We Definitely Have An Oversupply
A report from the Seattle Times in Washington. “Seattle’s sky-high crane count has dropped significantly for the first time in years, suggesting the ongoing construction boom could be starting to lose some steam — even as the city continues to lead the country in total cranes. Most of the new buildings under construction are apartments. A flood of new rental high-rises hitting the market late last year led to the first significant rent drop in Seattle this decade, with 6 percent declines downtown, where the bulk of the new towers are.”
“The apartment frenzy could be slowing, though. Developers have noted that banks have started to pull back on funding new apartment towers as rents have begun to lag behind rising construction costs. Seattle still has more cranes than New York and San Francisco combined. But it remains well behind Toronto, which has 88, for the most in North America. Several other international cities from Australia to the Middle East have more than Seattle, as well.”
From the Portland Tribune in Oregon. “Although Portland rents dipped slightly last year, they were still the 20th highest in the country in January, according to Zumper. On a year over year basis, two bedroom rent is down nearly 5 percent. The Reed and Brooklyn Action Corps neighborhoods saw some of the biggest rent dips, down over 15 percent.”
The Dallas Morning News in Texas. “If North Texas lands Amazon’s HQ2, housing those thousands of new workers won’t be a problem. Last year D-FW builders constructed more than 30,000 single-family homes. And developers completed about 35,000 apartments in North Texas. More new housing was built in the area in 2017 than any other U.S. metro area. ‘Product availability in metro Dallas totals about 57,000 apartments - roughly 33,000 vacant units in existing properties and another 24,000 or so units in projects that are under construction,’ RealPage chief economist Greg Willett said.”
From Crain’s Chicago Business in Illinois. “The developers of the Marquee at Block 37 wanted a big price—about $370 million—when they put the new Loop apartment tower up for sale last year. But they found another way to score a hefty payday. They refinanced the 690-unit high-rise last month with a $225 million loan from New York-based Blackstone Mortgage Trust, allowing them to pull tens of millions of dollars out of the property and still retain ownership.”
“It’s one consequence of an overbuilt downtown apartment market. With developers completing as many as 8,500 units in downtown Chicago over the next two years, investors have grown wary of paying up for shiny new buildings. Unable to get their price, developers are refinancing instead, capitalizing on low interest rates and a positive lending climate.”
“By refinancing, many developers can score a loan that’s large enough to pay off all their construction debt and return all their equity and then some. By borrowing $225 million, the Marquee’s developers, CIM Group of Los Angeles and Toronto-based Morguard, could pay off a $110 million construction loan and pocket much of the $115 million in proceeds.”
“Cash-out financing is nothing new in real estate. When prices are rising, homeowners can borrow more against their residences, allowing them to keep the difference between old and new loan amounts. Refinancing in commercial real estate works in much the same way, though developers can often boost their debt significantly. Lenders are willing to provide a much larger loan against a building that’s completed and leased up than one that only exists on a piece of paper. Developers also don’t have to pay capital gains taxes like they would in a sale, or take on the challenge of redeploying their capital in a new project.”
“Many investors that buy high-end buildings are just waiting to see how the downtown market shakes out over the next 18 to 24 months. Prices for luxury downtown properties have plateaued, or even started to fall, as the swelling supply of new apartments has forced many landlords to offer generous concessions like free rent. As a result, the average net rent, which includes concessions, at top-tier, or Class A downtown buildings, fell to $2.83 per square foot in the third quarter. Apartment sales also have dropped.”
“Though CEO of Fifield Cos., Steve Fifield still speaks with a developer’s optimism, he has no illusions about the near future of the downtown apartment market: ‘We definitely have an oversupply in Chicago. ‘18 and ‘19 are going to be very competitive.’”
From Curbed New York. “NYC renters had more leverage with landlords in the fourth quarter of 2017 than they’ve had in a long while, StreetEasy claims. In Manhattan a little over a third of the rentals had their prices cut, which was the highest percentage since StreetEasy started tracking these records in 2010. Queens and Brooklyn both had 28 percent of its rentals offered up with price cuts, which was the highest in Queens since 2012, and the second highest in Brooklyn.”
“In Manhattan, neighborhoods like Morningside Heights, Stuyvesant Town, and Lincoln Square were all ideal if renters were looking for big discounts; in Brooklyn the same could be said about some areas around Prospect Park; and parts of Northwest Queens. ‘While a flood of new construction has been the main driver of the rental market slowdown we’ve witnessed over the last year, the fourth quarter’s rent cuts are more far-reaching than in years past,’ said StreetEasy Senior Economist Grant Long.”
‘Product availability in metro Dallas totals about 57,000 apartments - roughly 33,000 vacant units in existing properties and another 24,000 or so units in projects that are under construction’
I’ll be flying into DFW this afternoon and will be in Texas for at least a week. Posting and moderation will be slowed.
Last time I flew through Texas I was driving a Corolla.
da bear
Big D!
If your in northeast Dallas and in the mood for some smoked meats, this place is good:
http://one90smokedmeats.com/
big 8 bbq is awesome as well
Dallas, TX 75204 Rental Rates Crater 11% YOY
https://www.zillow.com/dallas-tx-75204/home-values/
*Select price from dropdown menu on rental chart
“I’ll be flying into DFW this afternoon…”
More pretty ladies there than anywhere else in the country, IMHO.
‘It’s one consequence of an overbuilt downtown apartment market. With developers completing as many as 8,500 units in downtown Chicago over the next two years, investors have grown wary of paying up for shiny new buildings. Unable to get their price, developers are refinancing instead, capitalizing on low interest rates and a positive lending climate.’
‘By refinancing, many developers can score a loan that’s large enough to pay off all their construction debt and return all their equity and then some.’
This has been going on for years. Many of these guys brag about doing it every couple of years and a bunch of it is non-recourse. What could go wrong?
