Automation: To Serve (Hu)Man

I’m a big fan of the scientific fiction genre. No one did a better job of telling science fiction stories than Rod Serling from 1959-1964 on his television series, The Twilight Zone. I had many favorites, but one that really had me fooled was an episode titled, “To Serve Man.” The title, meant to be a double entendre, is based on an original short story of the same name by Damon Knight. I won’t go into the details of that episode but encourage those who like a twist ending to watch it. However, I will apply the title’s double entendre to discuss a few of the pros and cons regarding automation.

Automation is a subject that has a binary love or hate perception for most people. For me, I love it. Before getting into education, I spent many career years developing large scale warehouse automation opportunities for some of the largest companies in the world. We would approach each opportunity looking for inefficiencies in process, facility layout, equipment, and most importantly labor staffing levels or headcount. Always, the holy grail for these opportunities is a small real estate footprint, in a lights out, fully automated building, with NO humans inside. You can’t eliminate humans but the goal is to get as close as possible.

While there are many factors to identify in warehouse operations, e.g. workplace safety, increasing throughput/storage density, reducing errors/damage, etc., eliminating human labor time is the primary savings that pays for automation. A higher labor cost per worker adds up to a higher total labor savings overall providing a great opportunity cost advantage for a project’s approval.

In this post, I won’t get into the fact that after automation is paid for by human labor costs, labor savings continue to accrue to the equity side (shareholders) of the balance sheet. This is causing extreme inequality among  working class labor. It is why you can have CEOs making 300, 400 or more times the average wage worker’s annual salary. Case in point, Manpower and Kohl’s as spelled out here: CEOs Paid 1,000 Times More Than Average Workers.

High, fully-burdened labor costs (benefits + hourly wages) are a legacy left over from when unions had more influence in production and distribution. Most unions have been under heavy political pressure for decades. They have been dramatically reduced in membership or eliminated, especially in the private sector. As the labor movement as waned, so have wages making it harder and harder to justify automation. Generally, a company prefers projects to break even after two or three years, and as mentioned before, then allowing labor cost savings to accrue to capital.

However, wages have grown for those who provide services in support of automation. The irony is that those supporting automation are now the targets to eliminate in an organization’s cost structure. Artificial intelligence is now getting huge venture capital investments in order to replace those high cost support wages.

The thing that stands out in all that I have said so far about justifying automation cost is that eliminating humans from the process is the primary goal. Yes, automation reduces redundant sometimes high risk activity that can injure, disable, or kill a human and, therefore, serves humans. However, on the other hand machines must be served by humans in the form of losing their job and supporting those machines (until they are replaced also.) 

The greatest irony for me in justifying automation is that there has to be lots of high cost labor to eliminate. You have to serve humans up for elimination in order to get automation. However, with lower skilled, non-union labor mostly the norm in the private sector (and fast becoming so in the public sector too), it is more difficult to automate. Somehow wages will need to be raised significantly in order to get the next wave of cost justification for automation. For example, just about any $15 per hour or less (with no benefits) service sector job is not always high enough to justify automation.

One last thing, if automation is to serve a (hu)man rather than a (hu)man being served to automation, we must look at how to productively redeploy those humans eliminated by automation. Otherwise, who will buy the products the economy produces from automating all human labor activity? Machines don’t buy anything.

The Second Greatest Story Ever Told, Modern Monetary Theory (#MMT).

This being the Christmas season, many people think primarily about shopping and secondarily about THE greatest story ever told–the birth of Jesus. For billions of people the story of Jesus Christ is a historical fact, not fiction. His story gave faith, hope and justice to all human beings, not just a few, for all time.

However, I want to tell a different story. One that is secular not religious but has everything to do with faith, hope, and justice for all. That second greatest story is one of the operational facts about money as detailed in an academic body of work known as Modern Monetary Theory (MMT). It is a factual story told by a growing contingent of heterodox economists who are smack dab in the middle of the continental United States at the University of Missouri, Kansas City (here), in Australia (here) and across the world. They teach a story that a sovereign country that issues its own currency, with a floating rate of exchange against other currencies, and is not convertible at a fixed rate of exchange into a commodity such as gold can never be insolvent. It can always pay its bills.

This story of a sovereign, fiat currency issuing government has even been affirmed by such orthodox economics voices as Alan Greenspan and Marriner Eccles. Both men are Republicans and former Chairman of the Federal Reserve.

The insights of this true story come from Warren Mosler, noted investor and economist, who wrote the book, the Seven Deadly Innocent Frauds of Economic Policy, supporting the veracity of the story. A story rooted in the practical economic teachings of Abba Lerner, Wynne Godley, and others.

