I’ve Been Homeless 3 Times. The Problem Isn’t Drugs Or Mental Illness — It’s Poverty.

(Noel Celis/Getty Images)

On March 8, 2016, Veronica Harnish writes on Vox:

At a late January Bernie Sanders rally in Iowa, 46-year-old Carrie Aldrich described through tears what it was like struggling to survive on less than $12,000 a year. I watched and shook my head knowingly, having survived on $8,000 each of the past two years. Such low income, combined with a perfect storm of unaffordable rent, incompatible roommates, non-living wages, and an inability to find full-time work, resulted in three bouts of homelessness that forced me to live in my car. And in a few days, it will happen a fourth time for the same reasons.

I was born into a middle-class family, but I’ve hovered near poverty level all of my adult life because my line of work doesn’t pay much. My career consisted of administrative roles in high-tech offices and government agencies, with most of it contract work because it paid more and provided more flexibility and mobility than permanent secretarial work.

I attended college pay-as-you-go for a couple years while working, then left because I couldn’t afford to continue and knew better than to take on student debt. My moderate savings was destroyed in my 30s by health care costs that insurance wouldn’t cover. Within the past several years, full-time work that pays a subsistence wage has been hard to come by. Now I’m pushing 50, and am aging out of a workforce that for the most part gave me a subsistence-level existence at best.

Three times within the past four years I’ve lived in my 36-year-old car that has more than 400,000 miles on it, because I could not find affordable rental housing or a job that paid a living wage. Though I reside in the Pacific Northwest, the situation is the same all across the country. Impoverished, working single women without children do not get top priority on long waitlists for subsidized housing, rapid rehousing, or other government services or benefits. I don’t have family or a spouse to turn to for help or support. Friends can’t or won’t help for their own various reasons and circumstances. I am totally on my own.

I never dreamed that homelessness would ever happen to me, let alone multiple times. The first time I was homeless in the winter of 2012, I lost my job and had to live in my car with my cat, spending one month in the middle of winter with $230 to my name. My car heater broke years ago. I remember waking up at 2 am one mid-December morning and discovering my cat’s water dish next to my head had frozen solid in the 27-degree weather — inside the car.

The second time I became homeless, in the summer of 2014, I was working a part-time, temporary job for a small municipality while waiting for a full-time position to open up. My roommate gave me notice to leave so her daughter could move into the room I was renting. I had a grand in the bank at the time but couldn’t find a rental situation I could afford. So once again, my cat and I lived in the car. This time, we went to a small, wealthy, temperate-climate Pacific Coast town, because the weather was in triple digits where I had come from, which turns the car into an unlivable oven. Each day I was harassed by police and park rangers because of the town’s aggressive policies that criminalize homelessness. Though I found a new roommate after that horrible week, I lost the city temp job not long after I returned. I’d asked for a raise from $12 an hour to $13. When the city gave me a 23-cent raise, and when out of sheer disbelief I sought an explanation, I was told I should be grateful for any raise at all, because “temps don’t usually get them.” Then I was fired. “We don’t want you here if you’re not happy,” they said.

I became homeless a third time last summer — again with a grand in savings — and lived in my car for a month and a half when my part-time, low-paying, temporary job ended and my roommate stopped paying her bills. My cat and I moved more than 500 miles to a cooler climate in another state, and for a month and a half we spent our days at a state park that had free wifi so I could look for work online, and inexpensive showers (50 cents for three minutes of lukewarm water). We spent our nights in the car on residential streets in town or a couple of industrial parks outside of town.

And in a few days, due to the sale of my rental house to wealthy buyers from Silicon Valley who don’t wish to be landlords, I’ll be living in the car once again — with a grand in the bank — because I can’t find an affordable place to live. Since more than half of all Americans have zero dollars in savings, for someone like me to thrice sock away a grand on a paltry four-figure income was no small feat. It took an earned-income tax credit (EITC) from the IRS for being “working poor,” and withdrawing retirement money from my last government job — and taking a stiff tax penalty for it.

This is what it looks like when you totally fall off the bottom of the economic ladder, and how it happens:

1) Homelessness is expensive

The longer you’re homeless, the more basic expenses such as gas money, car insurance, storage unit costs, laundromats, and gym memberships or park fees for showering deplete your savings. Without car insurance, your vehicle can be ticketed and impounded. Gas hovers close to $4 a gallon in the summer, so just driving around trying to find a safe place to park for the night, or to do routine things like laundry or going to a job interview across town, can rapidly burn up your cash.  Laundromats are expensive. So are storage unit payments if you don’t have enough room in your car for your belongings, especially the ones you might need again if you find a place to live.

When you’re low-income, you have to have excellent money management skills, because you have to survive on so little. Everything is budgeted to the penny. Credit cards? A nonstarter if you’re unemployed, low-wage, or homeless. So a simple problem — such as a car repair — that a higher-income person can eliminate with a credit card in five minutes can wipe out people living in poverty and put them on the streets or, worse, keep them there. It is much harder to climb out of poverty than it is to fall into it.

2) People think if you’re low-income or homeless, it’s because you’re lazy or uneducated

In 2010, more than a third of all working adults with jobs that did not pay a living wage had at least some college education or a degree. According to 2014 census data, the poverty rate for college-educated Americans jumped from 4.4 to 5 percent. And post-recession, many older workers were forced to take positions they were overqualified for at less pay than before. Many government-funded job retraining programs are for trade careers (nursing assistant or pharmacy technician, paying on average $12 and $14 an hour respectively) that pay better than minimum wage but are still not living wages in most areas. Not “wanting” or “choosing” to work several different low-wage jobs for a total of 60 to 80 hours a week just to survive doesn’t make anyone lazy: It points to the unfairness and inefficiency of the economic system, and the inequality inherent in it.

People also believe if you’re homeless, it’s due to moral failure or “poor choices” on your part, rather than a broken economic system, as if nearly 40 years of stagnant wages in America were your own personal doing. Blaming personal failures for your circumstances merely provides an excuse for not responding to the real causes of homelessness.

3) Lack of affordable housing is the leading cause of homelessness

After the housing crash in 2008, many people who lost their homes to foreclosure moved into rentals — and stayed. When fewer people buy homes, rental markets tighten. The number of renters across the United States grew by about 5 percentage points between 2006 and 2014, to just over 43 percent. Tighter lending policies, student loan debt, and stagnant wages discourage renters from buying. In the most desirable housing markets in the country (such as the West Coast, where the tech hubs are), population growth has outpaced new home construction, driving up housing and rental prices faster than gains in income can keep pace. When home prices rose, it priced people out of the market, keeping them in rentals. Rents then soared due to demand. All of this, in turn, made it even harder for renters to become homeowners, completing the vicious circle.

Poor households, naturally, took the brunt. I started feeling the rental squeeze in 2010, when at the age of 40 I moved in with a roommate to try to stay above water. Research shows that a $100 increase in rent is associated with a 15 percent increase in homelessness. As the Atlantic recently reported:

“The housing-cost squeeze faced by the poorest households is deeply disturbing. The share of income devoted to rent by the lowest-income households increased from an already whopping 55.7 percent to a staggering 62.5 percent. No other income group spends more than 30 percent of their income on rent. Lower-middle-class households saw their rent burdens grow from 27.4 percent to 30 percent. Upper-middle-class households went from 18.5 percent to 20 percent, and the richest households from 12.5 percent to 13.5 percent.”

Simply picking up and moving to a state with more affordable housing isn’t a solution. Many states with cheaper housing also pay lower wages, offsetting any savings and keeping the proportion of income to rent high. Low-wage workers in places with higher minimum wages, such as Seattle or San Francisco, earn far less than an affordable housing wage for their area, but the situation is similar in cheaper places, too: It’s just as difficult to afford $700-a-month rent on $10 an hour as it is to pay $1,200-a-month rent making $14 an hour.

Even if you find affordable housing and a job paying a living wage, you can still end up struggling: Affordable housing is often located miles away from the downtown business cores of major cities, resulting in long, expensive commutes each day that eat away at already sparse paychecks. Plus, it’s expensive to move to another state, given the cost of gas money, a moving truck, etc., so it’s possible to end up trapped in a bad situation where you are if you can’t afford to relocate.

4) Lack of a living wage means you won’t be able to afford housing

“Since 2000, rents have grown roughly twice as fast as wages, and you don’t have to be an economist to understand why that is hugely problematic,” says Stan Humphries, a chief economist at the real estate website Zillow.

Thirty-seven years (and counting) of wage stagnation and decline compounds the problem significantly. The federal minimum wage of $7.25 per hour has not been raised since 2009. Had it risen in connection with productivity over the past four decades, the minimum wage would be more than $18 per hour today. Gains in productivity were previously tied to increased wages, but now those gains go to CEOs and shareholders instead. Combined with horrible trade agreements unfavorable to workers such as NAFTA, weakened labor unionsglobal competition, and a high cost of living that has far outpaced wages, people are left struggling to make ends meet.

