Class Warfare Blog

September 8, 2018

Artificial Intelligence—The Promise

I am a big fan of digital technology and someone who is hopeful of the future. It is harder and harder for me to maintain that stance, however.

Currently there seems to be a widespread debate regarding the development of Artificial Intelligence (AI). Since we know so little the positions staked out are quite broad. At one end is a new future where machines take over dangerous and boring jobs and human beings have more leisure. At the other end, autonomous drones are the first step toward Skynet (the “bad guy” in the Terminator movies) and the extermination of human beings by intelligent killing machines.

There seems also to be many opinions in between the two extremes.

Something I do know is that it will not be the machines that determine the outcome. In every case of new technology impactful enough to change the course of history, the tech has been used to coerce and oppress the labor of the masses to serve the interests of the elites.

Consider the following photograph.

This is an Amazon warehouse. Amazon is a tech company. So, how do those who work in Amazon’s warehouses fare? Amazon uses personal monitoring algorithms to make sure that its employees do not waste time taking short breaks to catch their breath or go to the bathroom. They are to stay on task as long as Amazon wants them to … or else.

Jeff Bezos, creator of Amazon, makes huge profits by paying his warehouse employees wages that are so inadequate that many of them need public assistance just to get by. Thousands of Amazon workers are forced to rely on food stamps, Medicaid, and public housing because they can’t survive on the wages they receive. Meanwhile, Jeff Bezos is now worth $158 billion, and his wealth increases by leaps and bounds. (And who pays for the public assistance subsidizing Mr. Bezos’ wealth? You and I do, of course.)

If you think back to the first powered looms to make cloth, it was the workers who had to get along with the machinery, not the other way around. Same was true with the assembly line to make automobiles, etc.

I do not argue that there were no benefits from technology that actually accrue to ordinary people. Henry Ford, no friend of workers, paid more than anyone else as a daily wage to pursue his dominance of the auto market. But that was then and now, wage suppression is the favorite tool of the captains of industry. Much of the advanced tech of today is not available to us because, well it is very simple, we cannot afford to pay for it. We don’t make enough money.

As much as people will squander $1000 on a new iPhone, the really impactful tech, such as a liver transplant, is not available to you … unless you can afford to pay for health insurance and many, many people cannot.

So, AI in and of itself will not necessary oppress ordinary people, coercing our labor for the benefit of the elites, but if rich people have any say in the future, my bet is that a sizable amount of AI will be used for just that purpose. (Jeff Bezos has already begun the application.)

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August 20, 2018

CEO Pay Growing Faster than Yours … Still

Filed under: Business,Economics,Politics — Steve Ruis @ 12:14 pm
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A recent report of CEO pay shows that the gulf between CEO pay and the pay of average workers in their companies has grown wider. I am shocked, shocked I tell you!

Articles are asking “How could this have happened?” As I have said over and over, this did not “just happen,” it was managed by the CEO’s. These people sit on each others boards of trustees to make sure that their pay increases will never be threatened. They have lobbied Congress and state houses to get tax cuts and tax provisions that favor them. We call such tax regulations “loopholes,” but loopholes are laws meant for one purpose that are used for another. These laws were passed for the purpose of increasing CEO power and wealth, period.

Take for example, Bill Clinton’s legislation to rein in the growth of “executive pay.” The situation was CEOs, through “golden parachutes” and other nonsense, were getting extravagant compensation for lackluster, even terrible, performances. So, the Clinton administration decided that CEO pay should be tied to CEO performance, an idea not so bad. But instead of tying CEO pay to some standard measure of business performance (income, profit, 5-year profit average, average wages in the company, customer satisfaction, etc.), they tied it to the value of the company’s stock, and therefore to the stock market. CEO’s rapidly took advantage of this and began getting more and more of their compensation in the form of stock options. They also started manipulating their own company’s stock price for their own gain. (I’m shocked, shocked I tell you!)

The most recent iteration of this practice is having the company borrowing money to “buy back” stock in the company. This has the effect of raising the price of the stock that remains and burdening the company with debt. The only people who benefit are stockholders and, oh, CEOs and other execs. This practice (stock buy backs) used to be illegal but as part of the package deal, it was made legal in the same era that started this binge of stock manipulation.

Who in a company is better positioned to manipulate the price of the company’s stock? Gosh, I believe it would be the CEO.

Can you spell insider trading, boys and girls? And it is legal. And it is making CEOs rich beyond their wildest dreams. And that wealth is being applied to our legislative and court processes to make them even wealthier and more powerful.