So in this Christmas season that finds its spiritual hope in the greatest story ever told, also remember that there is worldly hope in what I call the second greatest story ever told. That the US or any other monetarily sovereign country can never be insolvent involuntarily and money is not scarce as long as there is production capacity, people, and natural resources to apply. A wonderful story known as MMT.

Wisconsin idea to grade inner city, public schools: Work in a classroom first.

The latest political idea to fix schools is to grade them. This policy approach ignores the larger issues causing problems outside the schools in favor of a simple set of limited issues inside the classroom. This is a sure fire way to further eviscerate public education in favor of private, profit-driven education which will further degrade our neighborhoods and community.

Before policy makers decide to grade schools, I challenge them to spend one week in an inner city, public school classroom. They can do that as a substitute since the challenges inside the classroom are so great, that inner city schools are always in need of substitutes. The challenges are behavioral, not academic, that burn out full time teachers to the point that they leave the system at some point during the school year or need frequent time off to physically, mentally, and emotionally recharge.

In my opinion, the problems inside the classroom exist because of massive political policy failures that have created economic wastelands in the neighborhoods from where these students come. Neighborhoods that have no jobs, no easy to walk to schools, and no near term hope that that will change. The students and their behavior are a reflection of these neighborhoods.

I have been substituting in the Milwaukee Public Schools system for over 9 months and have spent time in a dozen different schools. I have gotten to know many of the teachers and administrators in many of those schools where I have taught and most are very smart, passionate, and dedicated people. Most importantly, the students I have met are bright and want to learn.

A school is generally considered the pride and joy of a neighborhood. It anchors and provides stability to the neighborhood. It brings neighbors together to discuss problems as well as successes within the community it serves and on an economic level helps to preserve the value of home and property.

We cannot continue to go down a path to dismantle public education as it will eventually dismantle neighborhoods, communities, cities, and the well being of our country. Go work or volunteer for a week in a classroom and you will know there is merit in what I write.

The Genesis of a Substitute Teacher

In reflecting back on 2014, I feel great gratitude for my experiences and lessons learned. Those experiences come in the form of people I have met and the lessons gained by having crossed their path. First and foremost are those who I have met since March when I started substitute teaching in the Milwaukee Public Schools (MPS) system.

Within the MPS system there are so many passionate and dedicated individuals who work and volunteer everyday to not just teach and administrate, but who try to heal the many broken lives of students coming from broken urban neighborhoods. Broken lives that make it very difficult for those who want to learn and those who want to teach.

In teaching, I have gained so much inspiration from administrators and other staff who manage the schools, teachers who work in the classroom, and, most importantly, the students. Why do I say “most importantly, the students?” It is because their success in the classroom is absolutely the key to our success as a country, the true assets of our nation or any nation for that matter!

As a substitute, I have gained a wide range of insights through my assignments at over a dozen different schools. Some of those being within the most economically disadvantaged neighborhoods in the city of Milwaukee, where our policies and politics (primarily at the state and federal levels) have consigned them for the last 40 plus years.

Prior to coming into teaching I had spent over 35 years in the private sector, mostly in the sales and marketing of computer and software systems that automate business, information, supply chain, and logistics operations. The primary component involved in the return on investment for those systems is the elimination of human labor. That component became an increasing difficult ethical dilemma for me to cope.

My exit from the private sector labor market in 2012 prompted some deep soul-searching and knowledge acquisition that took me down an interesting eye-opening, path of awakening. That path culminated in my reemergence into the public sector labor market as a substitute teacher. While substitute teaching in an economically challenged urban area can be difficult for sure, I have never felt my life more meaningful with the exception of marrying my beautiful wife of 34 years and the birth of my two wonderful sons.

My path to awakening has been energized on many fronts not the least of which is the effects of economics on education. Public education is under a devastating attack from fictional narratives authored by neoclassically trained, orthodox economists to inform ruthlessly, sociopathic neoliberal political interests who prey on our country’s celebrity-obsessed, pop culture-focused citizens. A toxic narrative that strives to teach that healthy, educated citizens free from the financial insecurity of growing old or becoming disabled are not the most important assets of our country. Instead, that narrative teaches us that abstract numbers, labeled as US Dollars, are THE most important assets and ignores the human beings who underlie and, in many cases, suffer from those numbers. It teaches us that the US government is some kind of foreign, hostile agent, rather than being formed by people who we elect to represent us.

My hope in the coming new year (and hopefully years to follow) is not only to educate students but also to educate those who may wander by to read this blog. To make them aware of the vital importance of public education and the forces that seek to undermine it and us as a country.