Most jobs created post-recession are in low-wage industries, with 44 percent of new jobs paying no more than $13.33 per hour. The same type of administrative work that I was paid $15 to $20 an hour to do in 2000 now pays only $11 to $12 an hour — without benefits, holiday pay, or sick leave. If you don’t work, you don’t get paid, period.

Full-time work at minimum wage is not enough to lift someone above the poverty line, let alone afford housing. Critics argue that a higher minimum wage will discourage companies from hiring, but studies have shown that two-thirds of all low-wage workers are actually employed by large corporations. Those corporations are earning profits much higher than their pre-recession levels, but those gains go to executives and shareholders rather than to employees. Low-wage employers such as Walmart and McDonald’s won’t hire older, college-educated workers anyway, because they are overqualified and will quit when something better comes along. Without a living wage, working people will continue to live in poverty and rely on public assistance such as SNAP and Medicaid — and be blamed for their predicament.

5) Even if you do have a job and savings, landlords can make it impossible for you to get a lease

More than half of renters in America pay over 30 percent of their income in rent. According to the National Low Income Housing Coalition (NLIHC) via its excellent housing study “Out of Reach,” there isn’t a single state in the US where a full-time, minimum wage worker can afford a fair market rate one-bedroom apartment while paying less than 30 percent of their total income. In 2015, the hourly wage a person would need to earn to afford housing is $15.50 for a one-bedroom unit (assuming a fair market rate rent of $806 a month) and $19.35 for a two-bedroom unit (assuming a fair market rate rent of $1,006 a month). In two of the West Coast states where I have lived and worked most of my adult life, those wages are far above the sub-$9.50 minimum wage of both states.

housing market

Because the tight rental market is so heavily stacked in landlords’ favor, many of them now require proof that you make a certain percentage more than the rent when you submit your rental application. Here are examples from some current ads in my area:

  • We require documentation of income such that the monthly rent payment is no more than 35 percent of monthly gross income.
  • Our one-bedrooms start at $820, and our two-bedrooms start at $870. To qualify, we do require an income of two and a half times the rent or a minimum of $10,000 in a US bank account.
  • Your gross monthly household income must be no less than three times the amount of monthly rent.
  • You must have verifiable monthly income, and your net income amount should be approximately three times the amount of rent per month ($2,700 total/$900 month rent).

Those requirements — just for apartments with three-figure rents — put the upfront move-in costs at well over $2,000, far more than I have in savings. Even when I was working full time, whether at $12 or $15 an hour, I didn’t gross, let alone net, $2,700 a month.

Landlords don’t care that you have no debt or criminal history and a good rental history — if you are unemployed or homeless, you are out of luck. And you absolutely cannot tell a potential landlord (or employer) that you are homeless, let alone that you were three times prior. Homeless people are so routinely discriminated against by both landlords and employers that several state legislatures have passed a Homeless Bill of Rights to try to protect them from discrimination because of their status.

“Landlords think that just because a person is poor they will be a bad tenant, but there are no studies to show that they have worse outcomes as tenants,” says Michele Thomas, director of policy at the Washington Low Income Housing Alliance (WLIHA). Discrimination against homeless job applicants prevents them from breaking out of poverty and from obtaining housing. It’s worth noting that 25 percent of homeless people are employed but just don’t earn enough to afford rent.

6) Politicians won’t help

Poor people don’t voteso most politicians ignore them — especially at the federal level. The homeless constituency is invisible. With all of their time spent on day-to-day survival, the homeless don’t have time to advocate for their own needs.

Most cities still throw money at social services instead of building low-income housing and housing for the homeless, failing to understand it’s called “homelessness” and not “servicelessness” for a reason. The mostly nonprofit providers of social services are known as Continuum of Care providers, whose mission is to secure federal, state, and local money to provide services that deal with the result of homelessness, such as shelters, day-use centers, etc., rather than prevention. Addressing and solving the root causes of homelessness is not their job, mission, or focus.

This misdirected focus creates expensive bureaucracies to administer the programs, and drains funds away from addressing the problem directly, for example, by building more affordable housing.

In the past decade, national homelessness experts figured out that the best way to end homelessness was to give the homeless a permanent roof over their heads first, rather than services. The approach, known as Housing First, has been independently vetted and declared a success, because it is far more cost-effective to provide housing than having the homeless population drift through shelters, jails, emergency rooms, and the streets. Direct-housing programs work, but cities have been slow to either enact or fully fund successful programs like Housing First or Rapid Re-Housing, because the decision-makers are slow to realize that only housing solves homelessness.

7) Living with a roommate is the fastest but most problematic way out of homelessness

Living with a roommate will often cost far less than a private apartment or house, and will get a roof over your head for protection from the heat or cold. But you can end up scraping the bottom of the barrel as far as living conditions go. Not once, but twice, I was offered the “opportunity” to sleep on rugs and furniture reeking of pet urine for “only” $400 a month! No, thanks, my car is free and isn’t nearly as disgusting and uncomfortable as that.

Also, living with roommates at middle age to escape homelessness is far different and much less benign than generally congenial and flexible college roommate scenarios. Just because a person has a roof over her head — and you don’t — doesn’t mean that she is sane or safe to live with. Whenever I place classified ads looking for a room to rent, I always get sex-for-rent offers from men. And dealing with someone else’s drama, such as drug or alcohol abuse, can be far worse than living in your car. You already have enough problems and trauma of your own; you don’t need other people and their issues adding to your vulnerability.

One of my roommates had a mental episode and stopped paying her bills. My next roommates, a retired couple, would snoop through my papers and personal belongings while I was at work. Another roommate became unhappy with me because I didn’t want to become her drinking buddy. The bottom line is that your roommate is the leaseholder with all the legal rights to your living space, and can give you notice to move out at any time for any reason. This means you can be tossed back out onto the streets in short order with essentially no recourse, and your problem of trying to find an affordable place to live begins all over again.

8) People who are uncomfortable with homelessness in their communities want you to be invisible — and the penalties are stiff if you aren’t

Seventy-one percent of San Francisco’s homeless population were once residents with homes, but that didn’t stop a young tech worker in the city, Justin Keller, from writing a brutally insensitive open letter to the mayor and chief of police about the “riff raff” homeless in his city. Keller stated: “We live in a free market society. The wealthy working people have earned their right to live in the city. They went out, got an education, work hard, and earned it. I shouldn’t have to worry about being accosted. I shouldn’t have to see the pain, struggle, and despair of homeless people to and from my way to work every day. I want my parents when they come visit to have a great experience, and enjoy this special place.”

Homeless people try to stay invisible to survive, because if someone complains to the police, the homeless risk being jailed or fined for violating “no overnight camping” laws or having their vehicle towed and impounded if they are living in it. It’s exhausting and stressful trying to find work, stay clean, and keep the car running, especially when many people don’t want you in their neighborhood, their parks, or their libraries, the last bastions of the homeless.

It’s hard to sleep at night due to street noise, all while remaining vigilant that no one notices you are sleeping in your car (window condensation from breathing is a huge tip-off). It’s difficult to hide the fact that you live in your car, because people will see you come and go, and if have a pet with you, it’s a dead giveaway when you take it out for walks. My old beater car doesn’t blend in at all with nicer, late-model vehicles that line the streets of the neighborhoods where it’s safest to sleep.

Living in a car is a step up from street homelessness, but isn’t much safer: Homeless people are 13 times more likely to be the victims of violence than housed people. And homeless women are inherently vulnerable, with higher personal safety risks than men.

Society’s message to the homeless is abundantly clear: You don’t matter, because you don’t have money. There are so many ways to get down on your luck, or become homeless, and so few means to escape. Economic inequality and a system built to perpetuate it is the problem — homelessness is the result for people without a safety net. A rising economic tide doesn’t lift all boats — it merely drowns the poor. It’s understood that most people in life aren’t going to be high-wage earners on par with doctors and lawyers, but that doesn’t mean working people should have to live on the streets or in vehicles.

In a few days, I will yet again put the key into the car ignition and have no place to go, not enough money for housing, no job or prospects, and $1,000 in savings to survive on until it’s gone or I somehow find a job and a place to live — whichever comes first. It looks like this is going to be the new normal for me in this economy. It’s not about the prime of life or possibilities anymore; it’s about what will I have to learn to live with from now on.

Sadly, I’m far from alone in working-class poverty. Even more sadly, in one of the richest countries on Earth, some people are choosing suicide rather than enduring the oblivion of poverty. The poor and the homeless are not looking for luxury. This is about meeting basic needs. It’s not living — it’s survival, and it’s miserable.

https://www.vox.com/2016/3/8/11173304/homeless-in-america

Gary Reber Comments:

This is a poignant article, which gets to the point that homelessness is the result of poverty.