Last year I thought I was going to get laid off so I was looking/visiting at apartments in FL.
In Jacksonville the apartment I liked is down $100/month. The apartment in Ft. Lauderdale is up about1%.
FWIW-I think the only reason i did not get laid off is Trump won and the company made the decision that lower regulations were coming and decided to try and grow my area.
made the decision that lower regulations were coming and decided to try and grow my area ??
So, one year later is your area growing ??
“The apartment in Ft. Lauderdale is up about1%.”
7%.
The tipping point.
++++
End of the 9-Year Rental Housing Boom?
by Wolf Richter • Jan 26, 2018
Since the Financial Crisis, the number of renters surged at a blistering pace, and renters became a majority in 42 cities, but the trend has now reversed.
The number of people living in rented housing in the US has surged by 23 million over the past 10 years. This is the period of the includes the Housing Bust. But the number of people living in owner-occupied homes (“homeowners”) inched up only by 679,000.
Over the same period, the total US population has increased by 23.7 million. In other words, the growth in the renter population absorbed nearly the entire growth in the population.
RentCafé’s report also found that the overall population shrank in 12 of the top 100 cities. In eight of them – Toledo, Honolulu, Santa Ana, Baltimore, Cleveland, St. Louis, and Chicago – the ownership population took the entire hit, while the number of renters actually increased.
Note that in Newark, Jersey City, Miami, New York City, and Boston, around two-thirds or more of the population lives in rental homes. In the top 42 cities, over 50% of the population lives in rental homes.
During the housing bust, millions of people lost their homes (or seen differently, they shed a horribly under-water mortgage that the banks, the Fed, and the US Treasury then ended up with). These folks moved into rental housing. In 2008, the population in rental housing surged by 3.1%, in 2009 by 4.4%, in 2010 by 3.4%. And it continued to rise albeit at decreasing rates through 2015. In 2016, the number of renters edged down for the first time.
The surge in rentership rates after the Housing Bust has been a boon for developers and landlords, and rents have rocketed higher, which triggered a phenomenal multifamily construction boom especially in large cities where apartment towers are shooting up like mushrooms. All hot housing markets have these construction booms. But just as these towers are being delivered and the apartments are being put on the market, rentership begins to edge down. Soaring supply of apartments meets declining demand for them.
Rents in some of the formerly hottest rental markets are already showing signs of declines – and in some markets, sharp declines.
In other words, we really didn’t need any more houses built during the entire last decade. Certainly not millions of 4,000 ft2 luxury “starter homes”.
Has anyone in the industry, or in the media, even considered the idea that the upcoming generation (the Homelander generation) is significantly smaller in number than the Millennial generation?
No, they haven’t, because it isn’t:
Gen X: 55 million
Millenial: 66 million
Homelander: 69 million
Immigration skews the numbers. It’s no longer based on GIs coming home and getting busy.
http://www.pewresearch.org/fact-tank/2016/04/25/millennials-overtake-baby-boomers/
They typically allocate more years to the millenials than to the X-ers, hence the larger numbers as madison avenue tries to paint them as some monolithic consuming blob that they can sell their useless garbage to. Worked on the boomers for the most part, Xers not so much so we’re the invisible generation - thankfully.
All these generations are smaller and smaller. …. As evidenced by the fact that the US population growth rate is at record lows and falling.
Inside your head maybe, HA.
All of these children of immigrants being born here? Americans, every one of them.
Study and learn my good friend. Study and learn.
“US Population Growing At Lowest Rate Since 1930s, Census Data Shows”
https://www.theguardian.com/world/2013/dec/31/us-population-growth-slowest-1930s-census-data
Individuals figured out in the ’60s and ’70s that family size needed to come down to maintain the family standard of living. For the past 50 years we have been below replacement birth rate. The government does not care about the individual or family standard of living, they manage the “economy”.
They make it sound like FREE money.
It is a loan. Every penny has to be paid back with interest.
+++++
By borrowing $225 million, the Marquee’s developers, CIM Group of Los Angeles and Toronto-based Morguard, could pay off a $110 million construction loan and pocket much of the $115 million in proceeds.”
“Cash-out financing is nothing new in real estate. When prices are rising, homeowners can borrow more against their residences, allowing them to keep the difference between old and new loan amounts.
“It is a loan. Every penny has to be paid back with interest.”
Ah, but the true financial artist will insure that it is not he (or she) who ultimately does this “paying back with interest”.
the true financial artist
Is that like a “sandwich artist” at Subway?
“Is that like a “sandwich artist” at Subway?”
No, more like this…
https://en.m.wikipedia.org/wiki/Artist%27s_Shit
Before poo-pooing his work, I suggest you try your hand at selling your own excrement for $100,000 a pop. It has to be harder than it looks.
“It has to be harder than it looks.”
It would be harder than it looks if people had more sense than access to money but apparently this is not the case.
He benefits from our wonderful educational system as much as I do. The big difference is he sells excrement one can at a time and all at once while the excrement I sell is sold one dotted line at a time and (hopefully) is stretched out over a lifetime.
Ah, but the true financial artist will insure that it is not he (or she) who ultimately does this “paying back with interest”.
+infinity.
If they were smart, the excess was paid as “management fees”, to a different company—kind of like how leveraged buyout specialists make sure they get paid their huge fees up-front, and someone else is left holding the bag much further down the road.
I’ll pay you Tuesday for a hamburger today…
It seems that nobody* does anything anymore. They just delay it until they can retire and make it someone else’s problem. David Learah should be sitting in the stocks for public humiliation after what he did to countless homeowners. But he’s not. He’s sipping mai tais on Vero Beach. Eff him.
—————
*except one guy: Paul Wiedefeld, the poor man who volunteered to take over the crumbling Metro subway. They’re trying to fix it but it’s a lot worse than they thought.