Bank Executive Fraud on an Industrial, Global Scale: Bill Black Interview

William K. Black, Associate Professor of Economics and Law, University of Missouri at Kansas City

Regardless of whether your politics is right or left, Democrat or Republican, a Bill Moyer fan or not, please watch this interview with William K. Black. Professor Black is an economist, attorney, and a faculty member of the University Missouri at Kansas City and University of Minnesota. His book, The Best Way to Rob a Bank Is to Own One details how the U. S. government in the early 1990’s under President George H. W. Bush successfully prosecuted over 1000 criminal fraud cases involving executives at America’s leading Savings & Loan institutions.

In Bill Moyers’ October 3, 2014 interview, Too Big To Jail, Professor Black discusses his insights regarding the facts that NOT ONE leading executive at any of America’s largest commercial banks has been prosecuted for criminal financial frauds that lead to the Global Financial Crisis in 2008. That fact has allowed executives like Jamie Dimon at J. P. Morgan, Lloyd Blankfein at Goldman Sachs, et al., to walk away with hundreds of millions of dollars in salary and bonus payments and free to create more and greater crises in the future.

Man with a new, healthy heart says Obamacare saved his life

Preexisting condition before January 1, 2014 would not allow Mike O’Dell’s heart transplant to be covered under private insurance. After January 1, 2014 he was covered under ObamaCare. The expense of the transplant and necessary (very expensive) anti rejection medications were/are now covered.

Volunteercoin: Bitcoin Protocol Merged with Social Value and Public Purpose

Presently money instruments or things used to settle transaction agreements, e.g. dollars and credit cards, are unequally produced and distributed by governments and recognized banks. Even the monetary innovation called bitcoin, mined by computers and known as a cryptocurrency, is just a virtual form of gold. It too is unequally produced and distributed adding the elements of anonymity and with no sovereign government oversight. Although not to be completely negative, bitcoin does have a wonderful upside potential that will be discussed later.

The problem with all of these money things is that none of them can act countercyclically to pull our country out of its economic stagnation, dare I say depression even. Since this stagnation is primarily the irresponsibility of our elected representatives, we are prompted to think of ways forward on our own.

Enter The VolunteerCoin Concept

Let us do a thought experiment. The purpose being to see if we can conceive of a disruptive monetary instrument that is based on the bitcoin protocol. The combination of this disruptive monetary instrument with the bitcoin protocol we will call a volunteercoin. The end result of this combination will hopefully achieve social economic value and public purpose.

What If?

What if tomorrow we had a way to mine for or mint a volunteercoin using the collateral of one hour of time contributed by a volunteer to a nonprofit organization? What if each volunteercoin was minimally worth US$22.14, as one hour of general labor volunteer time is currently valued by Independent Sector. What if that volunteercoin could be spent for any good or service produced anywhere in the world with the same level of transaction acceptance as your credit card or even cash? We might even want to include the capability for this volunteercoin to be tradable on currency exchanges and have a flexible rate of exchange with sovereign currencies like the US dollar. If we could do all those things we might be able to put everyone in the country to work almost overnight.

Volunteercoin: A Complementary Currency

Bernard Lietaer and Jacqui Dunne in Rethinking Money write, “There is a system of solutions already in place in localities throughout the world where terrible problems have existed. The changes came about, not through the redistribution of wealth, increased conventional taxation, bond measures or enlightened self-interest from corporate entities, but rather, by people simply rethinking the concept of money.”

In essence, a volunteercoin would act as a complementary money thing/instrument, e.g. complementary currency like an Ithaca Hour, to settle any transaction for goods and/or services where it is accepted. For additional reference, Charles Eisenstein has an excellent discussion on local and complementary currency on his web site Sacred Economics.

Economist Hyman Minsky’s Quote: “Anyone can create money; the trouble is getting it accepted”

Former Minsky student and respected heterodox economist, Dr. L. Randall Wray often references that quote in his own writing. Minsky’s statement is the anchor of our whole thought experiment. Since our elected government is not working for all of its citizens to relieve the stagnation in our economy why shouldn’t people go to work for themselves by creating and using their own money instrument such as the volunteercoin?

Volunteercoin: Let’s Start It Now

If a few bitcoins can be produced by a lot of computer time for a few people then why can’t a few computers produce a lot of volunteercoins for many people based on their volunteer time? Additionally, if bitcoin can find a market and grow in value (approximately US$ 625 per bitcoin as of 02/19/2014 on Bitstamp’s orderbook) over just five years, how much faster could a volunteercoin, produced by volunteer labor, find a market and grow the wealth of our country and its citizens.