Sadly, any discussion of solutions to empower people to earn always is limited to job creation and raising the minimum wage to a “livable” wage.

If you believe that job opportunities and good wages are the ONLY solution, they you are ignorant.

Wealthy people are wealthy because they OWN significant wealth-creating, income-producing capital assets, the non-human factor increasingly making many forms of labor unnecessary.

Productive capital, on the other hand, is increasingly the source of the world’s economic growth. As this is the real world reality, therefore, shouldn’t OWNING productive capital become the source of added property ownership incomes for all? Logically, if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all.

Yet, sadly, Americans ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the economy.

No matter, whether the debate is about how much labor is necessary or unnecessary, it is imperative that the issue of concentrated capital ownership is addressed, and policies are enacted to simultaneous create new capital owners with the growth of the economy and the corporations growing the economy.

For solutions that achieve this goal, see  Monetary Justice at http://capitalhomestead.org/page/monetary-justice and the Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

 

Government Set To Borrow Nearly $1 trillion This Year (2018), An 84 Percent Jump From Last Year

U.S. Capitol building

To finance the debt, the U.S. Treasury sells bonds and other types of securities (Securities is a term for a variety of financial assets). Anyone can buy a bond or other Treasury security directly from the Treasury through its website, treasurydirect.gov, or from banks or brokers. When a person buys a Treasury bond, he or she effectively loans money (from their past savings) to the federal government in exchange for repayment with interest at a later date.

Most Treasury bonds give the investor – the person who buys the bond – a pre-determined fixed interest rate. Generally, if you buy a bond, the price you pay is less than what the bond is worth. That means you hold onto the bond until it “matures.” A bond is mature on the date at which it is worth its face value. For example, you may buy a five-year $100 bond today and pay only $90. Then you hold it for five years, at which time it is worth $100. You also can sell the bond before it matures.

There are actually many different kinds of Treasury bonds, but the common thread between them is that they represent a loan (from past savings) to the Treasury, and therefore to the U.S. government.

The federal debt is the sum of the debt held by the public – that’s the money borrowed from regular people like you and from foreign countries – plus the debt held by federal accounts.

Debt held by federal accounts is the amount of money that the Treasury has borrowed from itself, such as from trust funds, which are federal tax revenues that can only be used for certain programs. When trust fund accounts run a surplus, the Treasury takes some of that surplus and uses it to pay for other kinds of federal spending. But that means the Treasury must pay that borrowed money back to the trust fund at a later date. That borrowed money is called “debt held by federal accounts;” that’s the money the Treasury effectively lends between different federal government accounts. Almost one-third of the federal debt is held by federal accounts, while the remaining two-thirds of the federal debt is held by the public.

Debt held by the public is the total amount the government owes to all of its creditors in the general public, not including its own federal government accounts. It includes debt held by American citizens, banks and financial institutions as well as people in foreign countries, foreign institutions and foreign governments.

As you can see in the pie chart above, about one third of the total federal debt, and nearly half of debt held by the public, is held internationally by foreign investors and central banks of other countries who buy our Treasury bonds as investments. These countries include China ($1.3 trillion), Japan ($1.2 trillion) and Brazil ($262 billion), the three countries that currently hold the most U.S. debt. Treasury also groups foreign holders of national debt by oil exporting nations (including Iran, Iraq, Kuwait, Ecuador, Nigeria and others, $297 billion) and Caribbean banking centers (Bermuda, Cayman Islands, and others, $293 billion).

The next largest portion of debt held by the public is held by private domestic investors, which includes regular Americans as well as institutions like private banks.

The U.S. Federal Reserve Bank and state and local governments also hold substantial shares of federal debt held by the public. The Federal Reserve’s share of the federal debt is not counted as debt held by federal accounts, because the Federal Reserve is considered independent of the federal government. The Federal Reserve buys and sells Treasury bonds as part of its work to control the money supply and set interest rates in the U.S. economy.

The debt ceiling is the legal limit set by Congress on the total amount that the U.S. Treasury can borrow. If the level of federal debt hits the debt ceiling, the government cannot legally borrow additional funds until Congress raises the debt ceiling, and could be left with no way to pay its bills. If this happens, it could result in sudden interruptions of government services and unintended consequences.

Congress has the legal authority to raise the debt ceiling as needed. Doing so does not authorize new spending, but rather allows the Treasury to pay the bills for spending that has already been authorized by Congress.

Source: National Priorities Project https://www.nationalpriorities.org/budget-basics/federal-budget-101/borrowing-and-federal-debt/

Bernie Sanders And Elizabeth Warren Wrote A Letter to Trump About Infrastructure

On January 30, 2018, Christian Britschgi writes on Reason:

A group of senators is pressuring Trump to make his infrastructure proposal as cost-ineffective as possible by adding protectionist provisions to it.

“As you draft your infrastructure proposal, we encourage you to not only protect existing ‘Buy America’ laws, but work with Congress to expand these protections,” reads the Friday letter (first made public Monday) signed by such progressive luminaries as Elizabeth Warren(D–Mass.), Bernie Sanders (I–Vt.), and Sherrod Brown (D–Ohio). Such a move, these senators say, will “improve wages, boost growth, and support American manufacturers.”

To judge from the letter’s extensive quotes from Trump’s own speeches and executive orders, protectionist procurement requirements are one area where #resistance progressives and the president are in agreement.

Trump’s inaugural address promised a government that would “buy American and hire American.” A few months later, he signed an executive order in Kenosha, Wisconsin, which promised to crack down on waivers for “Buy American” provisions on federal projects.

Current federal law requires that infrastructure projects receiving federal dollars source a certain percentage of materials—typically iron, steel, and “manufactured goods”—from domestic producers. Federal cabinet heads have broad authority to waive these requirements if they impose undue costs, if the materials are not available in sufficient quantity, or if it would otherwise be in “the public interest.”

That “public interest” provision allows the government pretty broad authority to skirt Buy America requirements, which they often do—and for good reason, says Baruch Feigenbaum, a transportation analyst with the Reason Foundation (the nonprofit that publishes this website).

“Buy America basically makes things more expensive. Instead of getting the most cost-effective materials from throughout the globe, you’re forced to buy things in America,” he says.

The senators writing to Trump had precious little to say about cost effectiveness, instead asserting that “only strict adherence this [Buy America] principle will ensure that the economic benefits of infrastructure investment to American companies, not to foreign companies.”

“The point of an infrastructure project is to build infrastructure,” retorts Feigenbaum. Hiring workers and purchasing materials are a means to that end, not an end in themselves.

Stepped up enforcement of Buy American provisions isn’t the only infrastructure demand coming from the Democratic side of the aisle. In January of last year, Senate Dems proposed their own $1 trillion infrastructure plan composed entirely of direct federal spending; it was full of progressive priorities, including $130 billion for public transit, $100 billion for “21st century” (read: renewable) energy projects, and $20 billion for expanded broadband internet. House Democrats have proposed a $2 trillion infrastructure plan similarly composed entirely of direct federal dollars.

The Trump administration says it wants to shift as much infrastructure financing as possible onto states, local governments, and private investors. Still Republicans will likely need support from some Democrats to move an infrastructure project through the Senate, necessitating some horse-trading.

“Democrats are going to be skeptical to work with the White House, so giving Democrats Buy America stuff will make them more likely to agree to an infrastructure package,” says Feigenbaum. Given Trump’s personal support for the idea, and given the leverage Democrats hold, the administration’s forthcoming infrastructure plan is likely to contain more protectionism, and consequently less actual infrastructure investment.

http://reason.com/blog/2018/01/30/sanders-warren-infrastructure-trump

 

How To Lay The Foundation For An Employee-Owned Business

On October 5, 2016, Darren Dahl writes on Forbes:

The evidence continues to mount that employee-owned companies simply perform better than their peers. They create more jobs, generate more wealth for their employee-owners, and then give back impressive amounts to the communities they operate in.

So why doesn’t every business operate this way?

One potential barrier for any company becoming employee-owned is that, for most businesses, it involves more than just flipping a switch or filling out a lot of paperwork. Sure, the founder of a business could technically sell the company to their employees tomorrow. But what would happen next? If a founder has kept their employees in the dark about, say, the company’s finances and then, voila!, pulls up the curtain for the first time, how do you think things will turn out? Or, if the founder has made every key operational decision inside the business since its start, what happens when they hand over that responsibility to someone else out of the blue?

 
 

The point is that there are steps every business can take to better prepare their workforce, and their company culture, to make the transition to becoming employee-owned. And, in some cases, paving the way for a successful transition can take years.

Consider the path that the team at Top Value Fabrics, an international fabric supplier based in Carmel, Indiana, took to become a company that is now 100% owned by its more than 60 employees.

 

Two entrepreneurs founded the company back in 1974; eventually one of the partners bought out the other in 2001.