I paid for mine yesterday, with money I made doing things. I guess I’m Nobody.
“I guess I’m Nobody.”
Pretty much. But I bet you’re a great deal more content.
rms posted this yesterday and I think this is a very interesting point.
The investment banks won’t be exposed next time.
Last bubble the IB got nailed but so far they are not a HUGE part of the residential REAL ESTATE GAME . Lat year goldman and everybody had their own mortgage origination groups but if they have them now I don’t know about.
So who will get burnt this time? (other than the tax payers?)
“So who will get burnt this time?”
Greater fools, same as always.
So as explained to me in a bar (so caution on accuracy) - but i kinda believe it as the guy seemed to have worked on both the construction and finance side
There is a workflow here for residential apartments here is Seattle. First one company envisions and hires the prime contractor for building between 40-250 units. The goal is to execute very quickly on the building - including multiple crews
Second, they they contract a management company to fill the units. Special focus on the younger crowd. They are not particular about how long folks will stay (i.e. stable medium term renters)
Third, at 80%+ occupancy, the can sell to investment groups and REITs who are just looking at the year1 and maybe year2 cashflow.
So unlike the days of old - it is not about building and maintaining the units for 20-30 years - where you would be more cautious
It is about churning and burning.
Schillow shows predictions n yoy up down n all around in my hood
Why do they bother w predictions?
Because you read their garbage. That’s how they make their money.
Hillsboro, OR Housing Prices Crater 11% YOY
https://www.movoto.com/hillsboro-or/market-trends/
A topic we have discussed here for awhile.
The main reason - insane rents driven by cheap and easy obama money (debt).
+++++
Lamenting the loss of New York City’s character
ARTHUR CHI’EN - Jan 25 2018 - FOX5NY
But Tom Birchard, whose family owns Veselka — the 24-hour Ukrainian diner on the corner of 2nd avenue at 9th street, says things seem to be disappearing an increasing pace. Three generations of Birchards have kept Veselka alive, but Tom says a small piece of his heart breaks each time he sees a local business get pushed out by a corporate brand. And it has been breaking a lot.
Perhaps no one has done as much to document the cultural, if not historic bleaching of New York neighborhoods than Jeremiah Moss, the man behind Vanishing New York, a blog that passionately gives voices to institutions that may not have landmark status, but are crucial strands in the cultural fabric of our lives. Strands he feels are being torn out at an alarming pace.
Some are forced out without a replacement. Along a span of two blocks on Bleecker Street in the west village, storefront after storefront after storefront are vacant. Many of these establishments have been closed for several years. Jeremiah calls it a “form of urban blight” because empty storefronts look terrible and create a bad feeling when you walk down the street.
Tom of Veselka says that smaller landlords can be more flexible and humane whereas the larger corporate landlords can keep spaces vacant for a long time without suffering that much financially.
And Jeremiah says he talks to younger people who come to New York and ask, “What happened to the city?”
Soon, NYC will look like Baltimore.
palmetto
I have to apologize to Zbanman for this Thread-jacking.
Hillary Clinton: Thank You to Activist Bitches Supporting Bitches
12 hours ago
https://www.youtube.com/watch?v=ZfeHWDvjkiE
She still hasn’t figured out that she won’t be able to trump Trump in his own game.
lol, jeff. One of the biggest, if not the biggest, criminals on the face of the planet, thoroughly enjoying herself.
I saw the same in London. Few mom-n-pop storefronts but lots of chains (Tesco, Sainsbury, M+S minimarts, Costa Coffee, Starbucks, Wetherspoons, Boots Pharmacy, etc.) especially in Central London.
Most of the UK is a bad example. It’s a wannabe country.
“We’ll leave the blight on for ya!”
da bear
New York City has left the building!
Yankeestan in Bigly Depression. Soybeans and cotton are up! Taxpayers go south for Nuclear Winter.
da bear
Your ad here.
Crumbs
All those crumbs are moldy. There’s nothing there but a major mindfark. I wanted to believe, too.
Pelosi Just Tweeted Her Most Offensive ‘Crumbs’ Comment Yet
BENNY JOHNSON
3:38 PM 01/26/2018
House Minority Leader Nancy Pelosi again referred to bonuses companies are giving workers on the heels of the GOP tax cuts as “crumbs” Friday afternoon.
Pelosi has now referred to bonuses, pay raises and tax breaks for American workers as “crumbs” on three separate occasions while criticizing the GOP tax reform bill passed in December.
http://dailycaller.com/2018/01/26/nancy-pelosi-crumbs-cartoon/
Waste Management CEO Responds To Pelosi’s ‘Crumbs’ Comment By Explaining Why He Gave Out Bonuses
By Andrew ClarkJanuary 16, 2018
http://www.shopfloor.org/2018/01/waste-management-ceo-responds-to-pelosis-comment-that-tax-reform-bonuses-are-crumbs/
Nevermind that during the Obama administration raises and bonuses were rare.
Nancy is all upset. And that’s good.
Oops, sorry, jeff, I thought you were referring to something else, the Internet breadcrumbs hoax.
“The developers of the Marquee at Block 37 wanted a big price—about $370 million—when they put the new Loop apartment tower up for sale last year. But they found another way to score a hefty payday. They refinanced the 690-unit high-rise last month with a $225 million loan from New York-based Blackstone Mortgage Trust, allowing them to pull tens of millions of dollars out of the property and still retain ownership.”
And the same is being done by millions of Americans in bubble markets, once again living beyond their means. Buying imports. That’s the good Trump economy for you (and the improved Obama economy in his last year). All debt. The 2000s all over again. We’re just ratcheting down to hell.
crushing.housing.losses.