Of course there is much discussion to be done still on this thought experiment with regards to its effects on money, economics, law, and politics but we can get to that after we have created the first genesis volunteercoin. So those who want an egalitarian neighborhood, community, country, and world need to come together to start the volunteercoin on its path to reality. Who wants to start now? My hand is raised.

I’ll Have The Bit But Hold The Coin Please: #BTC technology and #ComplementaryCurrency

First, this is not an essay about Bitcoin, at least not the currency part of it. Bitcoin the currency appears to have a few problems and myths dogging it, not the least of which is all the profit seeking associated with it as a commodity play. However, Bitcoin the cryptocurrency technology, is a far more compelling and useful discussion if used to enable local complementary currencies.

Edward Harrison recently referenced the use of its technology in a commentary on his Credit Writedowns blog titled, Bitcoin as a deflationary force for bank fees. The title does not hint at the idea of Bitcoin’s backend technology value but is highlighted in the body of the piece here:

People need to stop fixating on Bitcoin the currency and start focusing on Bitcoin the technology. The technology is the big deal because Bitcoin is a low-cost and global instantaneous payments system that uses the distributed nature of the internet to create a robust platform with hundreds of potential uses.

I would be remiss by not stating that Marc Andreessen’s commentary titled, Why Bitcoin Matters, served as some reference for Edward’s thoughts. Marc’s thoughts are definitely worth a read.

First what is a complementary currency? A good overview by Scott Fullwiler can be found here? Further discussions can be found on the Modern Monetary Network site here.

Okay then, how can we conceptually apply Bitcoin the technology to create complementary currencies? Here are a couple of ideas to consider: 1) Rob Parentau’s excellent essay on New Economic Perspectives site titled How to Exit Austerity, Without Exiting the Euro and 2) A great discussion by Bernard Lietaer on his idea of Money Diversity expands on the benefits of the many complementary currencies in use today.

By using Bitcoin the technology to power many different local complementary currencies backed by assets such as tax revenue streams, volunteer hours, and other products and services, perhaps we can inject much needed economic energy into the blighted areas of our communities, counties, provinces, and/or states. As Bernard Lietaer discusses above, we need monetary diversity to split up the single firehouse stream of a sovereign currency like the USD, JPY, GBP, et al at the national level into many customized smaller streams at the local level.

Are we missing the forest for the trees just because of the problems associated with Bitcoin the commodity currency? I think the answer to this question may be yes.

The Second Greatest Story Ever Told, Modern Monetary Theory (#MMT).

This being the Christmas season, many people think primarily about shopping and secondarily about THE greatest story ever told—the birth of Jesus. For billions of people the story of Jesus Christ is an historical fact, not fiction. His story gave faith, hope and justice to all human beings, not just a few, for all time.

However, I want to tell a different story. One that is secular not religious but has everything to do with faith, hope, and justice for all. That second greatest story is one of the operational facts about money as detailed in an academic body of work known as Modern Monetary Theory (MMT). It is a factual story told by a growing contingent of heterodox economists who are smack dab in the middle of the continental United States at the University of Missouri, Kansas City (here), in Australia (here) and across the world. They teach a story that a sovereign country that issues its own currency, with a floating rate of exchange against other currencies, and is not convertible at a fixed rate of exchange into a commodity such as gold can never be insolvent. It can always pay its bills.

This story of a sovereign, fiat currency issuing government has even been affirmed by such orthodox economics voices as Alan Greenspan and Marriner Eccles. Both men are Republicans and former Chairman of the Federal Reserve.

The insights of this true story come from Warren Mosler, noted investor and economist, who wrote the book, the Seven Deadly Innocent Frauds of Economic Policy, supporting the veracity of the story. A story rooted in the practical economic teachings of Abba Lerner, Wynne Godley, and others.

So in this Christmas season that finds its spiritual hope in the greatest story ever told, also remember that there is worldly hope in what I call the second greatest story ever told. That the US or any other monetarily sovereign country can never be insolvent involuntarily and money is not scarce as long as there is production capacity, people, and natural resources to apply. A wonderful story known as MMT.

In Honor Of Joyce’s Father: A Veteran’s Day Tribute

(This essay on Social/Civic values was written as part of the Ottawa University, Bachelor of Arts capstone class, Global Issues In Liberal Arts.)

Introduction

My social/civic essay describes an interview with an 85 year-old man, who happens to be my father-in-law, Donald R. Cierzan. The subject of the interview was his military service experience during the early 1950s. Don, whom I call dad, served in the United States Marine Corps (USMC) and is a Korean War Veteran. His USMC service was from 1950 to 1954 with his tour of duty in Korea dating from October of 1952 to June of 1953. Don’s tour ended just before the armistice agreement ending the war on July 27, 1953.