A few years later, the new owner began thinking about his long-term succession plans and, with that in mind, he more fully empowered his executive team to run the business, including additional P&L responsibility and strategic decision-making authority. He continued to progress under that mindset, reducing his presence in the office more and more as time went on even though he was still the sole owner and didn’t have a clear succession plan.

In 2010, the company’s CFO, Chris Fredericks, who is now the company’s president, asked the owner about the possibility of selling to an ESOP. After a short due diligence process, the founder sold 100% to an ESOP later that same year. Along with that transaction, a professional board was put in place and the leadership team began a new effort to increase transparency and broad based decision-making throughout the organization.

“It’s amazing to see how much more interested and engaged team members can be in an ESOP that really leverages an ownership culture,” says Fredericks. “Building an ownership culture is not easy even in an ESOP; it requires a management team willing to let go of top down thinking, which is sometimes still very prevalent in older businesses and industries.”

Most companies that are 100% owned by an ESOP also rely on a board with some, or even a majority of, independent directors, which “opens up the management of the company to a more professional approach, along with more perspectives rather than just one leader,” says Fredericks.

Fredericks also points out that ESOPs don’t have to be an all or nothing solution. He says that private businesses that are contributing in some way to employee retirement accounts – such as through a 401(k) match or profit sharing program – are already great candidates for ESOP, even if being 100% employee owned isn’t their end goal. “They just have to establish a minority ESOP and shift the retirement expense to ESOP from what they are already doing,” says Fredericks.

So how do you know if your company might be a great candidate to becoming an ESOP? Fredericks suggests asking yourself the following questions:

1.     Can this business run without you on a daily basis? If not, it might be time to start building out a management team that can shoulder the load of everything from solving problems to finding new customers to setting the long term strategic direction of the business.

2.     Do you share what Jack Stack, the CEO of SRC Holdings and the founder of open-book management, calls a “Stake in the Outcome?” If not, it might be a good time to explore the notion of building a bonus or profit-sharing program that explains to your team what they can win – and how they can win it.

3.     Are you willing to let an “ownership culture” take hold? In other words, are you willing to empower team members to make decisions and impact the results to the fullest?

4.     Are you willing to add independent board members now to help professionalize the company?

5.     What do you want your legacy to be? If your goal is to sell for market value, but also for your business and its culture to live on beyond you while also rewarding the people who helped you build it, it might just be the perfect time to start laying the foundation for employee ownership in your company.

“Some company founders inadvertently limit the future success of their business by letting it become too dependent on them,” says Fredericks. “The most impressive thing to me about our founder was his ability to recognize that well in advance of his desire to actually retire. He knew the type of legacy he wanted to leave for his market-leading company, and for the employees that worked hard to help him build it. The things he did well in advance of selling to an ESOP created an organization that was extremely well prepared to transition to employee ownership.”

https://www.forbes.com/sites/darrendahl/2016/10/05/how-to-lay-the-foundation-for-an-employee-owned-business/#52b6daaf37ef

http://related.forbes.com/Employee_Stock_Ownership_Plans.cfm?&vsid=1514304302496618&vi=1517709351174701509&dytm=1517709352555&rtbsd=6&kbbq=%26sde%3D1%26adepth%3D1%26ddepth%3D1&tdAdd[]=%7C%40%7Csde%3D1%7C%40%7Cadepth%3D1%7C%40%7Cddepth%3D1&verid=121199&hvsid=00001517709351790007980249155853&upk=1517709352.7156&sttm=1517709351789&=&kp=1&kbc=35625&kt=307&ki=9729104&ktd=7421737173308&kbc2=0%7C%7Crpc%3D0.14%7C%7Clvl%3D2.81&fdkt=307&fp=G_lRe64-7i5EeY9qABvjq93xlddiKoxqz–p6Ol83DTPIVcaYiAZMkJCmsHxI9sgnkx3mInPqMDYpwk7RhUoghVydynHHe7JgUJMim-rjK5H7kw6QNMPa2VB2n2GbN-v&c=uauoXr0uCsVH7624-4lIQQ&cme=XQ5FShBORrOdlMJQHYFO0uObObkXekWzMNqGbga1MdAfUcPr6GVr55zSIp0jsXZ3Nhh1nfzSEFBbMqGAbiqxnq6yf5N-duR5PnJK-lCayYV4kNMGCxnDBIDX8sBGPLrR9vAaY0RYGdCY5Ky8FTJXMfyM9jjxTsq0WQVSWVGgKkPadiifk3PM9BseLhiO00tE%7C%7CNDHRnZ9Gz3KXlI-i9OnZqQ%3D%3D%7C5gDUJdTGiJzedmq9hanWYg%3D%3D%7CN7fu2vKt8_s%3D%7CSo9ZXMsdcnDwfGskl6uzo43joGOC-vahnbivCge4gasv4PLkGJQqi8gYdlxlrrjtjoznu4v941mPlPAkEUKaMsjTBPpY7OgjHHbLSYnZahARhyBdAzTFIyKkAWJRW_cH%7CJf0d-WoAdPswlM4CPdQydpUSkC8WRfxaPGqlQu_w1UE%3D%7CpIJW-KDwhYtP_aAIi-5IWoRsqRBECFw24Avlu41QwL8chc-cUccyaUsuXcbh3L2HVx6UsY5iuUAlmMiLvXCAiFFyAFCtYnAKRNDKomZPwqygYoyrAQyvB2bVJwiUydn3Ylyhsk7tUhXPFSGQE7n5bYoLKP7Ejjs3XHSX7OPRTro%3D%7C&ib=0&cid=8CU2T3HV4&crid=688196485&size=800×200&lpid=&tsid=15032&ksu=224&chid=&https=0&kwdsMaxTm=400&ugd=4&maxProviderPixel1=%2F%2Fc.ad-srv.co%2Fpixel&maxProviderPixel2=%2F%2Fc.adyield.co%2Fpixel&rms=1517709352&&asn=5650&clsKb=2&ecref=w77EQ%3ASSBBB.kmLGJQ.NmYSkmLGJQSBJjNmYJS%3F7mPDTvw77EQ%3ASSBBB.kmLGJQ.NmYSQ87JQSO1LLJzO1wjSf9uFSu9S9XSwmBo7moj15o7wJokmxzO178mzokmLo1zoJYEjm5JJomBzJOoGxQ8zJQQS%26LJkPDTvw77EQ%3ASS7.NmS3QzfTJ-D45%26LJkJLLJLvw77EQ%3ASS7.NmS3QzfTJ-D45&kct=1648981&abpl=1

Gary Reber Comments:

This an excellent article on how to create employee-owned corporations.

Dawn K. Brown Commendts:

An excellent piece making a solid business argument for why employee ownership works better than the top-down wage system. It also provides some good transitional tips for making the change to the ownership system.

A Tsunami Of Store Closings Is About To Hit The US — And It’s Expected To Eclipse The Retail Carnage Of 2017

Dead MallRolling Acres Mall in Akron, Ohio.Nicholas Eckhart

On January 1, 2018, Hayley Peterson writes on Business Insider:

  • More than 12,000 stores are expected to close in 2018 — up from roughly 9,000 in 2017, according to Cushman & Wakefield.
  • A rash of bankruptcy filings and announcements to close stores are expected at the start of the year, when retailers are flush with cash from the holiday season.
  • Among the companies most likely to file for bankruptcy within the next yearare Sears, Bon-Ton Stores, Bebe Stores, Destination Maternity Corp., and Stein Mart.
  • The closings would push hundreds of shopping malls to the brink of death.

Retailers are bracing for a fresh wave of store closings in 2018 that is expected to eclipse the rash of closings that rocked the industry last year.

“Landlords are panicking,” said Larry Perkins, the CEO and founder of the advisory firm SierraConstellation Partners. “The last year was pretty apocalyptic from a retail standpoint, and the macro issues haven’t changed. There will continue to be a high degree of bankruptcies and store closures.”

2017 was a record year for both store closings and retail bankruptcies. Dozens of retailers including Macy’s, Sears, and J.C. Penney shuttered an estimated 9,000 stores — far exceeding recessionary levels — and 50 chains filed for bankruptcy.

But there’s still a glut of retail space in the US, and the fallout is far from over.

The number of store closings in the US is expected to jump at least 33% to more than 12,000 in 2018, and another 25 major retailers could file for bankruptcy, according to estimates by the commercial real estate firm Cushman & Wakefield.

Store closuresCushman & Wakefield

Nearly two dozen major chains including Walgreens, Gap, and Gymboree have already announced plans to close more than 3,600 stores this year.

Many more announcements on closures and bankruptcies are expected in the coming months.

The start of the year is a popular time to announce store closings and bankruptcies because retailers are typically flush with cash after the busy holiday season — and closing stores and filing for bankruptcy are costly.

