Friday, June 24, 2016

Driverless Cars in America: Will the Technology Outstrip Everything Else?

It’s been seven months since my last post on self-driving automobiles.  Normally, that’s too short a time to tackle the subject again even for many technical propositions, but this one has been zooming along like a Ferrari.  Since November, a mass of work, most being completely proprietary to the software companies, automakers, and electronics firms doing it, has been finished.  The otherwise beleaguered gypsy cab companies Lyft and then Uber have been working with Ford and General Motors toward offering driverless taxis.  Microsoft and Alphabet, Google’s parent company, have made their like ambitions public.  An elaborate artificial city section in Ann Arbor, Michigan, complete with storefront facades, 13 different traffic light varieties, expressway ramps, and parking meters, is being used by at least five world-class car manufacturers to test their autonomous products, and others are under construction in Ypsilanti, California, and Virginia.  There has been an outpouring of articles, ranging from Neal E. Boudette’s New York Times “5 Things That Give Self-Driving Cars Headaches” to one of course much better than the grammar of its headline, “As a senior citizen, a self-driving car will be my godsend,” in the Washington Post, and on to attempts to find the best related investment targets.  There is also a subtopic taking form about driverless large trucks, with many companies seeing them as a way of resolving their long-standing driver shortages without sufficiently raising pay. 

Although it is impossible to even decently estimate the amount of money and person-hours currently going toward this effort, it is crystal-clear that by 2020 or so such technology will be usable for ordinary consumers.  That, though, will prove to be its least limiting factor.    

The largest sticking point is the lack of a suitable environment.  At the least, places allowing driverless vehicles will need large-scale Wi-Fi, for the constant communication with online facilities these cars and trucks will require.  Citywide or better still statewide or nationwide wireless connectivity, built robustly and redundantly enough to make outages almost nonexistent, is the best way of dealing with potholes (located precisely through GPS), poor visibility on snowy roads (through detailed maps), and detours (with up-to-the-minute rerouting instructions).  Unfortunately, that is exactly the kind of infrastructure project that Congress has refused to fund.  Ultimately, only countries willing to build such a network will be able to fully implement driverless technology.  

There is a set of additional problems which might be described as barriers to mentality.  The first is one of the five headaches in Boudette’s story, described as “ethics on the road.”  One example he poses is a ball, followed by children, bouncing into the car’s path, giving it no choices beyond hitting the ball’s pursuers or crashing into something on the side of the road and endangering its occupants.  In this and many other situations, some people will lose and others will be spared, and there will be no human driver to explain his or her actions, only computer code with unknown originators.  Another is bizarre accidents rare but not unheard of, which will kill people before they are programmatically forestalled.  A third problem is one more from Boudette, “unpredictable humans,” which may never be eliminated.  (Could a modern-day superbly maintained bullet train driven on its immaculate track by a completely sober, prudent, and experienced engineer avoid tragedy when a person, suicidal or otherwise, somehow appears, say, 130 feet directly in front of it, or half a second away at its 180 miles per hour?)  The fourth issue concerns autonomous 18-wheel trucks, of which many people will, even if mishap rates are microscopic, be terrified.  Although it is clear that driverless vehicles will prove vastly less dangerous than human-driven ones, resistance to the accidents they will have, many of which would not take place if they were manually driven, will still be at least a temporary problem. 

What are the chances that we can overcome the concerns above?  How might self-driving technology be implemented in stages?  What else will happen with and around it?  These will be the subjects of next week’s post.  

Friday, June 17, 2016

Guaranteed Income, an Idea with Plenty of Merit, Returns to the News

There are few comprehensive possible solutions to the permanent jobs crisis caused mostly by automation, globalization, efficiency, and the exclusively one-way movement of these trends.  Three of the only four I have seen that could remove the problem completely are reduced working hours, assured government jobs, and a system of payments for providing electronic content.  The fourth is a guaranteed citizen’s income.

I wrote favorably about such a thing in a November 2014 post, and analyzed it in detail in Work’s New Age Chapter 8, so I will be brief about introducing it.  It has a long, honorable place in American political thought, with advocates on both the left (Bertrand Russell and John Kenneth Galbraith) and the right (Thomas Paine and Milton Friedman), since it offers not only the ultimate in social security but a minimum of government involvement.  Similar programs, from Alaska’s annual dividend to the national Earned Income Credit, have succeeded.  Its conceptual appeal rests on two facts:  that functioning markets not only require sellers but buyers, who must have money from somewhere; and that, although we have replaced jobs in extraction areas such as farming, fishing and mining with manufacturing ones, and in turn exchanged those for ones in services, we know of no paying employment that will replace endangered and disappearing jobs there.  To qualify as guaranteed income, as opposed to welfare, federal governments must provide money to all adult citizens, regardless of how much they earn from other sources.  Its largest obstacle is, of course, its cost.