Here’s President Trump speaking at Davos …
https://youtu.be/5_woD7TJziw
The fraud economy. Fake users and fake valuation…
Very good read. It’s more pervasive than NYTimes admits.
https://www.nytimes.com/interactive/2018/01/27/technology/social-media-bots.html
I wanted to comment on this link posted yesterday:
https://www.cnbc.com/2018/01/25/10-percent-of-amazons-ohio-employees-are-on-food-stamps-liberal-think-tank-says.html
This is precisely what’s wrong with Amazon and the current business model in this country. It’s almost entirely focused on automation, job destruction and wage suppression. Yet, Amazon has hundreds of cities in this country falling all over themselves and giving massive tax breaks to try to lure a company who will decimate its labor force and wages over time. Not only that, how could any other company compete when the local tax structure favors these behemoths?
Jeff Bozo knows exactly what he’s doing - he’s exploiting corrupt local governments, workers and everything else he can in the name of greed, pitting desperate locales against one another. Until this country has an honest conversation about what’s really transpiring, we’ll continue down the path of rampant economic, employment, wage destruction and poverty until one day there’s absolutely no going back. I don’t know exactly what the answer is, but somebody in the press needs to get a spine and start talking about this, using Amazon as an example.
Technology = deflation.
Except for housing, education & health care industries.
Classes are now Virtual. People standing at a blackboard are no longer necessary. Your classroom instruction is now on a computer screen which can be accessed by your phone. You learn through neural networking feedback loops.
An excellent example of what you just stated …
https://youtu.be/r18Gi8lSkfM
Virtual classes are another job destroyer. You can record one guy once and and just play the video over and over again.
I’m so glad I finished my teaching assistant career just before everybody was wired for internet. Near the end, students were asking me to post my recitation lectures and homework answers and grades online, and could they email me lab reports. At the time I didn’t even have a home computer. I told them NO, they lived on campus and they could get all that by coming to class. Nowadays they all telecommute from their dorm room between games of Halo. No way.
(I’m also a big believer in classroom instruction for some things. You learn better when you write by hand, especially if you’re doing hand calculations. STEM is too difficult to learn by PowerPoint. It isn’t a lecture on art history.
difficult to learn by powerpoint — at least STEM.)
It was pointed out to me recently that the internet generation has a decreasing understanding of the general relationship between things. They are increasingly specialized in their field. They also just want the “answer”, not so much how the answer is arrived at.
I am pursuing a field of art/craft. Skill is required. I can only make so much progress researching and practicing. Leaps and bounds come when I spend time with a teacher in person. A good teacher will discover your weakness and focus on that. Left alone we tend to avoid our weaknesses.
“Nowadays they all telecommute from their dorm room between games of Halo.”
Why spend money “going to college” if you can do it from home?
Why spend money “going to college” if you can do it from home?
Because there’s a vague understanding that it’s more important who you know that what you know…so there’s still hope of meeting the right people there?
“[AMZN is] almost entirely focused on automation, job destruction and wage suppression.”
Humans are extinct. “We came. We created a replacement for ourselves. We ‘left’.” Why is this so hard for people to accept? The sci-fi folks saw this early on.
The AMZN business model makes human labor extinct. Walmart is building a new SuperStore with a SMALL team to run it. Then in one hundred years the team will be replaced.
In the meantime we can see if the man running AMZN can amass two hundred billion dollars. This is what homo sapiens are now focused on.
The AMZN business model makes human labor extinct.
Then who’s gonna buy the $hit they sell?
AMZN will eventually sell only items needed literally for the “maintenance” of the purchasers. The line of items will change. Look at the front lights in your car. No more big bulbs to replace like in my 1985 Chevy SWB Pickup.
(AMZN + internet = Sears and Roebuck catalogue.)
Then who’s gonna buy the $hit they sell?
that’s exactly correct. human labor will never go ‘extinct’, even if every job now in existence is automated. there will always be other jobs that will take their place, and even if those jobs are easier, human labor will become more and more valuable.
“Machine/robotic labor will not go extinct.” Correct
“Human labor will not go extinct.” Incorrect
“Human labor will not go extinct.” Incorrect
incorrect? then how will people get money to buy anything?
“Incorrect? then how will people get money to buy anything?”
Androids do not need money. Humans do. I’m projecting this future to be less than five hundred years from now.
If you have already created a technology that defeats you at chess, you are done.
All that is needed to defeat an army of humans is radiation. Robots will be fine after a neutron bombing. (Militaries with humans will be focused on combating circuitries. )
(Do not assume this is what I want)
Androids do not need money. Humans do. I’m projecting this future to be less than five hundred years from now.
If you have already created a technology that defeats you at chess, you are done.
All that is needed to defeat an army of humans is radiation. Robots will be fine after a neutron bombing. (Militaries with humans will be focused on combating circuitries. )
thanks. that clears it all up.
If you have already created a technology that defeats you at chess, you are done…
LOL, the workman vs his tools!
Machines are unlikely to develop man’s greatest weapon of destruction; mania.
“then how will people get money to buy anything?”
Ask a homeless, jobless guy. There are ways to get fed, regardless of whether you have a job.
Ask a homeless, jobless guy.
and where do the guys handing out the charity get THEIR dollars if labor is extinct?
It’s handouts all the way down.
starting from where?
“starting from where?”
Come see me and I will show you.
i doubt you’ll show me where labor goes extinct, because it can’t happen.
Throughout most of history we’ve had alarmists that fear with the advent of a new technology will destroy jobs. Indeed, new technology has destroyed certain jobs, but from the ashes new jobs have been created. Also, trade and globalization can destroy well-paying jobs.
Those in the dying industries have been objectively worse off during the transition, though society as a whole has improved over the long run from technological progress. That is why Trade Adjustment Assistance and job retraining programs were instituted when NAFTA and other free trade agreements were put in place. As for global trade, we are relitigating the costs and benefits of this. With trade, the benefits are diffuse and the costs are concentrated. Entire towns are uprooted and opioid scourges move in. Not everyone who is a blue collar manufacturer will be able to retrain as a hospital tech, nurse, or x-ray technician.