Among the companies most likely to file for bankruptcy within the next year are Sears, Bon-Ton Stores, Bebe Stores, Destination Maternity Corp., and Stein Mart, according to S&P Global Market Intelligence.

Mass store closings will force shopping malls out of business

When combined with last year’s record-high store closings, an even higher rate of closings in 2018 would push hundreds of low-performing shopping malls to the brink of death.

The commercial real estate firm CoStar has estimated that nearly a quarter of malls in the US, or roughly 310 of the nation’s 1,300 shopping malls, are at high risk of losing an anchor tenant.

Anchor tenants are retailers like Macy’s and J.C. Penney that occupy the large, multistory buildings at mall entrances.

BI Graphics_Store closing in 2018_v2Business Insider/Samantha Lee

The loss of even one anchor tenant can trigger a multidecade downward spiral for mall owners.

That’s because the malls don’t only lose the income and shopper traffic from that store’s business; such closings often trigger clauses that allow the remaining mall tenants to exercise their right to terminate their leases or renegotiate the terms, typically with a period of lower rents, until another retailer moves into the vacant anchor space.

That’s good news for retailers looking to grow their physical assets — it means they are more likely to score low rent and favorable lease terms.

But it’s terrible news for retail landlords, some of whom are now trying to stop the bleeding by suing the companies that are closing stores.

Mall owners are suing retailers to keep stores open

Simon Property Group, one of the biggest mall operators in the US, sued Starbucks this year after the coffee chain said it planned to close all 379 stores in its Teavana chain, 77 of which are located in Simon Property Group malls.

The mall owner demanded that Starbucks keep running the tea shops located in its malls, arguing in part that their closing would reduce traffic to surrounding stores.

A judge ruled in Simon Property Group’s favor in December and ordered Starbucks to keep operating the Teavana stores in question.

Shopping MallOli Scarff/Getty Images

Whole Foods was also recently sued for closing a Seattle-area store, with the owners of the property fighting the company for breaking its long-term lease.

A judge has since ordered Whole Foods to reopen the store, which the grocer had closed in October.

As mall operators become increasingly desperate to keep the lights on, many more retailers could find themselves in court, fighting to shut down struggling stores.

Not all retailers and shopping malls are doomed

To be sure, there are still hundreds of high-performing shopping malls in the US that are expected to remain immune from the fallout of shrinking retailers.

Only the lowest-performing malls — of which there are roughly 300 — are in danger of going out of business.

There are also plenty of retailers, mostly discounters, that are growing their physical assets while others shrink.

Dollar General, Dollar Tree, Lidl, Aldi, Ross Stores, and TJ Maxx are planning to open hundreds of new stores next year.

“Retail isn’t going away by any means,” Perkins of SierraConstellation said. “We just got a little bit out of control with the volume of retailers and the number of stores.”

http://www.businessinsider.com/store-closures-in-2018-will-eclipse-2017-2018-1

Gary Reber Comments:

For a healthy economy, there must be a universal state of “customers with money” to create demand for goods, products and services, and continuously spend their earnings from their production to achieve general affluence and sustain economy growth.
The problem is the vast majority of Americans are losing or under the threat of losing income to support themselves and their families, because of tectonic shifts in the technologies of production and globalization, which destroys jobs that enable people to live comfortably and not constantly having to seek out the lowest possible price on products and services. Because consumers will always seek the lowest cost/quality/performance alternative, for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their products or services.
And with stagnate incomes and reduced incomes, consumer debt tends to rise, putting more and more people in financial jeopardy.
On the other hand, the wealthy capital ownership class, the top 10 percent of the nation, are not the drivers of a mass production/mass consumption economy as they produce so much through owning productive inputs to the economy that they have attained general affluence and use their excess earnings to reinvest instead of spending it on consumption.
 
The problem is technological change makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). The technology industry is always changing, evolving and innovating. The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor. Thus, when the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate.

Sadly, we are living in a “holistic” society, which is about the ability of greedy rich people to rig the system and manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the wealth through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success – always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to earn the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.”

It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well being.

In a democratic growth economy, based on binary economics (human and non-human productive inputs), the ownership of productive capital assets would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, benefiting EVERY citizen, including the traditionally disenfranchised poor and working and middle class. Thus, productive capital income, from full earnings dividend payouts, would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote environmentally responsible economic growth and more profitable enterprise. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy. As a result, our business corporations would be enabled to operate more efficiency and competitively, while broadening wealth-creating ownership participation, creating new capital owners and “customers with money” to support the goods, products and services being produced.

THE G.O.P. TAX CUT IS DRAINING THE TREASURY EVEN FASTER THAN EXPECTED

 

McConnell photographed in the chamber of the U.S. House of Representatives before the SOTU on January 30th.
By Alex Wong/Getty Images.

 

On February 1, 2018, Bess Levin writes on Vanity Fair:

One of the many things confirmed by the great tax-bill melodrama of 2017 is that Republicans only pretend to care about “fiscal responsibility” when Democrats are in power and tax cuts aren’t on the line. With the opportunity to slash the corporate rate nearly in half, cries of “I won’t endorse a bill that adds one penny to the deficit!” evaporated, and tacking on $1.5 trillion became no big deal. Tax cuts, we will soon be reminded, don’t grow on trees, and the social safety net must be pared back in exchange. For now, though, Republicans are still in the trickle-down honeymoon phase, seeing in every corporate press release more confirmation that America has been made great again. Which makes it somewhat ironic that the Treasury is now burning through its cash reserves at an even more spectacular rate.

According to the nonpartisan Congressional Budget Office, the federal government will run out of money even sooner than expected, thanks to the new tax legislation, which is estimated to lead to a fall in revenue of $136 billion in 2018. A default on debts had originally been forecasted for late March or early April. But now, because of the new withholding tables, “withheld receipts are expected to be less than the amounts paid in the comparable period last year.” That, combined with the fact that the Treasury generally issues a high number of tax refunds in February and March, means that the $272 billion in cash the Department had on hand as of Tuesday will quickly dwindle. If the debt ceiling isn’t increased by the first half of March, the C.B.O. cautioned on Wednesday, “the government would be unable to pay its obligations fully,” and would be forced to delay payments, default on its debts, or both.

Treasury markets are already skittish at the prospect, according to Bloomberg, and the matter may prove contentious in Congress, which is already grappling with an immigration stalemate and another government shutdown vote on February 8. A proposal to raise the debt ceiling may repel G.O.P. deficit hawks, who in the past have pushed for spending cutsbefore allowing a vote. And Democrats may be equally hesitant to support the measure, particularly if there’s been zero progress on the immigration front. (Donald Trump’sState of the Union address, in which he claimed that the the visa lottery and family sponsorships are “deadly loopholes” that allow “criminals and terrorists to enter our country” did not help matters—“He is just setting another bad standard which we have to reject,” House Minority Leader Nancy Pelosi told reporters Wednesday.)

To be fair, the C.B.O. report doesn’t factor in the stratospheric growth Team Trump promised would be spurred by the tax plan, allowing it—per Treasury Secretary Steve Mnuchin—to not only “pay for itself, but . . . pay down debt.” But experts have cast some doubt on that outcome. “That’s wishful thinking,” wrote Bruce Bartlett, a former domestic-policy adviser to Ronald Reagan. “So is most Republican rhetoric around tax cutting.”

https://www.vanityfair.com/news/2018/02/the-gop-tax-cut-is-draining-the-treasury

Gary Reber Comments:

The national debt is debt not associated with productive growth. The current system perpetuates budget deficits and unsustainable government debt, underutilized workers, a lack of financing for financing advanced energy and green technologies, and outsourcing of U.S. industrial jobs to low-wage countries, trade deficits, shrinking consumption incomes among the poor and middle class, and conventional methods for financing productive growth that increase the ownership and power gaps between the top 1 percent and the 90 percent whose combined ownership accumulations are already less than the elite whose money power is widely known as the source of political corruption and the breakdown of political democracy.

If we are to really have “stratospheric growth” to produce inclusive prosperity and pay down the national debt , the Federal Reserve needs to stop monetizing unproductive debt, including, as in the past, bailouts of banks “too big to fail,” Wall Street derivatives speculators, and war, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to purposely acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income.

The CHA would process annually an equal allocation of productive credit to every citizen exclusively for purchasing full-voting,  full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets.

The shares would be purchased using interest-free credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods, products and services produced by the added technology, renewable energy systems, manufacturing factories, rentable space for entrepreneurial endeavor and infrastructure, both repair and new, added to the economy.

Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.

We need to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. Removing barriers that inhibit or prevent ordinary people from purchasing capital that pays for itself out of its own future earnings is paramount as an actionable policy. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers.

We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings.

The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today — management and banks — that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.

Making EVERY citizen productive is the ONLY way that the real economy will grow along with incomes from both wages and dividends to repay the national debt and set our nation on a course of inclusive prosperity, inclusive opportunity and inclusive economic justice.