After years of only occasional mention, guaranteed income – also called a “basic income” – has made the pages of The New York Times, The Economist, Financial Times, and elsewhere.  The impetus was probably Switzerland’s June 5 referendum, in which automatic monthly payments of SFR2500 and SFR625 in their currency almost at par with the U.S. dollar would have been made to each citizen adult and citizen child respectively.  Only 23% voted in favor of it, but its supporters expressed delight at that percentage being so high. 

In the wake of the Swiss plebiscite, commentators made several points about guaranteed income, with varying amounts of merit.  They suggested that it would cause reduced motivation for working, which is correct, but that would be held to a favorable level, reducing demand for work to something approximating the number of jobs available, if the stipend amounts were more like the $10,000 I have recommended instead of the too-high $30,000+ on which the Swiss voted, which would mean that people would need other sources of money if they wanted, for example, cars and sit-down restaurant meals.  (Interestingly, only 2% of Swiss citizens surveyed thought even the amount on which they voted would cause them to leave their jobs, but one-third thought others would do that – I suspect that Americans have the same perception gap.)

Writers also mentioned, as one put it, the problem of losing “the centrality of paid work to the way people live.”  That would be a more valid concern if it were not happening already, and there were fewer than the current 94 million not in the labor force at all.  The idea that the market, or “capitalism” in one commentator’s words, has always provided new jobs and so will continue to do that is also weak, since the only positions beyond extraction, manufacturing, and services are unpaid.  And it silly to suggest, as two did, that there would be a “stigma” about getting money every American would receive.

Three things from recent articles were more worthwhile.  The first was a chart in The Economist’s June 4th “Sighing for paradise to come,” a fine comprehensive piece despite its misleading title.  It showed how much money 12 different developed countries were now spending annually per person on social, non-health-care programs.  That, a starting point for funds redirectable to guaranteed income, showed that Denmark and Norway were highest at $10,900 and $10,700, with Sweden, Finland, and France also over $9,000 and Germany at $8,300.  The United States came in at $6,000, still a large amount and higher than Japan, Australia, New Zealand, and Canada.  I have seen little before about two other concerns mentioned, that such redistribution, since it would benefit those with high incomes along with others, would be regressive, and that it would be incompatible with either open borders or with all residents receiving equal treatment.  Those may actually be good things, but are worthy of continuing discussion.

So where is the idea of guaranteed income going from here? Brazil, Canada, the Netherlands, and even India are now running small-scale experimental rollouts on it.  In Finland, 10,000 adults will receive 550 euros per month, or about $7,500 annually, for two years, toward possible national implementation.  It is hardly unthinkable that Switzerland might try another vote with a lower amount.  Two sources of increased American taxes worthy of consideration would be higher ones on estates, mentioned by Eduardo Porter in The New York Times, and a levy on financial transactions.  Both would affect those in the higher income brackets the most, paying for much of the stipends going to their economic peers.  Charles Murray, a nationally-known conservative author and commentator who has written before on basic income, is scheduled to soon publish an update to his previously released plan to provide $10,000 to each American 21 or over without increasing any taxes.

Overall, though, the bottom line is that it is premature to implement a guaranteed income in the United States.  There are still 151 million Americans employed, which, though decreasing as a percentage, is only doing so slowly.  That, though, is not the same as saying we should not be talking about it or even planning for it.  Perceptions can move at glacial paces, and this one may go from radical to necessary as soon as a couple of presidents from now.  “Forewarned is forearmed” is an ancient proverb for a reason, and dealing with guaranteed income before it is needed will prove to be one more example.          

Friday, June 10, 2016

Another Result of the Permanent Jobs Crisis: The Middle Class, As We Know It, Will Continue to Dwindle

Last month a Pew Research Center study made national news.  It found that the share of middle-class families, which it defined as those with between 66%+ and 200% of median household income, had dropped greatly and broadly.  The center found that of 229 metropolitan areas, 203 had a smaller percentage of middle-class households in 2014 than in 2000.  No longer, per the survey, do a majority of American adults have middle-class income. 

That however does not mean that American affluence is falling, for three reasons.  One, of the 229 there were more gaining upper-class shares (172) than lower-class ones (160).  Two, middle class as Pew defined it is only relative to others, without regard to how high that mean or median national income actually is.  Three, when you are evaluating nothing but income you have at best a rough approximation of true prosperity, which includes all the resources to which people have access;  if as now many things are free or much lower priced than in the past, they are measured little or not at all in income-based analyses.

The Pew piece precipitated various articles bemoaning the “shrinking,” if not “vanishing” or “disappearing,” middle class.  They came from the left, which incorrectly blamed American corporations, and the right, which incorrectly blamed Barack Obama.  They did, though, have some points worthy of concern.  Average family income has dropped $4,000, inflation-unadjusted, in 16 years.  Debt as a percentage of annual income has more than doubled since 1989, to 122%.  And perhaps saddest of all, median 2014 middle-class retirement savings, despite households getting older in general, sat at only $20,000.

