Category Archives: Economy

Is Capitalism Dead or Dying?

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Why the Capitalism economic model might be Dying and in the near Future, Dead!

I was raised in a capitalistic society and it was, and currently is, a great economic model but I have to wonder if it’s starting to die and will soon be dead.

Are they are in control?

AI killing capitalism?

The intelligent systems that are being created may very well be the death of the Capitalistic model, but in a good way…  let me explain.  If the companies and governments are providing intelligent systems via robotics and automation that provide free energy, food, transportation and possibly shelter, that would kill the concept of the “needs lacking” poor.  The term poor is relative to others in a society, so to a degree, term poor could still exist in a society, but it wouldn’t be for lack of food, shelter or clothing or even other consumables.

If there exists autonomous “free” intelligent systems (like AI), then you have a complete intelligent ecosystem that could be society supporting.  While it wouldn’t be free like perpetual energy, it could be a free perpetual ecosystem based off of autonomously operating intelligent systems that would freely provide needed resources for a society to exist, without human labor or even money.

Once the “autonomous AI systems” that provide basic needs are running smoothly, eventually other advanced, “higher layer” intelligent systems could be based off of it, providing lifestyle enhancements to society.

An example of such a system could be a augmented reality system that could exceed reality with “extra” stimulation or benefit.  So it could be that such augmented reality systems could provide much, much more than reality could provide, Once the minds of those more creative than the rest of us start to create such virtual constructs within such a system, augmented reality could take forms unseen or at least beyond what we can imagine today.  So perhaps the net effect would be to experience remote locations in virtual reality than actual exceed physical reality (like the removal of trash from the virtual reality, or no crime because your safe in a virtual app).  To me this is a wild concept, but believable… look at what the effects of TV has been on society!  I know people who come home from works and just watch TV until it’s time to go to bed and start the process over again the next day, week, month…

So if a society exists where everything is free (provided by the government, which of course will have to become more intelligent too, maybe even creating the rise of a sort of politics based on technology, like a Technocracy), and you have entertainment provided by free “entertainment or learning” intelligent systems, what is the worth of Capitalism?  Especially if those governmental systems provide all the necessities of life for free (hello Star Trek money concept).

Technology implemented in a smart and ever improving way, could be the death of the Capitalistic model, because once free intelligent systems and subsystems exist, why work?  Besides, what labor related jobs would be available anyway?  Perhaps there could always be a need for art though, but most of the labor intensive jobs could be eliminated.

In closing, this would be a gradual, but accelerating journey, because overnight disruptions are often times harmful to society.  So, perhaps we don’t have to worry as much about AI, intelligent robotics or other labor robbing technologies after all, at least if we as a society (or government) are smart about it.  That said, we do have to worry about the weaponization of AI, intelligent robotics, drones and the like…  But we can handle that too if we are smart!  I’ll be back!

I would love to hear other thoughts around this!

Don

Why Increasing Minimum Wage By Doubling it to $15 Is Harmful For The US

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The current Federal Minimum Wage is $7.25, but there is a “doubling” proposal by various group and media channels that are interested in increase it to $15.  Personally, I think that is a very bad idea, and below are the top reasons why:

Why Doubling the Minimum Wage is a bad idea

  1. Small Employers and small companies starting out will be squashed.  Companies, much like human are born small with a small footprint.  Over time they grow and become larger, at that point they can afford to spend more money because they have more financial leverage to do so.  In fact, as they grow, they make more money by purchasing more skilled labor in the process.  In the recent past, I’ve thought about starting a small business, but I would had a hard time making the finances work because of all types of cost, including human labor.  If minimum wage is increased to over double the current rate, there is no way I could start a business with employees, which leads me to the next point.
  2. Human labor becomes too expensive with wild increases, especially in the United States.  Companies would offshore or automate everything as much as possible and continuously, just to survive.  This isn’t a matter of companies being spiteful, it’s because they couldn’t compete in the market place with such a high US labor cost.  This is basic economics that most people don’t understand because they haven’t ever read economic theory or even had a business where they hire human to work for them.  When the average US worker is paid around $20 in US dollars, and the average Chinese works is paid less than $2 in US dollar, I think making the US less competitive by raising the minimum wage by double seems like a bad choice for US employment.  We all know that the average wage would increase by at least 50% if not doubling itself.  Making the US much, much less competitive in the proverbial “global” marketplace.  Old economist think we still operate in a vacuum, but we don’t.  Now our competition is the guy next door, and the guy next continent over.
  3. Minimum wage is wage minimum, not average wage…  Increasing minimum wage to “average wage” makes it hard for young people to become employed because they are too expensive to train or hire.  I’ve been brainstorming this, and perhaps it makes sense to have different minimum wages based on age and living circumstances.  I’m still playing around with this idea and I might expand upon it in a later idea in a separate post.
  4. Increasing the minimum wage to double the current rate will have an inflationary effect, and at the same time reduce employment.  If I were a small employer, I’d have to increase the price of the product or service that I sell to the public by a big jump, in some case by double and at the same time I would automate and do as much as I could as possible so I could have a viable business.  The sad thing is that the unemployment might not even show the decline in employment because unemployment isn’t the total number of people unemployed.  if you stop looking for employment, you are no longer counted in the employment number… bad statistics, bad… sort of… lol

 

 

Flat-World

Okay those are the main thoughtsI wanted to convey.  I believe in what I typed above and without the intent of trying to sensationalize this communication, which is so common in the media anymore.  Think of it from a consumption standpoint,  Would you still buy milk if it cost $7.00 a gallon instead of $3.00 a gallon (I know, my math seems weird until you realize that there are more costs with a doubling of the minimum wage than just the actual minimum wage itself)…

From an economic standpoint, increase the minimum wage by double would be a bad move and I’m sure it won’t pass Congress.  Sadly certain News media channels will jump all over that story, trying to portray the Congress (and in particular the Republicans) are the bad guys, but in reality they are just protecting you by keeping the country from going into a massive decline and a steep rise in unemployment or underemployment (know that we know the number is not entirely accurate).  The media channels know this, but the sensationalism of the story brings eyeballs to their channel or site.  Kind of sad that a story becomes first than the accurate depiction as to what could happen in the country.  I wonder if the media will ever right itself, or will they just keep pimping themselves out by dishing untrue dirt for profits?

Please share your thought either way if you’d like,

Don

Is OPEC Giving the World a Stealth Stimulus Package and Other Considerations

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Before I begin, let me define what the acronym OPEC stands for…  OPEC stands for “Organization of the Petroleum Exporting Countries” and represents mostly the middle eastern countries, but also outliers countries like Venezuela.

At the last OPEC meeting (11/27/2014), OPEC decided not to cut oil production and for many countries the decision was kind of like a stealth stimulus package.  When oil is cheaper, that means goods are cheaper and people send more!  I know personally with falling gas prices, I’m less worried about driving too much than I was a few months ago.  Over the next few months, ideally goods (things we consume) should not have any near term prices increases since goods are cheaper to produce because of cheap energy.  The biggest benefactor would be China in my opinion though.

How the OPEC non-cut affects the United States:

In my laymen logic, I think that with OPEC not cutting oil production,is a small stimulus like package for the United States too.  Now the OPEC ideology of not cutting production is that such an action will destroy the United States shale oil business as the price of cheaper extraction oil from the middle east/gulf area will become cheaper than it cost to extract the oil from shale.  Personally, I think there is some missing logic to consider.  For one, even if many of the shale oil companies go belly-up, the shale oil resources will still be there!  In fact, once oil prices return, I’m sure companies (the same or different) will start extracting new shale oil again in the future.  Basically, the shale oil resources can pretty much create a somewhat permanent cap to future oil prices.

In the mean time, we the US consumers will benefit from the cheaper oil prices.  Non-oil related companies should see margins increase as their cost of goods sold decreased correspondingly.  That said, oil related companies may suffer a bit from the lower oil prices, but hopefully the benefits will outweigh the negatives.

Other country considerations:

Countries that are oil based should be adversely affected by the decreased prices of oil.  So countries like Russia, Iran, Venezuela and others should feel a small ding in their economies.