See my article “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://www.foreconomicjustice.org/?p=11

See my article “What Is Needed To Resolve The Destruction Of American Jobs Problem?” published by The Huffington Post at http://www.huffingtonpost.com/entry/593adb89e4b0b65670e569e9.

Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.

Support the Capital Homestead Act (aka Economic Democracy Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

Separating Science Fact From Science Hype: How Far Off Is The Singularity?

On January 30, 2018, Dom Galeon writes on Futurism:

If/When Machines Take Over

The term “artificial intelligence” was only just coined about 60 years ago, but today, we have no shortage of experts pondering the future of AI. Chief amongst the topics considered is the technological singularity, a moment when machines reach a level of intelligence that exceeds that of humans.

While currently confined to science fiction, the singularity no longer seems beyond the realm of possibility. From larger tech companies like Google and IBM to dozens of smaller startups, some of the smartest people in the world are dedicated to advancing the fields of AI and robotics. Now, we have human-looking robots that can hold a conversation, read emotions — or at least try to — and engage in one type of work or another.

Top among the leading experts confident that the singularity is a near-future inevitability is Ray Kurzweil, Google’s director of engineering. The highly regarded futurist and “future teller” predicts we’ll reach it sometime before 2045.

Meanwhile, SoftBank CEO Masayoshi Son, a quite famous futurist himself, is convinced the singularity will happen this century, possibly as soon as 2047. Between his company’s strategic acquisitions, which include robotics startup Boston Dynamics, and billions of dollars in tech funding, it might be safe to say that no other person is as keen to speed up the process.

Not everyone is looking forward to the singularity, though. Some experts are concerned that super-intelligent machines could end humanity as we know it. These warnings come from the likes of physicist Stephen Hawking and Tesla CEO and founder Elon Musk, who has famously taken flak for his “doomsday” attitude towards AI and the singularity.

Clearly, the subject is quite divisive, so Futurism decided to gather the thoughts of other experts in the hopes of separating sci-fi from actual developments in AI. Here’s how close they think we are to reaching the singularity.


Louis Rosenberg, CEO, Unanimous AI:

“My view, as I describe in my TED talk from this summer, is that artificial intelligence will become self-aware and will exceed human abilities, a milestone that many people refer to as the singularity. Why am I so sure this will happen? Simple. Mother nature has already proven that sentient intelligence can be created by enabling massive numbers of simple processing units (i.e., neurons) to form adaptive networks (i.e., brains).

“Back in the early 1990s, when I started thinking about this issue, I believed that AI would exceed human abilities around the year 2050. Currently, I believe it will happen sooner than that, possibly as early as 2030. That’s very surprising to me, as these types of forecasts usually slip further into the future as the limits of technology come into focus, but this one is screaming towards us faster than ever.

To me, the prospect of a sentient artificial intelligence being created on Earth is no less dangerous than an alien intelligence showing up from another planet. After all, it will have its own values, its own morals, its own sensibilities, and, most of all, its own interests.

“To assume that its interests will be aligned with ours is absurdly naive, and to assume that it won’t put its interests first — putting our very existence at risk — is to ignore what we humans have done to every other creature on Earth.

“Thus, we should be preparing for the imminent arrival of a sentient AI with the same level of caution as the imminent arrival of a spaceship from another solar system. We need to assume this is an existential threat for our species.

“What can we do? Personally, I am skeptical we can stop a sentient AI from emerging. We humans are just not able to contain dangerous technologies. It’s not that we don’t have good intentions; it’s that we rarely appreciate the dangers of our creations until they overtly present themselves, at which point it’s too late.

“Does that mean we’re doomed? For a long time I thought we were — in fact, I wrote two sci-fi graphic novels about our imminent demise — but now, I am a believer that humanity can survive if we make ourselves smarter, much smarter, and fast…staying ahead of the machines.”

Pierre Barreau, CEO, Aiva Technologies:

“I think that the biggest misunderstanding when it comes to how soon AI will reach a “super intelligence” level is the assumption that exponential growth in performance should be taken for granted.

“First, on a hardware level, we are hitting the ceiling of Moore’s law as transistors can’t get any smaller. At the same time, we have yet to prove in practice that new computing architectures, such as quantum computing, can be used to continue the growth of computing power at the same rate as we had previously.

“Second, on a software level, we still have a long way to go. Most of the best-performing AI algorithms require thousands, if not millions, of examples to train themselves successfully. We humans are able to learn new tasks much more efficiently by only seeing a few examples.

“The applications of AI [and] deep learning nowadays are very narrow. AI systems focus on solving very specific problems, such as recognizing pictures of cats and dogs, driving cars, or composing music, but we haven’t yet managed to train a system to do all these tasks at once like a human is capable of doing.

“That’s not to say that we shouldn’t be optimistic about the progress of AI. However, I believe that if too much hype surrounds a topic, it’s likely that there will come a point when we will become disillusioned with promises of what AI can do.

“If that happens, then another AI winter could appear, which would lead to reduced funding in artificial intelligence. This is probably the worst thing that could happen to AI research, as it could prevent further advances in the field from happening sooner rather than later.

“Now, when will the singularity happen? I think it depends what we mean by it. If we’re talking about AIs passing the Turing test and seeming as intelligent as humans, I believe that is something we will see by 2050. That doesn’t mean that the AI will necessarily be more intelligent than us.

“If we’re talking about AIs truly surpassing humans in any task, then I think that we still need to understand how our own intelligence works before being able to claim that we have created an artificial one that surpasses ours. A human brain is still infinitely more complicated to comprehend than the most complex deep neural network out there.”

Raja Chatila, chair of the IEEE Global Initiative for Ethical Considerations in AI and Autonomous Systems and director of the Institute of Intelligent Systems and Robotics (ISIR) at Pierre and Marie Curie University:

“The technological singularity concept is not grounded on any scientific or technological fact.

“The main argument is the so-called “law of accelerating returns” put forward by several prophets of the singularity and mostly by Ray Kurzweil. This law is inspired by Moore’s law, which, as you know, is not a scientific law — it’s the result of how the industry that manufactures processors and chips delivers more miniaturized and integrated ones by scaling down the transistor, therefore multiplying computing power by a factor of two approximately every two years, as well as increasing memory capacity.

“Everyone knows there are limits to Moore’s law — when we’ll reach the quantum scale, for example — and that there are architectures that can change this perspective (quantum computing, integration of different functions: “more than Moore,” etc.). It’s important to remember that Moore’s law is not a strict law.

“However, the proponents of the singularity generalize it to the evolution of species and of technology in general on no rigorous ground. From that, they project that there will be a moment in time in which the increasing power of computers will provide them with a capacity of artificial intelligence, surpassing all human intelligence. Currently, this is predicted by the singularity proponents to happen around 2040 to 2045.

“But mere computing power is not intelligence. We have about 100 billion neurons in our brain. It’s their organization and interaction that makes us think and act.

“For the time being, all we can do is program explicit algorithms for achieving some computations efficiently (calling this intelligence), be it by specifically defining these computations or through well-designed learning processes, which remain limited to what they’ve been designed to learn.

“In conclusion, the singularity is a matter of belief, not science.”

Gideon Shmuel, CEO of eyeSight Technologies:

“Figuring out how to make machines learn for themselves, in a broad way, may be an hour away in some small lab and may be five years out as a concentrated effort by one of the giants, such as Amazon or Google. The challenge is that once we make this leap and the machines truly learn by themselves, they will be able to do so at an exponential rate, surpassing us within hours or even mere minutes.

“I wish I could tell you that, like all other technological advancements, tech is neither good nor bad — it’s just a tool. I wish I could tell you that a tool is as good or as bad as its user. However, all this will not apply any longer. This singularity is not about the human users — it’s about the machines. This will be completely out of our hands, and the only thing that is certain is that we cannot predict the implications.

“Plenty of science-fiction books and movies bring up the notion of a super intelligence, figuring out that the best way to save humankind is to destroy it, or lock everyone up, or some other outcome you and I are not going to appreciate.

“There is an underlying second order differentiation that is worth making between AI technologies. If you take eyeSight’s domain expertise — embedded computer vision — the risk is rather low. Having a machine or computer learn on their own the meaning of the items and contexts they can see (recognize a person, a chair, a brand, a specific action performed by humans or an interaction, etc.) has nothing to do with the action such a machine can take with respect to this input.

“It is in our best interest to have machines that can teach themselves to understand what’s going on and ascribe the right meaning to the happenings. The risk lies with the AI brain that is responsible for taking the sensory inputs and translating them to action.

“Actions can be very risky both in the physical realm, through motors (vehicles, gates, cranes, pipe valves, robots, etc.) and in the cyber realm (futzing with information flow, access to information, control of resources, identities, various permissions, etc.).

“Should we be afraid of the latter? Personally, I’m shaking.”

