We are fighting the last war . . . .

[LuketheDog]

Bingo. The blue collar segment will not put up with that for very long on a macro scale.

They've been putting up with it for decades already-welfare, food stamps, stipends for illegal aliens, etc.

 

[VikingsGuy]

I read a really interesting book recently, The Almost Nearly Perfect People: Behind the Myth of the Scandinavian Utopia. The successes and failures of their socialist systems are not quite what everyone has been led to believe.

now, now, can't let facts get in the way of a good narrative

 

[Treeshark]

They've been putting up with it for decades already-welfare, food stamps, stipends for illegal aliens, etc.

They aren’t really footing the bill for those things for the most part currently.

 

[VikingsGuy]

They've been putting up with it for decades already-welfare, food stamps, stipends for illegal aliens, etc.

I would guess the swede was suggesting something much more generous for him than our current system.

 

[LuketheDog]

They aren’t really footing the bill for those things for the most part currently.

The blue collar guys are not paying taxes?

 

[BigHornRam]

They aren’t really footing the bill for those things for the most part currently.

The magic money tree is footing the bill.....

 

[Treeshark]

The blue collar guys are not paying taxes?

Not as much as white collar/corporations (not even close).

Most people in the US are either underwater or at best very close to even on their actual tax contribution vs consumption.

 

[rjthehunter]

The magic money tree is footing the bill.....

I wish the magic money tree would foot the bill for my taxes.

 

[VikingsGuy]

The blue collar guys are not paying taxes?

Below $70k pay zero effective income taxes (45% of filers), folks below $100k pay little. That is the unspoken, "you can keep your insurance" lie of progressive European welfare state discussions in the US - in those countries all workers pay in significantly to support the system.

 

[BigHornRam]

I wish the magic money tree would foot the bill for my taxes.

Sorry. You're just magic money tree fertilizer.

 

[Buffs35]

While the obvious TwitterX wedge issues are in full burn, we are fighting the last war - building battleships in 1935 at the expense of aircraft carriers so to speak.

Before I start - ask yourself - am I blue collar labor or white collar labor? A simple way to answer that question for the purposes of this discussion is, during covid did I have to leave my home to have employment and/or did I lose employment during lockdown windows? Or, was I able to work from home just fine in front of my laptop? If yes to the first then you are "blue collar" for the purposes of this discussion and if yes to the second, you are "white collar".

With that in mind, the "next war" for our political, social and economic landscape will be gen AI - and I don't mean for its obvious ability to foment chaos through deep fake video and audio. I mean a whole new group of voters that are going to be faced with the same problem skilled labor ("blue collar") faced in the late 80's early 90's. Back in the day our government (both parties) decided that "net good" was to on-board 1 billion Chinese dollar a day laborers into a free-trade environment and create clear economic incentives to off shore our industrial base. Sure jobs would be lost, but look at all the knock on benefits that will raise all boats and secure a large free democratic ally in China. Whoops. And immigration. Rather than fixing a broken system the government (both parties) decided it was better to leave it as a wedge issue than resolve and in the mean time unregulated borders and immigration flooded cheap labor into the building trades and service sector ("blue collar"), etc. Whoops. Both of these decisions gutted our work-class ("blue collar") ability to share in the American dream while enriching the "knowledge worker" ("white collar") who still was in high demand, hard to outsource and now flooded with cheap stuff to buy with their growing incomes.

Now, we sit on the tipping point of genAI - how will we address the front end of the decimation of the day to day "white collar" worker. Sure the very top 1% of white collar won't be replaceable and will likely reap great economic benefits, but when the third of or workforce that benefited from decimation of the "blue collar" dreams over the last 30 years is now in the crosshairs how will this play out? Will they demand government protections? Will they demand better social safety net for themselves that they were so reluctant to provide the blue collar folks? Which party will they flow towards? Will skill labor replace them in the social/economic pecking order, as AI doesn't build roads or skyscrapers? Or will now 90% of our population feel left out? And if so does that lead to real revolution? And would that revolution be won by a right wing strongman to force "order" on the system without fixing it or would it be a leftist revolution that tries to redesign post-AI capitalism/socialism in a way to force the spread of the benefits across the whole?

The amount of disruption looming over the next 30 years will make arguing about the current social wedge issues seem quaint in hindsight, as I believe "white collar" America is about to enter the gauntlet we forced blue collar American though in the 90s. Hold on to your hats folks.

 

[Gus Chiggins]

A few random thoughts.

The top categories of our GDP are

Finance, insurance, real estate, rental and leasing;

Manufacturing (half of which is for non durable goods);

Professional and business services;

Government;

Educational services, health care, and social assistance;

Construction; and

Arts, entertainment, recreation, accommodation and food services.


GenAI will certainly eat into several of those categories. Maybe cut out duplicate or redundant roles and/or middle management in a given industry. Tech sector is already effecting more layoffs but perhaps partly because they over hired in 2021-22. On the other hand right now there’s a shortage of accountants.

Quite a while ago some guy on a finance podcast claimed that an established company in the financial services industry had reviewed their employees’ productivity and determined over 60% of them weren’t really needed.

I think there’s a lot of inefficiency out there, which perhaps AI will help reduce. It will be interesting to see how quickly that will happen, and where those displaced workers go. But apparently the rise of the machines AI will create new positions to be filled by people.

