Accidentally bumped the mute button during coffee this morning and overheard one of cnbc's guests say that we are in a "jobs driven recession" which started in the 90s. He went on to cite a lack of skills & training among U.S. workers and a need for better education. Hard to be against a good education - IMHO one of life's great treasures whether it leads to a better job or not. Where am having problems is this: Even with a highly educated populace, are there enough good-paying jobs out there (or still to be created)? Or have we reached the saturation point? I say this because the man vs machine tradeoff ain't a "1 on 1" proposition. Auto-checkouts at the grocery can replace a dozen cashiers in each store they're installed at. But, it doesn't take a dozen technicians working 8 hour shifts to monitor them or keep them in repair. Heck, I'd guess it's more like the Maytag repairman syndrome - drink coffee until the phone rings a month or so from now. Than, maybe send out a "patch" over the phone or Internet. Sounds light-hearted, but isn't meant to be. You can cite instance after instance. Classes on the Internet replacing live breathing teachers. Cameras at intersections replacing cops. If Amazon had a brick & mortar site you could visit, you'd see computers, cameras & conveyer belts. Not the plethora of workers as in say a WalMart or KMart. While off-topic this raises mega-issues for our capitalist economy - not to mention the fabric of society. Yes, am aware this debate has been going on a long time - at least back to Henry Ford's time. But rapidly increasing advances in technology (and perhaps globalization) have heightened the urgency. Interested in your thoughts or possible answers, perhaps beyond simply better education - which we all can agree on. Sincerely, hank
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In terms of smartphones, people always have gone on and on about how "Best Buy is a showroom for Amazon" and I always went, naaah, there has to be people who still are just going to go in.
Well, I don't do that much shopping (I hate clothes shopping like I did when I was 5), but I was shopping for shoes the other day and decided to use my new smartphone and the Redlaser app (investment note: Redlaser is owned by Ebay, so Ebay gets a ton of information on what people are scanning, and if someone scans something in a store to buy it online and clicks through to buy it online, I'm sure Redlaser sees a %.) The store did happen to have a slightly better price with a pair of shoes that were on sale than anywhere else, but not that much was on sale - with a majority of the store, I could have probably scanned something and found a better price somewhere else. You're going to see the price comparison apps evolve and probably get to the point where if you scan something and there's a store 2 miles away or elsewhere in a mall, something will pop up and give me a coupon if I go somewhere else. I see this all eventually ending in less competition and higher prices. (Speaking of higher prices, Amazon is definitely closer to retail price on a lot of things than they used to be.)
Redlaser is a barcode scanning app that allows you to compare prices locally and online. I started doing it while shopping and although it wasn't electronic items like Best Buy, I got what people were talking about. I know so much is moving to mobile, but when you start using it more, one can really understand what people are talking about. In ways it's exciting, but it clearly is going to create some serious issues, like the ones you've noted, that aren't really being addressed or broadly talked about.
There are some apps that "get people into stores" (Shopkick, where you can get points for walking into the door at places like Target), but with Amazon's app or Redlaser, anyone can scan a product in a B & M store and buy it online.
This is why I've said before retail is overbuilt in this country, but when you start using one of these devices in a shopping experience, it's all the more apparent. The only retail REITs I'd be remotely interested in are the high-end outlet mall concept (Tanger Outlets, which I don't own, or Simon, which is overpriced) or "necessity-based" REIT Retail Opportunity Investment (which I don't own.) Otherwise, mall REITS are going to have to evolve considerably to keep up with technology and change.
Other countries are well ahead of us in terms of things like mobile payments. Visa is going to force change to new EMV chip credit cards in this country, and look at these new credit cards from Gemalto that have a little display in the credit card (!): http://www.gemalto.com/financial/cards/display_interface.html
Gemalto (which is up over 100% in the last 52 weeks) is a French company (although I believe they have a US HQ in Austin) that is a real example of where things are headed (whether you believe it to be good or bad). I'd recommend looking around their website (http://www.gemalto.com/)
As I noted in another thread, I'd also recommend watching one or two of Visa's ridiculously slick "Currency of Progress" ads to see where things are going - http://www.youtube.com/user/CurrencyofProgress
As for the discussion of robots, was actually discussing that at a family gathering. Also used the Ford reference and that really summarizes it perfectly. As you said, it doesn't take a genius.
The other thing I've really noticed is that there is much less activity in retail banking (I've walked into bank branches recently that have seemed almost empty - less lines, less tellers, etc), which, in many ways, is not surprising. When you offer people no-fee accounts if they don't come into the bank... (among many other reasons - more people banking on phones.) But that is a lot of commercial property space that will no longer be needed, or at least not nearly to the same degree. Post offices going away - but I think what's really concerning about that post offices going away in rural towns.
This article also goes into great detail (although I don't agree with some of the minor details) about the topic, as well. http://www.zerohedge.com/news/guest-post-inevitable-decline-retail
There is no easy answer, but endless QE and currency debasement isn't going to fix these issues (nor do I actually think they're intended to, despite all the discussion from various levels of government.) It requires actual leadership from government, which is almost entirely lacking.