The big debate is whether this pattern will continue in the future. NPR’s Planet Money team did a really good show on this a couple of years ago where they interviewed economists on both side of the debate:
https://www.npr.org/2015/05/18/407749357/when-luddites-attack-destroying-machines-to-save-their-jobs
Today, it’s an insult to call someone a Luddite. But that’s not fair to the original Luddites — cloth workers who launched a war against the machines that were taking their jobs.
Indeed, new technology has destroyed certain jobs, but from the ashes new jobs have been created.
agreed. so let me ask you hypothetically, could automation ever make human labor obsolete?
I think it depends on whether the future is like the past, or whether it will be radically different. I think both arguments have valid points.
I think the point that was being made above is that human labor could conceivable become so drudgerous and soul-crusthing that it is tantamount to machine labor. I am sympathetic to that argument. I think if we get enough wealth concentration, the laboring class will have such little leverage and will be so beholden to the wealthy class (especially through debt) that they will have little choice but to accept any job that comes their way. Human labor could become more like serfdom or servitude. This is the point made in this essay:
But there’s a more straightforward and important way in which automation adds to abundance now. When a machine displaces a person, the person doesn’t immediately cease to be in the labour force. It is not the case that in period one the economy produces x using y workers and in period two it produces x using y-1 workers and therefore productivity goes up. No, that displaced worker probably has all sorts of bills to pay and must therefore find another job.
This is a critical point. People ask: if robots are stealing all the jobs then why is employment at record highs? But imagine what would happen if someone unveiled a robot tomorrow which could do the work of 30% of the workforce. Employment wouldn’t fall 30%, because while some of the displaced workers might give up on work and drop out of the labour force, most couldn’t: they need the money.They would seek out other work, glutting HR offices and employment centres and placing downward pressure on the wage companies need to offer to fill a job: until wages fall to such a low level that people do give up on work entirely, drop out of the labour force, and live on whatever family resources they have available, or until it becomes economical to hire people to do very low productivity work — serving as the fifth landscape worker on the household staff of a very rich tech magnate, for example.
https://medium.com/@ryanavent_93844/the-productivity-paradox-aaf05e5e4aad
a different way to think about it.
imagine a future where 100% of the jobs that exist today are automated.
food is planted, grown, harvested and transported without human labor. minerals are mined, processed and made into products without human labor. homes are constructed without human labor. autonomous cars are made without human labor. robotic doctors and lawyers are better than any of the human kind. maintenance of anything is better handled by robots. books, music and tv are done through machine learning and photo realism so that actors and writers are no longer needed. in other words, we would not only survive, but actually thrive without any human labor.
in the above case, do you think human labor would go extinct?
in the above case, do you think human labor would go extinct?
The utopia you describe of technological abundance is unlikely unless there is some sort of universal basic income or redistributive scheme because it ignores the distribution of capital among the population.
In other words, how does one buy autonomous cars made by robots, or get services from robotic surgeons or enjoy entertainment if you have no money. Remember, you have no money because you have no job and, as Warren Buffet said, “you didn’t win the ovarian lottery.” When labor is plentiful and there are no collective bargaining (e.g. unions), then labor will be about the replacement cost of machines.
Unless you are a millionaire, billionaire, or trust fund baby who came into money, labor supply will become increasingly abundant with the elimination of jobs. Good minimum wage laws and state-sponsored works programs that set a floor for minimum pay can boost labor’s take. Otherwise, the most likely fate is that unskilled workers will increasingly become a substitute for robots, making them much less like human labor and more like machines.
“Beat that robot today.”
Some distance away, in front of another mechanical press, was a 51-year-old man named Bobby Campbell who had the same job as Robot 1. He’d wound up with the position because of an accident: In February, he’d had too much to drink, tumbled off a deck at his daughter’s house, and broken his neck. When he returned after three months, Tenere pulled him out of the laser department and put him on light duty. Now, as the testing continued on a robot that he said “just looks like something you see in the damned dentist’s office,” Campbell was starting his 25th consecutive workday feeding claws to the machine. He’d punched the same two buttons that activated the press 36,665 times.
“Beat that robot today,” Campbell’s supervisor said.
“Hah,” Campbell said, turning his back and settling in at his station, where there were 1,760 claws to make and eight hours until he drove home.
The Rise of The Machines: At a Wisconsin Factory, Workers Wearily Welcome Robots
http://www.chicagotribune.com/news/nationworld/midwest/ct-wisconsin-factory-robots-20170805-story.html
The utopia you describe of technological abundance is unlikely unless there is some sort of universal basic income or redistributive scheme because it ignores the distribution of capital among the population.
so you refuse to answer my question.
my question was “in the above case, do you think human labor would go extinct?” not if it were likely or not.
not if it (the case above) was likely or not.
in the above case, do you think human labor would go extinct?
I don’t think human labor will go extinct. But I think the labor that exists will be horrible, unless there is a strong social safety net and protections to ensure that labor has strong collective bargaining.
I don’t think human labor will go extinct.
thank you. obviously i agree.
But I think the labor that exists will be horrible
i’m guessing that by ‘horrible’ you mean low paying. but you are wrong about that.
as the efficiency of labor increases, the cost of production trends to zero. in other words, dollars will become more valuable and buy more. everything will become cheaper and cheaper. obviously then the standard of living will be very high.
the other possibility is that by ‘horrible’ you mean ‘menial’. and again that wouldn’t be true. i’ve often tried to imagine what types of jobs might exist in that type of future. none of them would be hard to do, and most of them should be satisfying. in addition, one should be able to work very few hours a month to be able to get very nice things.
it’s really hard to imagine what types of jobs would exist. maybe reviewers of specific types of novels and movies? the kinds you like to read or watch. whatever kind of job it is, human labor would become extremely valuable because automation would be doing so much of everything else.
the things machines do would have little value because their labor is very close to being free. ‘value added’ by automation would be crazy-high.
of course that future is very far away, but if we stay with mostly free market capitalism, i believe that every single job now done by humans will be better done with automation. every single human job that is done these days will have been supplanted. and everyone on earth will be much better off for it.
i’m guessing that by ‘horrible’ you mean low paying. but you are wrong about that.
