-2021 Telephone Operators
665. 0.97 19-4011 Agricultural and Food Science Technicians
666. 0.97 43-3051 Payroll and Timekeeping Clerks
667. 0.97 1 43-4041 Credit Authorizers, Checkers, and Clerks
668. 0.97 35-9031 Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop
669. 0.98 41-9012 Models
670. 0.98 51-9061 Inspectors, Testers, Sorters, Samplers, and Weighers
671. 0.98 43-3031 Bookkeeping, Accounting, and Auditing Clerks
672. 0.98 43-6012 Legal Secretaries
673. 0.98 27-4013 Radio Operators
674. 0.98 53-3031 Driver/Sales Workers
675. 0.98 1 13-1031 Claims Adjusters, Examiners, and Investigators
676. 0.98 41-2022 Parts Salespersons
677. 0.98 1 13-2041 Credit Analysts
678. 0.98 51-4035 Milling and Planning Machine Setters, Operators, and Tenders, Metal and Plastic
679. 0.98 43-5071 Shipping, Receiving, and Traffic Clerks
680. 0.98 43-3061 Procurement Clerks
681. 0.98 51-9111 Packaging and Filling Machine Operators and Tenders
682. 0.98 51-9194 Etchers and Engravers
683. 0.98 43-3071 Tellers
684. 0.98 27-2023 Umpires, Referees, and Other Sports Officials
685. 0.98 13-1032 Insurance Appraisers, Auto Damage
686. 0.98 1 13-2072 Loan Officers
687. 0.98 43-4151 Order Clerks
688. 0.98 43-4011 Brokerage Clerks
689. 0.98 43-9041 Insurance Claims and Policy Processing Clerks
690. 0.98 51-2093 Timing Device Assemblers and Adjusters
691. 0.99 1 43-9021 Data Entry Keyers
692. 0.99 25-4031 Library Technicians
693. 0.99 43-4141 New Accounts Clerks
694. 0.99 51-9151 Photographic Process Workers and Processing Machine Operators
695. 0.99 13-2082 Tax Preparers
696. 0.99 43-5011 Cargo and Freight Agents
697. 0.99 49-9064 Watch Repairers
698. 0.99 1 13-2053 Insurance Underwriters
699. 0.99 15-2091 Mathematical Technicians
700. 0.99 51-6051 Sewers, Hand
701. 0.99 23-2093 Title Examiners, Abstractors, and Searchers
702. 0.99 41-9041 Telemarketers

[jiimbergin]

Re: Odds of Automating

The ranking of the insurance underwriters is interesting. At least one company have done away with underwriting! They take the agent's word that what is on the application is correct. Then after the fact, they check the agents block of business and find the agents that don't know what they are doing or even more often crooked. The agent then is usually fired and the manager above him is reprimanded or if there are many agents under him/her that have a bad record,
is also fired. I find this a bit odd based on my 32 years in various insurance companies (life and health and annuities, not casualty). I know the loss ratio has gotten much higher, but they must believe it is offset by the reduction in cost of underwriting.

[Woodsman]

Re: Odds of Automating

For those who have no intention of reading the paper, here's a list of jobs most likely to go the way of the milkman...

Of course, Economists are safe as kittens.

Those occupations used as training data are labelled as either ‘0’ (not computerisable) or ‘1’ (computerisable), respectively....
.
.
.
282. 0.43 0 19-3011 Economists

There is hope, only not for us.

[don]

Re: Odds of Automating

Of course, Economists are safe as kittens.

Speaking of economists, thought you might enjoy this one, Woodsman . . .

Radical Lefties All : Obama, Bernanke, Etc.


(Noureddine Krichene is an economist with a PhD from UCLA)

President Barack Obama recently stated that his highest priority is closing the income gap in the United States. Implicitly, he is admitting that his policies have hurt employed workers. Five years into his presidency, living standards in 2013 are far worse than in 2008.

Obama and US socialists aim at perfect income equality. The fervent communist belief in equality has incriminated the "bourgeois" salary earners and damaged wage earners exploited by the "bourgeois".

A vast amount of communist literature has been produced since early the 19th century. In a nutshell, communist writers and leaders determined that the only model to produce income equality is to turn every citizen into a "proletaire" and create a "proletariat" class. The state confiscates all private property, including land, shops, and factories, and exterminates the "bourgeoisie". Any form of private property will lead to capital accumulation, profit, and income inequality; consequently, it should be outlawed. This revolutionary model was applied literally in many countries, notably in the former USSR, across Eastern Europe, China, Cuba, North Korea, and Vietnam, and even in Angola, Ethiopia and Mozambique.

Needless to say, millions of people perished in every communist revolution; millions fled as all property was confiscated by the state and a central planning agency managed every single decision in the economy. After decades of suffering, many communist countries reverted to capitalism and tolerated the law of nature - that is, "income inequality". Communist revolutions turned out to be futile. Nature decided that Utopia cannot become reality, and attempting to establish Utopia leads only to disaster.

Obama can learn how futile "income equality" was by hiring Russian or Chinese experts to narrate to him the suffering their countries experienced under the ideologies of Lenin and Mao. If Obama and the socialists consider wealth and an income gap as a crime, then let them set the example by surrendering their wealth to the state and accept a wage equal to that of the lowest paid worker. (Nobel Prize winner Aleksandr Solzhenitsyn (1918-2008), showed how the state leaders enjoyed tremendous wealth and the "proletaires" shared equally in misery.

If a farmer strives to produce 100 tons of tomatoes, 10 tons of meat, and 100 tons of corn, the state should not force him to produce nothing and sit idle; yet, if he goes ahead, he will produce wealth and inequality. If an entrepreneur constructs a plant to produce medical machines, the state should not order him to construct no plant and sit idle; yet, again, if he goes ahead, he will create wealth and inequality.