Patrick Winston, artificial intelligence and computer science professor, MIT Computer Science and Artificial Intelligence Lab (CSAIL):

“I was recently asked a variant on this question. People have been saying we will have human-level intelligence in 20 years for the past 50 years. My answer: I’m ok with it. It will be true eventually.

“My less flip answer is that, interestingly, [Alan] Turing broached the subject in his original Turing test paper using a nuclear reaction analogy. Since, others have thought they have invented the singularity idea, but it is really an obvious question that anyone who has thought seriously about AI would ask.

“My personal answer is that it is not like getting a person to the Moon, which we knew we could do when the space program started. That is, no breakthrough ideas were needed. As far as a technological singularity, that requires one or more breakthroughs, and those are hard/impossible to think of in terms of timelines.

“Of course, it depends, in part, on how many have been drawn to think about those hard problems. Now, we have huge numbers studying and working on machine learning and deep learning. Some tiny fraction of those may be drawn to thinking about understanding the nature of human intelligence, and that tiny fraction constitutes a much bigger number than were thinking about human intelligence a decade ago.

“So, when will we have our Watson/Crick moment? Forced into a corner, with a knife at my throat, I would say 20 years, and I say that fully confident that it will be true eventually.”

Separating Science Fact From Science Hype: How Far off Is the Singularity?

Gary Reber Comments:

There is no doubt that the non-human factor, the broad category of structures and “machines,” are exponentially eliminating and making many forms of labor unnecessary. Yet as a nation we are not addressing this undeniable fact, and continue to be stuck in one-factor human labor thinking, artificially elevating human labor through government employment and government subsidization of private employment solely to increase consumer income to stimulate demand for goods, products and services.

Obviously, as productive capital (the non-human factor) is increasingly the source of the world’s economic growth, shouldn’t it become the source of added property ownership incomes for all? If both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders remain focused on employment and still pretend to believe that labor is becoming more productive, couching all policy directions in the name of job creation. Americans ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the economy.

I think this should be the number one topic of national attention, as without system reform the present wealthy capital ownership class will OWN the technology-rich future, leaving the vast majority dependent on them and their political puppets.

The question that requires an answer is now timely before us. It was first posed by binary economist Louis O. Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what capital ownership is. Therefore, by ignoring such issues of economic justice and capital ownership, our leaders are ignoring the concentration of power through concentrated ownership of productive capital, with the result of denying the 99 percent equal opportunity to become capital owners.

The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and services,” and thus, “how do we get from a world in which the most productive factor — physical capital — is owned by a handful of people, to a world where the same factor is owned by a majority — and ultimately 100 percent — of the consumers, while respecting all the constitutional rights of present capital owners?”

 

 

Democrats Paid A Huge Price For Letting Unions Die

There is power in a union. Photo: Justin Sullivan/Getty Images

On January 26, 2018, Eric Levitz writes in New York Magazine:

The GOP understands how important labor unions are to the Democratic Party. The Democratic Party, historically, has not. If you want a two-sentence explanation for why the Midwest is turning red (and thus, why Donald Trump is president), you could do worse than that.

With its financial contributions and grassroots organizing, the labor movement helped give Democrats full control of the federal government three times in the last four decades. And all three of those times — under Jimmy Carter, Bill Clinton, and Barack Obama — Democrats failed to pass labor law reforms that would to bolster the union cause. In hindsight, it’s clear that the Democratic Party didn’t merely betray organized labor with these failures, but also, itself.

Between 1978 and 2017, the union membership rate in the United States fell by more than half — from 26 to 10.7 percent. Some of this decline probably couldn’t have been averted — or, at least, not by changes in labor law alone. The combination of resurgent economies in Europe and Japan, the United States’ decidedly non-protectionist trade policies, and technological advances in shipping was bound to do a number on American unions. Global competition thinned profit margins for U.S. firms; cutting labor costs was one of the easiest ways to fatten ’em back up; and breaking unions (through persuasion, intimidation, or relocation) was one of the easiest ways to cut said costs.

Nevertheless, there was lot that Democrats could have done — through labor law reform — to shelter the union movement from these changes, and help it establish a bigger footprint in the service sector. At present, employers are prohibited from firing workers for organizing or threatening to close businesses if workers unionize — but the penalties for such violations are negligible. Further, while they must recognize unions once they are ratified by workers in an election, employers can delay those elections for months or even years — and, even after recognition, face no obligation to reach a contract with their newly unionized workers.

Democrats could have increased the penalties for violating labor law, enabled unions to circumvent the election process if a majority of workers signed union cards (a.k.a. “card check”), and required employers to enter arbitration with unions if no contract was reached within 120 days of their formation — as Barack Obama promised the labor movement they would, in 2008.

Or, if they were feeling a bit more radical, they could have repealed the part of the Taft-Hartley Act that allows conservatives states to pass “right to work” laws. Such laws undermine organized labor by allowing workers who join a unionized workplace to enjoy the benefits of a collective bargaining agreement without paying dues to the union that negotiated it. This encourages other workers to skirt their dues, which can then drain a union of the funds it needs to survive.

And that has the effect of draining the Democratic Party of the funds — and grassroots organizing — that it needs to thrive. As Sean McElwee writes for The Nation:

“In a new study that will soon be released as a National Bureau of Economic Research working paper, James Feigenbaum of Boston University, Alexander Hertel-Fernandez of Columbia, and Vanessa Williamson of the Brookings Institution examined the long-term political consequences of anti-union legislation by comparing counties straddling a state line where one state is right-to-work and another is not. Their findings should strike terror into the hearts of Democratic Party strategists: Right-to-work laws decreased Democratic presidential vote share by 3.5 percent.

The study found that impacts persist in down-ballot races, and have given Republicans more power in the Senate, House, and governors’ mansions, as well as in state legislatures. This leads to a vicious cycle wherein the GOP can use that power to further suppress votes, gut union rights, and gerrymander legislatures—in other words, embark on a fundamental retooling of American political mechanics.

The decimation of the blue wall in 2016 may have been driven by Trump’s unique candidacy, but right-to-work laws had been weakening the foundation for years. In 2014, Republican Governor Rick Snyder’s narrow victory against Democratic opponent Mark Schauer may well have gone in a different direction were it not for the state’s 2012 right-to-work law. It’s not impossible to imagine that progressive Senate candidate Russ Feingold would have beaten Tea Party–backed incumbent Ron Johnson in 2016 if only Wisconsin private- and public-sector unions had not been completely gutted. The effect of right-to-work laws, according to this research, are large enough that it could have easily cost Hillary Clinton Wisconsin and Michigan—two states that went right-to-work before the 2016 elections.”

These findings will surprise no one in the Republican leadership. Since 2010, six GOP state governments have passed “right to work” laws. Last year, Kentucky and Missouri joined the club (the latter development will make Senator Claire McCaskill’s already difficult reelection bid all the more challenging). Republicans prioritized these regressive labor law reforms because they understood how devastating they would be for the unions — and thus, to the Democratic Party. Last year, anti-tax crusader Grover Norquist argued that if right-to-work reforms are “enacted in a dozen more states, the modern Democratic Party will cease to be a competitive power in American politics.”

This could have been a golden age for American liberalism. The Democratic Party — and the progressive forces within it — have so much going for them. The GOP’s economic vision has never been less popular with ordinary Americans, or more irrelevant to their material needs. The U.S. electorate is becoming less white, less racist, and less conservative with each passing year. Social conservatism has never had less appeal for American voters than it does today. The garish spectacle of the Trump-era Republican Party is turning the American suburbs — once a core part of the GOP coalition — purple and blue.

If the Democratic Party wasn’t bleeding support from white working-class voters in its old labor strongholds, it would dominate our national politics. Understandably, Democratic partisans often blame their powerlessness on such voters — and the regressive racial views that led them out of Team Blue’s tent. But as unions have declined across the Midwest, Democrats haven’t just been losing white, working-class voters to revanchist Republicans — they’ve also been losing them to quiet evenings at home. The NBER study cited by McElwee found that right-to-work laws reduce voter turnout in presidential elections by 2 to 3 percent.

Further, the notion that grassroots organizing cannot make a non-woke white man prioritize his class interests over his racial resentments — and thus, that the Democratic Party’s refusal to bolster union organizing was irrelevant to its failure to fend off Trump — is unsupportable. In 2008, labor invested a quarter-billion dollars into Barack Obama’s election, allocating the bulk of those funds into burnishing the candidate’s support among union voters in the Midwest. That year, unionized white men backed Obama by an 18 percent margin; while nonunionized ones went for John McCain by 16.

If right-to-work laws alone cost Democrats roughly 3.5 percent of a given state’s vote share, how many votes has the party lost since 1978 by refusing to prioritize progressive labor reforms?