I mean both low-pay and menial, or mind-numbing. There will be a very stark dichotomy between the skilled (e.g. doctors, machinists, engineers, people who service robots) and the unskilled, those who essentially compete with robots.
I wish the scenario you described would materialize. Maybe it will, but the the evidence is certainly not born out by the current data. Look at what Amazon has done with the mechanical Turk:
Workers are offered pay for completion of a series of Human Intelligence Tasks (HITs), easily fragmented activities (like transcription, categorization or tagging) in which computers actually need assistance from carbon-based life forms like ourselves.
Estimates of what workers can earn on these crowdsourced tasks range from about $1.20 to $5 an hour without any benefits. Employers treat them as independent contractors not covered by federal minimum-wage legislation. A standard terms-of-use agreement gives employers the freedom to reject an employee’s work on any grounds; workers (oops, I mean contractors) have no easy recourse.
Ask yourself, how far does $1.20 to $5 an hour get you? If you dig in you’ll read that Americans are competing with Indians on wages. Truly, it’s a race to the bottom. The vibrancy of the US was that we at one point had “have-nots”, “the haves”, but also the “have-somes”. We’re moving towards a barbell economy with a tiny sliver of “haves”, and a whole bunch of “have-nots”.
https://economix.blogs.nytimes.com/2013/03/18/the-unregulated-work-of-mechanical-turk/?mtrref=www.google.com
Of course, the biggest expenditure for Americans is housing, transportation, and healthcare. If we get self-driving and fully electric vehicle fleet powered by battery, we may very well get a revolution in worker mobility and economic opportunity would follow. This type of an advancement would allow a huge section of forgotten US workers access to urban center jobs that pay more. Even low-wage jobs in urban centers pay significantly more than in rural areas. This could be a godsend for many.
The problems with healthcare cost are multi-faceted and too extensive to discuss here, although we have touched on them before. Suffice it to say, there is not enough regulation and government involvement in some areas, too little competition in other areas, a lack of transparency, misaligned/perverse incentives, and a society geared to producing an unhealthy population overall (obese, opioid-addicted, social isolation and mental illness, etc.).
The cost of living is sky high, because housing is expensive. When robots start building houses that cost next-to-nothing, then maybe I’ll change my thesis. But as things stand, prices for the most essential things in life are not going down due to automation, they are going up.
I mean both low-pay and menial, or mind-numbing.
those jobs would be automated in the future that i described.
I wish the scenario you described would materialize.
it will if socialism doesn’t win out.
The vibrancy of the US was that we at one point had “have-nots”, “the haves”, but also the “have-somes”.
no, the vibrancy of the US was that we at one point had a much higher degree of free-market capitalism.
the point you keep passing over like it doesn’t exist, is how the efficiency of labor lowers prices and creates more wealth that enables more jobs to be created than before.
when you talk about competing with ‘indians’ or japanese or any other country’s citizens, you’re engaging in zero-sum thinking. and unless a country stops producing, there’s no such thing as zero-sum in economics.
Ask yourself, how far does $1.20 to $5 an hour get you?
ask yourself how long it would take someone to start moving up the pay ladder as they begin learning new skills.
The cost of living is sky high, because housing is expensive.
no, the cost of living is high because government is reducing the efficiency of our labor. and housing is high because of government interference in the housing market.
regarding health care, like autonomous cars, ai doctors are coming sooner than you think. and robots are being created with the capacity to operate on beating hearts. as you know, that’s far beyond what any human surgeon can do.
regarding health care, like autonomous cars, ai doctors are coming sooner than you think. and robots are being created with the capacity to operate on beating hearts. as you know, that’s far beyond what any human surgeon can do.
Health care costs are not high because we don’t have AI surgeons. Yes, algorithms and AI-directed clinicians will be far more effective. We already use this in our hospital. There is no way they will displace entirely clinicians. What it will do is make diagnoses and prescriptions more accurate and allow for more evidence-based judgments instead of clinical judgement (read: gut feeling by nurse practitioner or MD).
the point you keep passing over like it doesn’t exist, is how the efficiency of labor lowers prices and creates more wealth that enables more jobs to be created than before.
I’m not passing over it, I’m pointing to a lack of evidence that what you think should hypothetically happen actually happens in practice. When I point these things out, you’re first reaction is not to question your assumptions and maybe concede that government “might” have a role to play in protecting workers. Instead, you reflexively retreat lack of free market, too much regs, etc.
government “might” have a role to play in protecting workers.
the left always points to the osha graph of declining accidents in the workplace since its inception. what they always leave out is the more historical graph showing that it was going down way before osha appeared.
Speaking of small teams running things, I was in Target last week and it was busy but they were running only ONE checker. The rest of the horde of people waiting to check out were being directed to the self checkout by ONE other person. I hate self checkout. Every time they force me to do that I say “am I getting a discount for doing your labor?” Absolutely ridiculous.
Actually those automatic checkout systems save time and money, as they are more cost efficient and lower maintenance than minimum wage human workers. And thanks to folks like you, I seldom have to wait for one.
until one day there’s absolutely no going back…
That may be true but I think there will be a going forward. I think the Amazon business model is rather inefficient and it will eventually fall to something more efficient or more sustainable.
One can be on food stamps making $45k a year. The problem isnt Amazon, it’s the ease with which anyone can get on the dole.