Likewise, the state should not close down the dentist’s office because he is creating income inequality. Nor should the state outlaw innovations and research just because they lead to new products and therefore income inequality.

Franz Oppenheimer, in his book The State (1922), maintained that man earns his income in one of the two ways: (i) through economic means that involve production and exchange; or (ii) through political means that involve confiscation and counterfeit of money. In (i), the producer of computers earns a car through exchanging computers for a car; in (ii), a person earns state subsidies or a car against nothing.

As long as earning wealth and income is through labor, sacrifice, and risk-taking, then there can be no objection to such gains. If income is earned through confiscation, there is an objection to such gain. Contrary to socialist belief, income inequality reflects growth; it is not a sin if wealth is created and not confiscated.

Neoclassical theory stipulates that income distribution reflects the respective marginal products of labor and capital. It becomes inequitable only if the state distorts it through corrupt policies. For instance, debtors get free wealth when they default; or speculators earn huge wealth thanks to zero-interest loans.

Poverty is a relative concept. Certainly, a poor person in the United States in 2013 is far better off than most wealthy people one century ago. He has safe drinking water, electricity instead of candles, far better medical services and effective and cheap medication; he may have a car - even two; he has a mobile phone and can Skype, for free, anywhere and at any time with his acquaintances anywhere in the world; he can travel from one continent to another inexpensively in a few hours. All these amenities were not available a century ago.

We must distinguish between social policies that are just and make everyone in society better off, and social policies that are detrimental and benefit wrongly beneficiaries at the expense of those who pay for those benefits. Social policies that provide free education, health, and infrastructure profit the poor as well as the rest of the society. The poor gain when their children become doctors, engineers, entrepreneurs, or when they have access to safe water, electricity, and roads.

State social policies that provide undeservedly lifetime food stamps, disability benefits to able people, unemployment benefits, free housing, and free-loans are unjust. They institutionalize unemployment, deprive millions of workers of part of their earnings, and deplete the capital and the productive capacity of the country.

If the chieftain in a village decrees that all his subjects receive free food, then everyone will applaud the chieftain; however, in a short time the entire village will starve simply because that decision, no matter how politically laudable, is against the law of nature.

President Obama and labor leaders in the US have recently reiterated calls for high wage increments. It is an obvious fact that workers' real incomes has fallen too much since 2000, while prices of essentials have risen steeply. For instance, gasoline, which cost $0.50-$0.60 a gallon in 1999, averaged about $4.30 in 2012; meat, cooking oil, eggs, fruit, vegetables and so forth are at least three times their level in 2000. Housing and property taxes are far more expensive. The Fed ignores totally this exorbitant inflation.

This fall in real income is an inescapable result of very costly wars waged by the US in recent years and Obama’s record fiscal deficits. The corrupt inflationary policies of Federal Reserve chairman Alan Greenspan and his successor, Ben Bernanke, caused huge credit expansion and immense wealth and income redistribution in favor of debtors, speculators, and recipients of government doles, at the expense of an employed worker. The Fed has been robbing workers for long time now. There is a heavy inflation tax and forced saving on employed workers who have no choice except consume much less in 2013 than in 2000.

The tremendous loss in real incomes, no matter how unfair that is, should not be repaired by a general increase in nominal wage rates. Nominal wages have to be set in the labor market according to demand and supply only. A government-decreed increase in nominal wages is an anti-market and distortive measure.

Experience everywhere shows that nominal wage increase will lead to very fast inflation, a wage-price spiral, a drop in real wages, and high unemployment. A nominal wage increase is instantaneously reflected in prices and transmitted to wage earners. The only way to restore a loss in purchasing power is reduce the fiscal deficit, remove government price distortions, expand production, and lower prices.

This cannot be achieved if the Fed keeps robbing workers through inflating prices with extremely loose monetary policy. To compel producers to invest and produce more, money has to be expensive. For instance, one orange in 2013 costs $1 compared with $0.05 in 2000. The producer previously had to sell 20 oranges to make one dollar of revenue; now he sells only one orange to make the same revenue. The cheaper money is, the stronger will be the fall in orange output since producers can generate much higher revenues with far less production.

The same principle applies to all producers. In hyper-inflation, producers sell nothing against worthless money. If money becomes expensive, the only way to generate higher revenue is through higher output and lower prices. Such was Ronald Reagan's policy. It removed inflation and brought about sustained prosperity.

The utmost priority for repairing the loss in purchasing power is to reduce the fiscal deficit by cutting unproductive expenditure and force the Fed to stop printing money and fixing interest rates. Any other policies, such as increasing nominal wage rates, increasing taxes and transfers, and increasing free loans will only destroy economic growth and impoverish workers.

The US has moved too far to the left, yet is impossible to persuade doctrinaires such as Obama, Bernanke, and other socialists to change policies no matter how penalizing for workers these policies are.

The 2008 financial crisis failed to dissuaded the Fed to renounce its cheap money policy. The Fed merely ignored any financial risk and responded with the cheapest money policy in US history and forced near-zero interest rates as required by communism.

Obama will never let interest rates rise nor will he restrain his wasteful spending. He does not and will not understand that his reckless fiscal deficits have robbed the employed worker; nor does he understand that the Fed spent the last decade robbing the employed worker.

With labor agitation underway and Obama’s strong quest for income equality and redistribution, wages, after lagging for so many years, will race upwards. The Fed will seize the opportunity to inflate more. A wage-price spiral is very likely. The dollar will keep falling rapidly, creating instability everywhere in the world, and a currency war.

Obama’s presidency may end up in sheer economic and financial disorder and severe impoverishment much worse than witnessed under the George W Bush Administration.