Renewable energies will be affected because of cheap oil.  But that too, should be a temporary ding I would hope.  Solar Energy is the most interesting in my opinion because the efficiency of the solar panels continues to increase creating a scenario where the cost of solar energy continues to become cheaper with such an increase in the efficiency improvements of the solar cells.

Will Oil become obsolete?

Petroleum is used to make plastic good too, so more than likely petroleum will not because obsolete entirely, but as renewable energy continues to make an impact on fossil fuel energy consumption, the rate of consumption of oil should and could stall.  So oil will not become obsolete, but maybe it will start to converge in the next 10 to 20 years to a static or declining consumption level.

The above is just me thinking out loud.  Well see how the Saudi’s gamble turns out (Saudis are the primary pusher for not cutting oil production).  I’m in no way an energy expert, but some of the topics I mention above seems both possible and logical, no?

Bests,

Don

 

Why It’s Wrong When Billionaires Try To Destroy Companies

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I stumbled across this article Today on the NYtimes: “Staking $1 Billion That Herbalife Will Fail, Then Lobbying to Bring It Down” and it made me sick to my stomach.

It’s not that I’m a big fan of Herbalife, but the fact that Bill Ackman is shorting the company with a huge position first, and now trying to get it destroyed seems unethical to me.  Herbalife pretty much follows a similar model of business that Avon follows, the reps buy the goods then peddle the goods.  I wonder if Bill will go after EBay sellers too?  They buy goods in bulk and sell them individually on Ebay, or maybe he’s go after any business for that matter that involves selling goods.  I wonder after this he sees dollar signs in his eyes?

I was shocked in the article that Bill spending over $150,000 to get minority leaders and groups to file lawsuits and that he’s basically wining and dining certain democrats in office.

Does this sound a little corrupt to anyone?  I have to wonder if the groups that he’s pushing around realize that he is taking advantage of them?  Moving them like pawns so that he can make big bucks if he succeeds in him company destroying mission?

Where are the 99%ers?  Bill’s move will cost jobs, and opportunities.  Shouldn’t the be protesting him?

I admit, I’ve never tried Herbalife and probably never will, but I know that the dirty acts by Bill Ackman could and may put Herbalife out of business while making him huge bucks.  This is a case of absolute power corrupts absolutely (and apparently corrupts others political and influential groups too!)

Read the NYTimes article if you want to read about a problem 1%er that should be protested!  I guess when an arrogant Harvard-educated investor makes a mistake, being down millions (if not a billion), he lets ethics he learned at Harvard go out the window?

While shorts and folks like Bill Ackman aren’t all evil, ones that go after real companies and ones that are young in particular are doing the world a disservice.

I’m kind of surprised that politicians in particular push his causes, especially when it’s so apparent that Bill primary motive is for profit.  I wonder if those that push Bill’s efforts will get re-elected?

Perhaps they are fooled by the trick below that the NYTime article mentioned.  It’s what I refer to 1 move thinking:

He has argued that he is trying to protect Hispanics, who he says are most frequently recruited by Herbalife as distributors, only to find out that there is little money to be made.

Yet Mr. Ackman’s staff acknowledges that this crusade is really rooted in one goal: finding a way to undermine public confidence in Herbalife so that his $1 billion bet will produce an equally enormous return. Mr. Ackman has said he will donate any profits he personally earns to charity, calling it “blood money.” The clients who invest in his hedge fund, however, would still benefit enormously.

Oh, so on the surface it seems like he is not gaining from the destruction of Herbalife, but it does benefit Bill Ackman’s company and the investors within.  If the investors within realized that this company took a huge loss from the Herbalife short bet, Bill would lose hugely as they exit his company and may even face lawsuits from unhappy investors.  So I would say that he has a huge financial position at stake, but it’s thinly veiled by the donating it to charity proposal.

Read the New York times article By , and ALEXANDRA STEVENSON.

Notice the sign that reads “Stop Exploiting us”.  Now that takes the cake!  if not like Herbalife is forcing people to sell it’s product…  If they don’t like option, it’s not like they are tied to it?  Where is the exploitation?  Makes me wonder if we are all exploited by the world we live in, and if that word “exploited” is being abused by special interest groups, especially when considering the more real usage of the word?

I disclose that I don’t currently own Herbalife stock, nor do I plan to in the next 30 days.