As I've said in other threads recently, I can see where a lot of problems going on right now eventually lead to social unrest.
There was an article the other day about a grocery store in France opening where you can shop via a phone with NFC (http://www.nfcworld.com/2012/09/12/317798/casino-to-open-worlds-first-nfc-enabled-supermarket/) NFC = Near Field Communication. My only question is, if you walk through the store scanning things to add them to your "phone cart" for when you check out, how do they know when you swipe your phone to pay at the end that you have in your cart what you indicated? Do you have people like at Costco that check your cart against a receipt? Not really here-or-there, but I was wondering how that will go.
I'm surprised there has not been more in the way of the virtual stores that Tesco put up in South Korea, where there are giant posters in subways where you can scan the items like on a grocery shelf and have them delivered. I've thought about investing in giant French ad firm JC Decaux, who also handles street furniture in many major cities around the world. Eventually, you get more and more ads with QR codes and/or NFC where people scan banners to shop, get coupons or get other information."
I think the issues that you discuss with technology need to be urgently addressed.
(Me on phone to government) ring ring ring.
(Me on phone to government) .....
(Me on phone to government) .....
(other end message) We cannot come to the phone right now because we are too busy catering to the banks and blaming the other side and playing political games. If this is in regards to something urgent, please let us know and we will debate it and then not agree and blame the other side at our earliest convenience. Please leave a message after the beep. Beep.
This is also a terrific speech from "Dirty Jobs" star Mike Rowe to Congress about this topic - occasionally funny, occasionally moving and well-worth watching.
Mike Rowe of Discovery Channel's "Dirty Jobs" speaks to congress:
That led to my comment on the Casey interview, reproduced here:Now, Mr. Stockman may or may not be correct with respect to the Keynesian theory, but I am intrigued that he, and virtually every other well-educated (read: "upper class") politician or economist evidently finds it impossible to discuss the very large elephant in the room: There are no longer an adequate number of decent-paying low-skilled jobs in the United States, and most likely there never will be again.
An earlier (and excellent) Casey presentation discussed how there was investment money to be made in robotics, which Mr. Casey believes is on the threshold of a major advance. This may well be true- he described at length the application of robotics in increasing, for instance, the efficiency of Amazon's distribution systems. His presentation included photos of an Amazon facility with many robots and ONE human being.
In the San Francisco area, the Golden Gate Bridge announced today that effective shortly they were eliminating all of the toll-takers. The state toll bridges announced that they were watching with interest, as they intend to follow if the change is successful. We also now have restaurants which have eliminated wait staff- you're supposed to order using your smart-phone, and serve yourself. Home Depot has eliminated most of their checkers/cashiers, and already some grocery chains are attempting to follow. I have also seen this technology application in Europe- they are actually a bit ahead of us in this area.
Neither Mr. Casey nor the Golden Gate Bridge directors had any suggestions for those whose jobs are about to disappear, nor did they even bother to mention that facet of the technological advance nor it's inevitable effect upon the overall economy.
I have no intention of proclaiming that all of these technological advances should be halted in the interests of job protection. But there are some really hard facts to be addressed here folks:
Between shifting low-skill production and assembly jobs "offshore", and continually eliminating other jobs by improved technology, we are creating a situation where, in plain English: there are not and will not be anywhere near the number of jobs necessary to provide enough income to allow a sufficient number of workers to lead a reasonable life and contribute tax-wise to the overall system. Sorry, but NO. Not now, not tomorrow, no matter who is president or who controls congress IT SIMPLY AIN"T GONNA WORK. Henry Ford well understood this, many years ago. It doesn't take a genius.
Yes, education and re-education will help, to some extent. But I submit that there is NO viable path forward from this situation, either short or long term. There are simply way more low-skilled individuals than there are matching jobs. If anyone can show otherwise, I would be thrilled to be proven wrong.
And this rant was followed by an additional, next (boy, are you lucky or what?).
My point is that NONE of these geniuses seem to acknowledge that we now have a major permanent systemic unemployment problem due to the mismatch in worker intelligence, education, native technological ability and skill sets.
Education and retraining can help here to some extent, but surely not enough to make a major dent. Every job that disappears due to "increased efficiency" is one less consumer able to purchase all of this efficiently manufactured stuff. And as we all know, consumers purchasing ever-increasing amounts of stuff is the vital underpinning of the whole damned economic structure. There simply has to be a "tipping point" in this equation, and I loved the way Stockman glossed over that aspect of the issue.
Again referring to the earlier Casey presentation, it was noted that robots are now even replacing nurses in some aspects of hospital services, and that this technology is already being employed in at least 100 European hospitals. The further up the skill set chain technology goes, the worse the human displacement is going to get. Does anyone seriously think that some entirely new industry requiring large numbers of low-skilled workers is going to appear to take care of this?
- PS: I don't think this is limited only to low-skilled workers except in a roundabout way: If there's a surplus of computer programers, some will teach. The teacher so displaced becomes an insurance agent. The fella who would have sold insurance takes a job at the local hardware. The guy who would have sold hardware .... (you get the drift). In the end, it's those at the bottom of the skills ladder who get shafted.