And, it all “just happened.” If you believe that, I have some lovely prime building land in Florida you may be interested in … but you might have to drain the swamp first.

July 16, 2018

We Can Trust Corporations … Right?

I often heard the trope from the Republihooligans that “we can trust the corporations, that they wouldn’t do anything illegal or immoral as that would affect their reputation which would ultimately hurt profits.”

I haven’t heard that line repeated much lately, especially since there has been a conga-line of disclosures of corporate wrong doing and illegality that has been unending before, during, and after that line was fed to us.

The latest example of corporate abuse involves a court case lost by Johnson & Johnson over one of their flagship products: baby powder. Surely J & J would never include a chemical in any of their products that would knowingly harm its customers (baby customers!), why that might damage their reputation. So would a $4.7 billion dollar award against them.

“Thursday’s massive verdict was handed down in the Circuit Court of the City of St. Louis. It was comprised of $550 million in compensatory damages and $4.14 billion in punitive damages.

“The women and their families said decades-long use of baby powder and other cosmetic talc products caused their diseases. They allege the company knew its talc was contaminated with asbestos since at least the 1970s but failed to warn consumers about the risks.”

OMG, do you think corporations could do such things?

Asbestos. Gosh, we all have know that asbestos is a health hazard for decades now. We have watched TV shows where house remodelers have to call in hazardous waste disposal teams to remove asbestos products before they can remodel their homes. Our public buildings have had to have “asbestos abatement” services in to make expensive extractions of the stuff.

Gosh, could J & J have not known? The judge who issued the $4,700,000,000 award thought not.

And what about the “we can trust the corporations” bullshit purveyors? I say, identify them and get them out of office and out of power, if for no other reason than gross stupidity but more likely because of political and moral corruption.

July 11, 2018

Donald Trump, Our Lame Ass Wheeler-Dealer

Our President, Donald Trump, is currently meeting with Russia’s Vladimir Putin, a real wheeler-dealer. Mr. Trump insisted all through his campaign that he would “Make America Great Again” because he was such a good negotiator, that he would negotiate much better “deals” for the U.S. and reverse the trend of “bad deals” we had been making. So far it seems that the deals he is capable of making are pulling out of negotiated agreements with a “so sue me” shrug (the Paris Climate Agreement, the Iran Nuclear Agreement, NAFTA, no embassy in Jerusalem agreement, etc.).

His evidence for his expertise was lodged primarily in the fact that he wrote a book with the title “The Art of the Deal.”

Now that you have seen his writing ability via his Twitter tweets, you can see that he did not really write that book, a ghostwriter did, a gentleman by the name of Tony Schwartz. If you are unfamiliar with ghostwriting, a ghostwriter is a writer for hire. A person provides information in the form of written notes and memorabilia or whatever or does oral interviews and then the ghostwriter bangs out a book that can be claimed to have been written by that person, “the author.” Easy peasy.

So, what kind of deal did Mr. Trump cut with his ghostwriter? Easily it is the worst ghostwriting deal ever made. It is simultaneously the best ghostwriting deal made … for the ghostwriter.

First, Mr. Trump got a $500,000 advance for the book. Schwartz was given half of that. Half! (Unheard of.) Trump also gave Schwartz half of the royalties … half! (Unheard of.) And then when you look at the cover, Schwartz’s name is on the same line as the author’s and is the same size! (Unheard of!)

Here’s a cover of a random book on Amazon.com that was ghostwritten. The ghostwriter is usually listed appended to the author’s name in smaller, less prominent print, in this case it is “Jason Turbow with Michael Duca.” I had to struggle to actually read the ghostwriter’s name as it doesn’t exactly jump out at you. Now look at Trump’s book cover again.

So, the Supreme Commander of Deal Making made the world’s worst deal with the ghostwriter of his book. If you offered the same deal (without details) to any current ghostwriter now and ask them if they would take it ($250,000 advance, half the royalties, equal billing) they would say “Yes, … hell yes! If you went on and asked “Do you care what the book is about?” the answer would be “No, why?”

And this idiot is sitting down to “make deals” with Vladimir Putin, former KGB officer, master politician, etc. Can you spell Manchurian Candidate, boys and girls?

PS If you want the gory details on the book deal, The New Yorker did the long form piece on it. You should be able to find it.