“The problem isnt Amazon, it’s the ease with which anyone can get on the dole.”
It’s even easier to start a fire.
Amazon has hundreds of cities in this country falling all over themselves and giving massive tax breaks to try to lure a company who will decimate its labor force and wages over time.
Then they’ll act surprised about all the new traffic problems that show up.
scAmazon hadn’t earned a profit since day one so the hype about where an unprofitable business sets up another package handling warehouse is just that…. Hype.
BlackSwandive: It’s almost entirely focused on automation, job destruction and wage suppression.
This happened at the dawn of the industrial age, where it went from requiring 100 farmers to feed a village down to 10.
It’s the “consolidation of production” phenomenon. Society created other jobs which then focused on the delivery of that value and the creation and delivery of other goods and services which people value.
Will the same cycle automatically repeat? Who knows.
Wasn’t the biggest job we created that finally got excess people off the farm “soldier”? After we got them off the farm for a nice visit to Europe and the Pacific then we trained them for other things. I wonder if that will be required for this transition as well?
It’s not a Duchamp, but, what the hell, Archie.
Notice: The WH didn’t ask the MET or the MOMA. You gotta understand that anything you give to the man as a loan, four years later, you will be told was a gift.
https://www.theguardian.com/us-news/2018/jan/25/white-house-gold-toilet-loan-guggenheim-museum
“On a year over year basis, two bedroom rent is down nearly 5 percent. The Reed and Brooklyn Action Corps neighborhoods saw some of the biggest rent dips, down over 15 percent.”
Isn’t Portland one of those space-constrained locations RW likes to lecture us about, where new building is either impossible or very expensive due to environmental constraints on growth and development?
I wonder how on Earth their prices* could be falling, and what that portends for other West Coast cities where they are supposedly running out of land?
* Rent is just the price of living in a house that someone else owns. Rents tend to correlate strongly with the market value of a home, although ownership is more expensive, particularly when prices are falling.
576 acres = Brooklyn ( Portland, Oregon)
Brookland ———-> Brooklyn
Oakton, VA Housing Prices Crater 10% YOY As DC Area Housing Correction Expands
https://www.movoto.com/oakton-va/market-trends/
Otis Redding died in a plane crash on December 10, 1967, a month before this song was released (January 8, 1968) and three days after he recorded it.
US Top 40 Singles for the Week Ending 27th January, 1968
NEW THIS WEEK
67 — (Sittin’ On) THE DOCK OF THE BAY –•– Otis Redding (Volt)-1 (67)
https://www.youtube.com/watch?v=rTVjnBo96Ug
PULL.your. EQUity
Thanks for the Otis.
I was 15 then and I remember whistling that over and over. Back then, we only had the sound in our heads from the radio, no images unless you had money to buy records with a cover. I never saw a picture of him before…
“I was 15 then and I remember whistling that over and over.”
My brother had 1 or 2 8-tracks from these guys, until I started clicking the sidebar I forgot how many hits they had.
The Grass Roots- Sooner or Later
https://www.youtube.com/watch?v=2cnCEvGrj3M
Grass Roots - Temptation Eyes
https://www.youtube.com/watch?v=29gt1fD4abc
The Grass Roots - I’d Wait A Million Years -
https://www.youtube.com/watch?v=h8F7LtzeQEE
Grass Roots - Let’s Live For Today
https://www.youtube.com/watch?v=ySjxZDT_5SA
The Grass Roots - Midnight Confessions
https://www.youtube.com/watch?v=5nZnqtDdsws
The Raspberries, Go All The Way
https://www.youtube.com/watch?v=j4-Jz9Mb0Zg
If these songs came out today instead of 50 years ago the woman of The View would condemn these Grass Roots songs as promoting sexual harassment of women.
That’s a great, if tragic, success story. I heard it told on the radio just recently.
“The Definition of a banana republic is a nation that suffers from chronic inflation, high unemployment and low growth; primarily due to massive government debt and deficits that are purchased by its central bank.”
Tame Impala — Nothing That Has Happened So Far Has Been Anything We Could Control:
https://www.youtube.com/watch?v=Gkp05lmogIM
https://youtu.be/M6nA8nLpNLs
There’s always a silver lining.
https://www.theguardian.com/commentisfree/2018/jan/28/silver-lining-even-if-bitcoin-bubble-does-burst-blockchain-technology
There could be a silver lining even if the bitcoin bubble does finally burst
John Naughton
The widespread adoption of blockchain technology could be good news for the internet and its users
Sun 28 Jan 2018 01.59 EST
One would need to have the attention span of a newt to be surprised by what has happened – and is still happening – with bitcoin, the so-called cryptocurrency. Non-newts are immediately reminded of the tulip mania that swept the Netherlands in the 1630s. At the peak of that bubble, in February 1637, a single bulb was selling for 10 times the average annual income of a skilled craftsworker. Robert Shiller, a Nobel laureate in economics speaking at Davos, brought up the Dutch bubble when asked about bitcoin. The tulip analogy holds, he said, but: “The question is: did that collapse? We still pay for tulips even now and sometimes they get expensive. Bitcoin might totally collapse and be forgotten, and I think that’s a good likely outcome, but it could linger on for a good long time; it could be here in 100 years.”
The downside of the media feeding frenzy around bitcoin is the way it obscures the fact that the technology underpinning it, the blockchain, or the public distributed ledger – a database securely recording financial, physical or electronic assets for sharing across a network through transparent updates of information – is potentially very important. This is because it may have more useful applications than supporting speculative bubbles or money laundering. In 2016, for example, Mark Walport, the government’s chief scientific adviser issued a report, arguing that the technology “could transform the delivery of public services and boost productivity”.
blockchain…the delivery of public services…
beyond Orwell.