Reestablishing a high middle-class percentage does not look easy from here.  We now have 4.7% official unemployment, which cannot get much lower without even more people leaving the labor force.  Women are fully integrated into the workforce, and their income, in most families, has done little more than offset how much less their husbands’ good career jobs pay, adjusted for inflation, compared to those a generation or two ago.  An increasing share of newly created positions pay too little for even two spouses working full-time at them to be assured of middle-class status as defined above.  Work, and income with it, has become increasingly concentrated into fewer and fewer people.  The savings rate is unlikely to improve, as the baby boom generation has been as a whole poor at keeping money, and younger millennials simply do not have work opportunities sufficient for them to do what would be best, setting cash aside in their 20s.  America may, frankly, simply have less economic equality than it has in the past. 
What can we do?  The best answer is for us to stop seeing ourselves in classes at all.  Over the next ten years or so we can refine a package of amenities within reach of all Americans.  They can include sufficient food, shelter, freedom from violent crime, health coverage through Obamacare or otherwise, a home computer with Wi-Fi or other high-speed Internet service and commensurate access to email along with vast numbers of free websites and oceans of information, the opportunity to live in such a way as to benefit from rising life expectancy, availability of low-priced consumer products as now available in Walmarts among other places, adequate heating, air conditioning in most climates, microwave ovens, cell phones, and more.  Most of those things would have been beyond the reach of our grandparents when they were our age, and we should not take them for granted.  The bulk is in place now, needing little more than national Wi-Fi, an idea now overdue – the rest we should continue to expect.

There is another side, though.  Some things we have long associated with the middle class will become indulgences that fewer people will have.  Those start with cars, and we should not take it as a sign of impoverishment that Americans, particularly those in cities with good public transportation, will be less likely to own them, or that couples, even if working, will more often share one.  Large cash holdings, whether used for savings or consumption, will continue being less the norm.  Having children should be a thoughtful choice, with many or even most choosing not to undertake that ever-increasing financial burden.  In contrast to postindustrial products such as software, hand-made items, whatever they are, will become luxuries, as will many manufactured ones.  And, of course, we can no longer expect that everyone with the ability to work will be able to find it.

The name for this new set of people?  If we want one at all, we can call it “sustaining class.”  That is where over 80% of Americans will be, with their prosperity gains real but coming more from technology improvements than from better jobs.  That is where our future is pointing.  

Friday, June 3, 2016

May: Latent Work Demand and Official Unemployment Move In Opposite Directions, as the American Job Shortage Number (AJSN) Increases 260,000 to 17.6 Million

Commentators yesterday called this morning’s Bureau of Labor Statistics employment release “the big one,” and expected we would gain about 160,000 net new positions.  Well, one out of two ain’t bad.

This 44th month of the American Job Shortage Number, or AJSN, started with the strangest set of federal data I have yet seen.  What on earth happened?
First, seasonally adjusted official joblessness, the headline number from this government-released report but not for much longer, fell all the way from 5.0% to 4.7%.  That was tremendously good.   

Second, we gained only 38,000 net new nonfarm jobs.  That was terrible, about 100,000 less than absorbed by our population increase, a five-year low, and a full 122,000 under than the solid consensus projection.

Third, the count of people not technically unemployed, but wanting work and not having looked for it for a year or more, soared a staggering 545,000 to just over 3.8 million.  The increase in latent demand for jobs from this group dwarfed the changes from all others, including those from 206,000 fewer unemployed, almost 900,000 fewer claiming no interest in work, and the oddly opposite 30,000 fall in persons discouraged.

Fourth, the two figures best showing how common it is for Americans to be working were split, with the employment-population ratio staying even at 59.7%, but the labor force participation rate matching April’s loss to reach 62.6% and heading again toward levels not seen since Jimmy Carter’s first full presidential year.

Fifth, while the number of officially unemployed people out for 27 weeks or longer actually fell almost 200,000 to 1.9 million, the count of those working part-time for economic reasons, or keeping short-hour positions while unsuccessfully seeking full-time ones, which had been ratcheting down for years, skyrocketed 468,000 and is now at 6.4 million, only 800,000 less than the officially completely jobless.  I know of no statistics on the number of people with temporary positions paying, say, half of what they once earned before, but that must be in the same range if not beyond it.

Sixth, average wages, though given to fluctuation and up significantly last time, rose another 5 cents per hour. 

Overall, the AJSN is significantly up, as follows:

The share of latent demand coming from those officially jobless is now under 37 percent, which I suspect is an all-time American high.  For decades, most people ready to go from working to not working were technically unemployed – now, that is not even close to true.

Two other good things went into May’s peculiar mix.  The unadjusted jobless rate went down as well, to 4.5%, and compared to a year before the AJSN is 900,000 lower, reflecting reduced latent demand of 1.05 million from those officially unemployed but 150,000 more from those with other statuses.  We also should not need to worry about interest rate boosts for a while.

The turtle was confused – he moved his legs around quite a bit for a member of his species, and considered various possibilities.  In the end, he took a decisive step, and forward or sideways it was not.