It Figures

When the Trump tax cuts were imposed (you remember don’t you: the small temporary tax cuts for us and the large permanent tax cuts for corporations and the wealthy) it was claimed by the Repubs that the money saved by the corporations would end up spurring growth, even result in raises for workers. (Right, those results were to be delivered via unicorn, I believe.)

It was pointed out that the last time such a tax cut was implemented, corporations spent the bulk of the savings in buying back shares of their own companies. Well, surprise, surprise, the same thing happened this time. (Who’d have known it could be this complicated?) In a post on the Naked Capitalism web site (Michael Olenick: Update Confirms That Share Buybacks Are Still Corporate Suicide) extensive studies on the effects of such buybacks show that “not only do buybacks not lead to growth in a company’s market value, they are strongly correlated to a declining market value.”

In other words, the effect of their behaviors is not to “grow” the companies but actually to “shrink” them! To quote from the piece:

Corporate executives and directors are apparently bereft of ideas and the confidence to make long-term investments. Rather than using record profits, and record amounts of borrowed money, to invest in new plants and equipment, develop new products, improve service, lower prices or raise the wages and skills of their employees, they are “returning” that money to shareholders. Corporate America, in effect, has transformed itself into one giant leveraged buyout….

And since “everyone” is doing it …

The most significant and troubling aspect of this buyback boom, however, is that despite record corporate profits and cash flow, at least a third of the shares are being repurchased with borrowed money, bringing the corporate debt to an all-time high, not only in an absolute sense but also in relation to profits, assets and the overall size of the economy.

This not only burdens those corporations, but also drags down the entire economy.

So, if these buybacks are not what anyone might call the best use of those tax savings, why are they being done?

Okay, boys and girls, whenever anything political happens what are we supposed to do? (Follow the money!) That’s right! So, who benefits from these buybacks the most? It turns out that … wait for it … it is the corporation executives who actually benefit the most. You see the buybacks inflate the prices for the corporation’s stock. CEO’s and their ilk are now being remunerated largely via stock options. And, corporation executives constitute the largest segment of the 0.1% of “earners.” And that class of “earners” is the one making the bulk of political contributions currently. Does the picture now come together for you?

Think of the corporation executives as sort of modern pirates. (Can you see the eye patches and hear the “aaaarghs”?) These executives started out as treasure ship captains but, well the temptation was too great, and they stole their own ships. Well what is the government’s politicians to do? When they sailed into action to recapture the ill gotten gains, they received handsome “gifts” from the pirates to the extent that they have become dependent upon those “gifts” and now seek to facilitate the pirate’s behaviors. The government stopped pursuing the pirates for taxes and actually invited them to submit their ideas on how the government could be run better.

And all of the rich assholes lived happily ever after.

When are we going to wake up? Stock buybacks should be illegal or strictly regulated (as they used to be). They are tools to manipulate the stock market by insiders, for Pete’s sake! But when we ask our politicians what the intend to do all we get is “Arrgh!” and a wink from under an uplifted eye patch.

May 30, 2018

Great Minds Think Alike!

Filed under: Business,Science,Technology — Steve Ruis @ 7:41 am
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Over at GFBrandenburg’s blog he comments on the Monsanto GMO study I mentioned in my past post and includes a link to an article detailing it. Check it out.

Surprise: GMOs *Reduce* rather than Increase crop yields

 

May 20, 2018

Stupid, Stupid, Stupid

I read a comment the other day that set my head spinning. The comment pointed out that up until around 1970, the only way to increase agricultural output significantly was to put more arable land into production. Basically that had been done to all effective extents by well before 1970. We now note how people are trying to put very marginal lands into production with predictable disastrous results. (Hey, let’s cut down that jungle and raise crops! … jungles have notoriously poor soils.)

But right about that time came the Agricultural Revolution, sometimes called the Green Revolution. We managed to increase crop yields for our staple grains (rice, wheat, corn, barley) by the simple expedient of growing these grains on shorter stalks. Shorter stalks are stronger and they can support heaver seed heads without falling over from being too top heavy. We practically doubled our yields per acre of these grains.

This I already knew. What the comment pointed out that the old “acreage limited” model of agriculture, which took about 10,000 years to run out, supported a global population of about three and a half billion people. The Green Revolution doubled our grain supplies and, if you are not aware, those grains also feed our cattle and other livestock, so represent fairly well the entire food supply of the world. (You will find grain of some type in 90% of the foods you can find in a local market.)