“In February 2013, the Federal Reserve Bank of St. Louis issued a report that denied the Fed monetized the federal debt. It claimed that the central bank can only monetize debt if its intention is to keep the Treasurys on its balance sheet indefinitely. In other words, it would be using its power to create money out of thin air to permanently subsidize federal government spending.”
https://www.thebalance.com/how-is-the-fed-monetizing-debt-3306126
if no one wants your debt buy it yourself!
Is the Fed’s housing reflation program finally so successful that every owner is refusing to sell because the capital gains are too good to pass up?
The Financial Times
US Economy
US mortgage slowdown prompts jobs alert
Thousands of positions under threat as rising rates put brakes on refinancing volumes
Alistair Gray in New York
2 hours ago
Thousands of jobs in the US mortgage sector have been put at risk as lenders prepare for the weakest year for refinancings since the turn of the century.
The drop in demand comes as interest rates rise and threaten to squeeze a sector that employs an estimated 450,000 people across the country at banks and specialist lenders.
The Mortgage Bankers Association predicts refinancing volumes will come in at about $425bn this year, the lowest level since 2000 and down almost 60 per cent from 2016.
…
You’d think these housing bubble sitters would take a hint from last week’s Bitcoin bust and sell before they lose all their home equity wealth.
buy a house and get rich! working sucks. Risk on b@tchez!
Stocks and homes will get u out of that misreable corner cubicle.
Dont fight the fed! It hasnt turned out well for you over the past 10 years.
So….whaddaya think about disallowing mortgagees making fellow countrymen pay for state tax write offs?
May I jump in?
You do have two barbs in that one question.
Is giving one a tax break equal to making everyone else pay for it? Doesn’t that require you to accept that all the money belongs to the collective anyway. Not sure about that!
The thing about not allowing individuals to deduct taxes from their taxable income bothers me.
Is giving one a tax break equal to making everyone else pay for it?
Maybe not directly, but indirectly I would say it is. When a tax break is narrow and not applicable to the entire public, it means the government is favoring certain purchases, and by extension certain types of businesses and consumers, over others.
If you cut taxes for one group but still have the same amount of expenses, it means that the other group has to pick up the tab. This might be justifiable if there is some sort of social goal or negative externality that is not well captured. I don’t think the MID passes this test.
The MID is a tax break that holders of mortgages get, but which renters do not. It has been shown not to make houses any more affordable, so it really just props up prices and lines the pockets of everyone involved in the real estate sector (lenders, realtors, title companies, appraisers, builders, developers, local governments, etc.).
“A severe deterioration in the greenback can end up hurting the U.S. economy by ballooning the trade deficit as a result of higher import costs. It might also spur foreigners to pull money out of the country if a further weakness in the dollar sours investing in the United States. ”
https://www.reuters.com/article/uk-global-forex-dollar-analysis/a-weak-dollar-good-for-the-u-s-its-complicated-idUSKBN1FD302
If a foreigner buys treasuries and then the dollar falls isnt he gonna lose a lot of money when he converts back to the currency of his country?
munchkin wanted a weak dollar but trump wants a strong dollar?
Perpetual Trade Deficits Can Be Good
https://www.mises.org/library/perpetual-trade-deficits-can-be-good
An excellent economic commentary is here
excerpt:
It’s an intriguing case of parallel analytical universes. There’s the bullish – U.S. as the world’s invincible superpower – view. America is blessed with superior systems – economic, governmental, market and technological. The world’s best and brightest still yearn to come to the land of opportunity. And with a few notable exceptions, this view has received almost constant affirmation from booming equities, debt securities and asset markets. Robust bond markets, in particular, ensured insatiable international demand for dollars. Surely, concern for U.S. Trade and Current Account Deficits is archaic, at best.
The opposing view holds that the U.S. financial situation is unsound and untenable. A deindustrialized “services” and finance-based economy is dependent upon unending Credit expansion, with the vast majority of new Credit non-productive in nature. The U.S. boom is again financed by unsound leveraging, this time generated chiefly by global central banks and foreign-sourced speculative finance. The perpetual outflow of U.S. currency balances internationally ensures at some point a crisis of confidence in the dollar. What’s more, extreme monetary inflation by the other major central banks since 2012 only increases the likelihood of a more systemic crisis of confidence throughout global markets and currencies. The resulting unprecedented looseness in global monetary conditions over recent years has promoted a degree and scope of excess sufficient for a deep and prolonged global crisis.
It’s been my long-hold expectation that the world at some point would discipline U.S. profligacy. The world instead followed in our footsteps. Global central banks accommodated unfettered finance, adopted inflationism and, without protest, recycled trade surpluses right back into U.S. financial markets.
There was Greenspan’s “conundrum” and Bernanke’s “global savings glut.” The reality is that U.S. trade deficits have been at the heart of a runaway expansion of market-based finance around the world. This dysfunctional and precarious financial backdrop was interrupted temporarily in 2008. Zero/negative rates along with $14 TN (and counting) of central bank liquidity fueled a much more systemic Bubble of unprecedented dimensions. Importantly, central bankers came together to support a common goal: reflation of markets and economies. Concerted policymaking – from Washington to Ottawa, London, Frankfurt, Zurich, Tokyo, Sydney, Beijing and beyond – has been fundamental to the synchronized global surge in risk-taking, over-liquefied market Bubbles and economic recovery.
Herman Cain had what I thought was a superior solution: simply cut government expenditures by 1% annually for several years running.
Little pain, little disruption that creates need for spending.
Our government is fat; it needs to go on a diet. A little bit at a time. Slow but steady wins the race.
I suggest that you lead by falling on your sword and requesting to have your Social Security benefit payments contributed to reducing the federal deficit. If enough others followed your example, our massive debt overhang could be eliminated.
Better yet…. Just issue refund checks for everyones contributions and shut it down for good.