 

[Gus Chiggins]

Not as much as white collar/corporations (not even close).

Most people in the US are either underwater or at best very close to even on their actual tax contribution vs consumption.

Recently Jim Cramer noted there are two categories of consumers in the US; those who are doing well and can keep spending; and those making $45k or less and who are struggling to even buy certain item menus at McDonalds.

I think thats unfortunately true. Last year McDs noted people in lower income brackets were buying less at mcdonalds. Plus for certain categories of people, credit card balances are substantially up and not sustainable.

 

[LuketheDog]

Below $70k pay zero effective income taxes (45% of filers), folks below $100k pay little. That is the unspoken, "you can keep your insurance" lie of progressive European welfare state discussions in the US - in those countries all workers pay in significantly to support the system.

Yes, that's kind of my point. It's the next bracket up, your small roofing company, teachers, your HVAC guy, two-job households squeaking in just over $100K, many of whom are very blue collar still, who are helping holding up the ones below them. Skilled trades can make great money now compared to 10 years ago, it's absurd how in-demand they are around Denver, but it's certainly not f.u. money and everybody is getting hammered here by the tax-everybody powers that currently be.

 

[TOGIE]

there are some government agencies out there that are massively understaffed that deal with mountainsides of complex data that they need to effectively manage and understand to properly carry out their duties and administer the things they are charged with administering. these agencies do the best they can but don't even begin to have the resources to adequately deal with data to administer their duties as effectively as they could/should.

AI can and eventually likely will create massive efficiencies here and that won't necessarily come with job loss. perhaps only it will come with fewer job gains. but legislatures were unlikely to give those agencies the people they need anyway.

me and my naivety suspects there are likely to be more gains for the good with the applications of AI in complex data intensive sectors than negatives of job loss - every efficiency it seems over the course of history has resulted in the need to remove humans from the equation to some degree and I wonder if it's just gonna be more of the same and AI won't be some watershed moment. whether it's self checkouts at grocery stores, gas stations, and fast food or the efficiencies created by robots in industrial manufacturing and then computers and excel spreadsheets, it's always been happening and we seem to keep moving along.

but as always, i'll throw up my hands in a big 'ol "i don't effing know"

 

[SAJ-99]

Boy do I have some thoughts. Think about this a lot and still feel I’m kind of all over the place on this.

1) Facebook laid off about 10,000 people last year and Zuckerberg added $80B in wealth. Watch the market to determine what society values. He built his own isolated, fully self-sustaining compound on an island in Hawaii. I guess he will eventually hire his own small army???

2) college enrollment has been in a general decline for over a decade. I think it bumped up last year but HS’er views on college remain much lower than over the last 50 yrs. Not sure if that fixes the problem or makes it worse.

3) I still think the issue happens slowly at first then all at once. Example, AI helps so you hire fewer entry level people, then in 20yrs senior employees start to retire and there are much fewer people to take there place and they don’t have the same type of experience as previous generation. We already see labor shortages from COVId retirements- pilots, nurses, doctors, teachers, cops, etc. it will get worse.

Recently Jim Cramer noted there are two categories of consumers in the US; those who are doing well and can keep spending; and those making $45k or less and who are struggling to even buy certain item menus at McDonalds.

Thank Jim for catching up for what the rest of us have seen for the last decade. I hope it gets more exposure on capital hill. Economist are struggling with this bifurcation.

 

[Treeshark]

Economist are struggling with this bifurcation.

The hardest part to figure out is that in many cases, especially in the last 5-10 years, it’s completely voluntary. I’m not sure it’s an economic challenge as much as it is a societal one.

 

[FairWeather]

Really interesting post, Vikingsguy- this stuff is fun and scary to think about at the same time. But it’s coming in some form to be sure.



This may in fact be true. One difference that I see, however, is the fluidity to go from white to blue is probably greater than it was for people to go from blue to white (obviously just an opinion). This might lead to this scenario being a net positive overall, albeit painful for people while they adapt.

This is already happening in China. People with college degrees are going to trade school, realizing the trades are paying better these days.

Hell, I’m “white collar” by this thread’s standards and I’ve been heavily weighing retraining to become a machinist the last few months.

 

[VikingsGuy]

Recently Jim Cramer noted there are two categories of consumers in the US; those who are doing well and can keep spending; and those making $45k or less and who are struggling to even buy certain item menus at McDonalds.

I think thats unfortunately true. Last year McDs noted people in lower income brackets were buying less at mcdonalds. Plus for certain categories of people, credit card balances are substantially up and not sustainable.

I agree - but would probably put the number closer to $65k in higher cost states.

 

[COEngineer]

I am no expert, but I work in a technical field and my son is working on his Masters degree in Computer Science, so we talk it about it often. People use the term "AI" for a lot of very different things and most of them are not what they think they are. It's like the people who only know about hunting from watching Bambi - not necessarily the same people, but the same level of understanding about AI from watching Terminator.

The current AI's are more like a sophisticated Google Search. For instance, if you have access to an AI, ask it a somewhat higher level math question. It will get it wrong. It's not 'smart' or 'dumb,' in fact it doesn't 'know' anything. It has all the information on the internet and it can string words together, quite well sometimes, but it is not thinking. It's a useful tool, but only if the user knows it's strengths and is aware of its weaknesses.