So, we doubled our food supply starting in 1970 or so and now the world population is about seven billion people. It is an axiom of population biology that organisms expand their populations up to the limits of their food supplies. The fact that our doubled food supply (from 1970 levels) matches our now doubled population (3.5 to 7 billion) supports the idea that we are at the end of the effects of the Green Revolution.  This second phase took less than 50 years. (Think about it! Three and a half billion more people in just fifty years.)

So, what is next?

Since there is no intelligence in charge of humanity, it is likely that corporations that are exploring the genetic engineering of food crops will work up a solution. I have written before that these shortcuts to different organisms have more risks associated with them than the procedures used before (up to and including the green Revolution). But let’s say they whip up something that works and it again doubles the yields of these grains, what then?

Well, history and biology indicate that we will double our population again, this time to 14 billion people. Imagine the impact on food distribution and electricity distribution networks, on transportation systems (cars and roads, subways, air travel, on the lives of us all.

What is really scary is that the reliance on the plants created under the Green Revolution has shrunk the number of species under cultivation to a very small number. When there is a much wider diversity of crops, crop failures are not widely catastrophic, but when they are but a few kinds of crops being depended upon, well, think of the Irish Potato Famine.

Nobody predicted the Bubonic Plague, otherwise know as the Black Death. This disease killed over a quarter of the population of Europe. So, what happens if some new agricultural blight, on the order of a plague, wipes out rice or wheat. Since there are only a few types of rice or wheat under cultivation it means that such a blight may wipe out all of the rice or all the wheat or very large fractions of those crops. The repercussions would not be pretty: massive famines, food riots, insurrections, whole countries destabilized, etc. (Take a look at what is happening in Venezuela currently, being a manifestation of just bad management.)

I guess my question is not “what is next?” so much as “to what end?” We haven’t developed enough political maturity to determine a fair and equitable distribution of resources. We still operate on a “get what you can” basis. (Exhibit No. 1 President Donald Trump) Is there any upside to doubling our food supply again, other than corporate profits for Big Ag Science corporations? Do we need another seven billion people on this planet? Are we prepared to handle the changes associated with such an event?

All of the answers to these questions are, of course, no. Herds of lemmings running off of cliffs is a societal meme we created. Lemmings are not so stupid as to do that. So, basically we, as a people, are projecting that behavior onto those animals. And, we seem quite capable from doing just that.

Stupid, stupid, stupid.

Note The word stupid is used as a pejorative meaning lacking in intelligence. Rather, it means “slow” as in “slow on the uptake” or slow to learn (it has roots similar to those of stupor). Really bright people can distract themselves in sophisticated ways so that what is glaringly obvious gets missed for a long, long time. That stupid, that’s the one I mean.

May 18, 2018

Good Guys with Guns … Missing!

Filed under: Business,Culture — Steve Ruis @ 11:26 am
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At least eight people were killed, and others were injured, in a shooting on Friday morning at Santa Fe High School in Santa Fe, Tex., according to law enforcement officials. (Sound familiar?)

But where were the Texicans, the good’uns with their shooting irons? Surely Texas is NRA country and some of those good folks should have jumped into the fray, slapped leather, and saved those lives. Plus shootin’ the miscreant woulda saved the cost of a trial and a hanging.

Or, maybe, the NRA is just a bunch of people who are “all hat and no cattle.”

May 7, 2018

Economic Apologetics

It seems that economists, some not all, behave much like Christian apologists. When challenged they respond with what sound like well-constructed arguments but which are just narratives with no evidence (or mixed evidence at best). Take, for example, this narrative:

“… most Americans subscribe to the view that market-determined gaps between rich and poor should be softened by government. The rich should be taxed, and the poor should be helped. But how much should government intervene? One common argument is that there is a trade-off between efficiency and fairness. If the rich are taxed and the poor helped through transfers, the hard work of the rich is punished and the idleness of the poor is rewarded. The rich cut back on their effort—for example, by not opening a new business—while the poor use their windfall to support their leisure, for example, by not taking an available job. The result, say the critics of income redistribution, is that society squanders much more than the $1 of income for each $1 of government help that actually reaches the poor. Redistribution, they believe, should be severely limited, used to address only the most extreme problems of poverty and hunger.” (Source: The Price of Civilization by Jeffrey D. Sachs)

This argument is quite popular right now amongst neoliberal politicians and most of the people in the Republican Party. (I’m shocked, shocked, I tell you.) But does this “narrative” hold water? Is there anything supporting it?