I have known Don since May of 1979. Over all the years since meeting him, I have known about his military service as a Marine but never asked him specific questions about his service while in Korea. All of his insights from his time there are extremely interesting. However, one particular line of questioning illuminated to me how geography may have played a role in developing cultural differences between the Korean people who lived North and those who lived South of the 38th latitudinal parallel. That parallel marks the boundary between North Korea and South Korea, a heavily militarized and political tense region of the world even today.

Discussion of the Interview

Don landed at Inchon in October of 1952, a port city in what is now known as South Korea. To land at Inchon meant to come ashore via an amphibious landing craft similar to the type used by World War II troops who landed at Normandy beach in France during D-Day. Inchon is on the western side of the Korean peninsula next to the Yellow Sea and is very close to Seoul. From Seoul it is less than an hour or so to the 38th parallel that separates North Korea from South Korea. In 1952, there were neither great ports nor grand buildings anywhere in Korea. The streets were not paved, but consisted of dirt roads, and the buildings, not the gleaming edifices you see today, but rather were simple structures that had been greatly damaged by bullets, artillery shells, and other ordnance types.

Don’s Military Occupation Specialty (MOS) designation was 3561. Those marines with that designation operated amphibious landing craft including what we all know well here in this part of the US, the Wisconsin duck. Don was first stationed at Munsan-ni, a motor transport compound that was located just north of Seoul and very close to the North Korean border. The primary ordnance he delivered from Munsan-ni was the 105-millimeter artillery shell. Don’s next and last station was from June until October 1953 at Ascom City, a military transport and storage compound that provided supplies to Kimpo Airfield. The primary ordnance supplied to Kimpo was 50-caliber ammunition used for machine guns mounted on aircraft at the airfield.

Don’s impressions of the Korean people he encountered were that they were scared and poor. Most wore similar, drab, dark colored clothing that for the most part they made themselves. Most people in Korea were farmers and their primary transportation was by ox cart. The climate in the area he was stationed he thought to be similar to Wisconsin’s.

Part of my interview, involved Don recounting a little history of Korea and of how the US was drawn into the Korean War. Those recollections started with Japan occupying all of Korea until after World War II. At that point, Korea was bisected at the 38th parallel with Russia occupying north of the 38th parallel and the US occupying south of it. Disputes arose between Russia and the US that could not be resolved even after the formation of the United Nations (UN). Troops from the North, supported by Russia eventually invaded the South marching all the way to Pusan, a city on the western southern tip of Korea near the Sea of Japan. The illegal action of North Korea’s invasion of the South led President Harry Truman to send in the US military in 1950. Other countries organized through the UN also fought along side the US.

US Marines first landed at Pusan, Korea to begin a series of bloody battles that pushed the North Korean troops back North of the 38th parallel. To support the Marines fighting at Pusan and allow the North Koreans to be pushed back, General Douglas McArthur’s strategy was to cut off logistics and supply lines to the North Koreans by landing Marines at Inchon. This strategy worked very well, in fact too well. The US Marines pushed the North Koreans from Pusan all the way to the Chosen reservoir in the central region of the North near the Chinese border. Chosen is far north of the 38th parallel. However, this led to China’s invading over their border into North Korea and pushing the Marines back to the Sea of Japan.

In discussing Don’s impressions of Korea, an interesting thought occurred to me regarding how the terrain of the Korea could have impacted the culture of its people. While the entire Korean peninsula consists mostly of hilly and mountainous, rather than flat plain, type geography, the North has a higher, more mountainous terrain. According to Sowell (1991), some areas of cultural diversity amongst people with a common regional and national background can be attributed to geography. When a cultural subgroup becomes geographically isolated, it can be cutoff from progressing socially, economically, and intellectually (p. 67 – 68). Given the more mountainous terrain of the North and its proximity to China compared to the South perhaps this played a role in creating the political and cultural divisions between these ethnically similar people.

Conclusion

In conclusion, my father-in-law’s experience gave me insight into a very interesting time in his life. He was only in his early 20s while stationed in Korea but saw things that not many of us see in our life. Through his eyes I could envision how geography might have played a role in allowing differences to develop that could cause people with similar cultural roots to become so hostile towards one another.

References

Sowell, T. (1991). A World View of Cultural Diversity. In Allard, M. and Harvey, C. (Eds.), (2012). Understanding and managing diversity: Readings, cases, and exercises. (5th ed.). (p. 60-69). Upper Saddle River, NJ: Prentice Hall.