One need only go back into recent history to find that it does not. Take, for example, the rich. Back in the 1950’s and 1960’s the federal government had marginal income tax rates as high as 91%. Did this level of “confiscation” deter the rich from doing what they do? Let’s use the example of Fred Koch, the father of the Koch brothers. Since Fred died in 1967, his final two decades were under the federal tax rates indicated. Having worked for both Stalin and Hitler, he established much of his wealth before WW2. He died a very rich man, passing on his private companies to his son, Charles, to run. Was their any slacking of his pursuit of wealth because of the very high personal income taxes? The answer is no. The same holds for all of the other “titans of industry” of that time.

In that postwar period, the pursuit of the trappings of wealth for immediate gratification focused less on salary (much of which would have just been funneled off into federal coffers) and more on perquisites. Many CEOs had lush offices decorated with expensive art (the company owned them, the CEO didn’t). The company also owned the apartment the CEO lived in, the company limousine, the private jet, etc. For long term wealth, the rich bought and ran companies to increase their value. Since they owned their companies and did not sell them, the increase in the value of those companies did not get taxed. Basically they developed assets to constitute their wealth; they didn’t take it in the form of salary or profits.

Do you know of anyone who made an immense amount of money, north of say 100 million dollars, who stopped working completely? Most of those people just started working on their next hundred million. Billionaires want another billion, etc. Some, like Bill Gates, create a new job they enjoy more than their old one, in Gate’s case, one of being manager of a very large and very well endowed foundation.

Now let us consider the other end of the spectrum. Let’s take Ben Carson. Dr. Carson started out in a very poor family. He is now quite wealthy as a retired neurosurgeon and Cabinet Secretary. Did he stop when he had enough money to cover a nice lifestyle? Did he kick back and put his feet up? No? If you look at any of the rich who have published their stories and select out the ones who started poor (not Mitt Romney or the Walton heirs), every man Jack of them blew right on through any easy living stopping point. Nobody does, except maybe big lottery winners and that situation is quite different. The “poor use their windfall to support their leisure” just doesn’t show up anywhere except in the stories these people tell one another. The majority of the poor work, many work multiple jobs. If their salaries were to be doubled tomorrow, do you think all of those people would be satisfied with their lives at that point and work no harder than they had been or, as is implied, work less? I suspect this would only happen with the people who are working so much now, just to get by, that it is ruining their health, their relationships, and families … but they would keep working.

This “narrative” regarding “income distribution” is a story the well-to-do tell themselves to make them feel as if there is justification for their viewpoint, a viewpoint totally unsupported in reality. So, where do they get this viewpoint? I suggest, in the case of the U.S., that it comes from their religion, not the religion of their scriptures, but the one they hold too now, the one adapted by the religious and secular elites (the rich) to serve their needs. While scriptures clearly talk about things like “how you treat the least of us, you treat me (Jesus)” the current religion talks about the poor being shiftless and lazy and unworthy and … I think you have the picture. I am sure some racial animosity is stirred in here, but that also serves the interests of the religious and secular elites, so they do not discourage it.

Just as with the bullshit arguments of religious apologists, we need to challenge the bullshit narratives of the priests of the new order, the economists.

April 30, 2018

Cynicism Comes Naturally Now

Filed under: Business,Morality — Steve Ruis @ 9:48 pm
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As I was perusing The Guardian this morning, I saw the following headline: “Big Bang: An oil refinery exploded in Wisconsin, forcing thousands to evacuate.”

My immediate thought was “Hmm, gas prices must be trending into the “too low” zone.” This thought stems from the U.S. oil community’s common practice of taking a refinery off line for “maintenance” or “service” and because we have a deliberate paucity of refining capacity (no refineries have been built in the last 40 years or so), every time a refinery goes “off line,” supplies of refined petroleum products, e.g. gasoline/petrol, go down and prices go up.

The industry often talks about how difficult it is to get a new refinery approved for construction (Aw, c’mon, even in Texas?) and how important regularly scheduled maintenance is, but these “problems” always seem to happen fairly shortly before the summer driving season, when prices are expected to be higher anyway. By making these “changes” a fair bit before the summer driving season, by the time motorists are filling their tanks in the summer, they will have forgotten the “issue” that “caused” the price increase.

Possibly there have been too many arbitrary “maintenance” breaks or possibly the site was in dire need of retrofitting and the company felt the insurance company should pay for a substantial part of it. I just have a feel that it “weren’t no accident.”

I used to view cynicism to be negative, but now I consider it to be a rational approach to the common behaviors of corporations, politicians, etc.

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