What kind of country would we live in today, if they hadn’t?

http://amp.nymag.com/daily/intelligencer/2018/01/democrats-paid-a-huge-price-for-letting-unions-die.html?__twitter_impression=true

 Gary Reber Comments:

Worker and political action is required to form a new vision for a labor union movement,

The labor union movement should transform to a producers’ ownership union movement and embrace and fight for this new democratic capitalism. They should play the part that they have always aspired to — that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline.

Unfortunately, at the present time the movement is built on one-factor economics — the labor worker. The insufficiency of labor worker earnings to purchase increasingly capital-produced products and services gave rise to labor laws and labor unions designed to coerce higher and higher prices for the same or reduced labor input. With government assistance, unions have gradually converted productive enterprises in the private and public sectors into welfare institutions. Binary economist Louis Kelso stated: “The myth of the ‘rising productivity’ of labor is used to conceal the increasing productiveness of capital and the decreasing productiveness of labor, and to disguise income redistribution by making it seem morally acceptable.”

Kelso argued that unions “must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods and services are produced by capital input, then 90 percent of the earnings of working people must flow to them as wages of their capital and the remainder as wages of their labor work… If there are in reality two ways for people to participate in production and earn income, then tomorrow’s producers’ union must take cognizance of both… The question is only whether the labor union will help lead this movement or, refusing to learn, to change, and to innovate, become irrelevant.”

Unions are the only group of people in the whole world who can demand a real Kelso-designed ESOP, who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital workers receiving income from their capital ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.

The unions should reassess their role of bargaining for more and more income for the same work or less and less work, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today — wages, hours, and working conditions — and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.

If we continue with the past’s unworkable trickle-down economic policies, governments will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it and give it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.

When labor unions transform to producers’ ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. The overall strategy should assure that the labor compensation of the union’s members does not exceed the labor costs of the employer’s competitors, and that capital earnings of its members are built up to a level that optimizes their combined labor-capital worker earnings. A producers’ ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.

Kelso stated, “Working conditions for the labor force have, of course, improved over the years. But the economic quality of life for the majority of Americans has trailed far behind the technical capabilities of the economy to produce creature comforts, and even further behind the desires of consumers to live economically better lives. The missing link is that most of those unproduced goods and services can be produced only through capital, and the people who need them have no opportunity to earn income from capital ownership.”

Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to the goal of democratic worker ownership in his 1967 testimony to the Joint Economic Committee of Congress as a strategy for saving manufacturing jobs in America from being outcompeted by Japan and eventual outsourcing to other Asian countries with far lower wage costs: “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth, which is today appallingly undemocratic and unhealthy.

“If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing [through wider share ownership] cannot be said to have any inflationary impact on costs and prices.”

Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, nor any subsequent union leader never followed through.

The union movement should also expand beyond representing corporate employees and represent capital ownership empowerment for all propertyless citizens.

Trends in AI: Solving Business Challenges With Automation

On January 26, 2018, Ed O’Brien writes on Robotics Business Review:

INTRODUCTION

Both the tech media and a variety of vertical markets are increasingly viewing artificial intelligence as a way to improve industrial efficiencies through better use of data. The term AI has been around for more than half a century. At the same time, the idea of amplifying the capabilities of computers to simulate humans’ iterative learning was becoming a popular theme.

This increased interest has coincided with improvements in AI capabilities, which are often mentioned in conjunction with machine learning. Also, there have been advancements in areas such as logic, data analytics, and predictive analytics.

In addition, the publicity around systems such as IBM Watson, which has appeared on Jeopardy and has been used in healthcare and tax preparation, has helped with public awareness and business acceptance.

In this whitepaper, we’ll review the latest AI research and development, changing opinions about AI, and different applications.

We’ll also take a look at how AI is evolving to serve real business needs across industries, specifically in manufacturing and robotics, as well as the market size and growth prospects.

BULLISH ON AI

The market for artificial intelligence is poised for explosive growth. McKinsey estimates that tech giants spent $20 billion to $30 billion on AI across industries in 2016, with 90% of this spent on R&D and deployment, and 10% on AI acquisitions.

The use of AI in manufacturing is also expected to grow. According to Markets and Markets, this market will grow from about $270 million in 2016 to just under $4.9 billion by 2023.

PWC notes that global industrial firms are projected to invest up to 5% of annual revenues on robotics and the Internet of Things (IoT).

Some of the key factors affecting adoption for AI and related technologies include a need to better understand demand and the desire to anticipate customer needs.

Until recently, most of the solutions available were based on historical information, and users needed deep knowledge about market forces. Some of their assumptions could be flawed because of changes occurring due to unknown factors. This has opened up an opportunity for innovative uses of systems powered by machine learning.

Broadly speaking, artificial intelligence includes systems that combine sensors or data with assessing, learning, and modeling to better understand patterns. It can also include an ability to process language and understand spatial relationships, which can be particularly useful in manufacturing and autonomous vehicles.

Rather than depending solely on historical data, AI is fundamentally changing how organizations are assessing customer, productivity, and inventory information. They can use it to take a more forward-looking approach.

Another trend is the incorporation of machine learning techniques to better understand market dynamics. Enterprises of all sizes can begin focusing their attention on future demand and events.

AI ADDRESSES BUSINESS PROBLEMS AND PROCESSES

Seasonal peaks, changing customer preferences, and global shifts in distribution channels require manufacturers and automation providers to better understand end-user and partner demand for products and services. Too often, existing systems are based on batch processes, with historical tracking not providing enough actionable data to identify potential inflection points or trends. In addition, it’s difficult to make forecasts based on real-time data.

AI can help to solve a wide variety of business problems. It can help to identify independent and dependent variables that would otherwise be hidden in the data. It can also adjust production and inventory schedules, AI is combining sensors with image recognition systems for greater flexibility in materials handling, as seen in this Neocortexpowered picking operation. roboticsbusinessreview.com 6 modify instructions for robots, and adjust work processes. Preventive maintenance is another promising application.

Machine learning, which is often referenced alongside AI and includes an ability to identify and learn from patterns without having to be programmed ahead of time, can also improve overall shop efficiencies and effectiveness. Consequently, this observational and learning process can allow machines to learn and make increasingly more accurate predictions over time based on the underlying data.

This is why there is such interest — a buzz actually — around the prospects of the use of AI in 2018. There is an increased awareness of the potential for new AI and machine learning capabilities available within business and industry.

In addition, there is also much anticipation around the prospects of manufacturing and robotics systems engaging in continuous assessing and learning of the underlying data and using it to provide actionable information.

CURRENT TECHNOLOGIES AND SUPPLIERS

An increasing number of industries are experimenting with — and benefiting from — artificial intelligence. They range from agriculture and consumer packaged goods to discrete and process manufacturing. The number of AI and cognitive solutions providers is also increasing, as AI improves the ability of robots to manipulate a variety of objects and maneuver in dynamic, unstructured environments.

Top software vendors are investing billions of dollars into AI, including IBM, Microsoft, and PTC. Here are a several examples of AI initiatives occurring by industry thought leaders:

AIBrain Inc. has a stated goal of building fully autonomous solutions by unifying three essential aspects of intelligence, namely problem solving, learning, and memory.

Alphabet Inc. is the parent of Google and purchased DeepMind Technologies in 2014. It is developing programs that can learn to solve Machine learning enables robots to adjust to varied inputs, as seen in this Neocortexpowered robot for plant sorting and picking. roboticsbusinessreview.com 7 any complex problem without needing to be taught how. The company is conducting research in the field of games, a useful training ground for machine learning, to develop algorithms that can provide a foundation for a wide variety of practical uses in business and industry.

IBM Watson was initially designed to beat chess grandmasters. It can process over 500 gigabytes of information (or the equivalent of 1 million books every second) with its natural language processing capabilities.

Microsoft Corp.’s Project Oxford includes research in image, text, and speech recognition capabilities. One area of research includes a facial recognition algorithm that can work with Windows phones.

PTC’s acquisition of ColdLight and its big data expertise bolsters the ThingWorx IoT platform. The solutions use machine learning technology to automatically and continuously discover patterns, build validated predictive models, and send information to virtually any type of application or technology.

SingularityNet enables AI-as-a-Service by offering an open platform allowing access to AI services. Its founders have developed AI for industrial and humanoid robots.

Still, there are limitations on what AI and machine learning can do. First and foremost, they can’t learn and analyze by themselves. They need a strong data management and analytics framework to provide clean and accurate data, otherwise the accuracy of systems learning and prediction capabilities.

Also, the success of AI solutions is dependent on the underlying security of networks and the adaptability of anti-intrusion and anti-fraud frameworks.

THE USE OF AUTOMATION EXPANDS

For many people, their initial exposure to AI has been with such consumer products as Apple’s Siri and Amazon’s Alexa.

Still, understanding and anticipating customer and partner expectations is more difficult than ever, with some organizations having to store as much as dozens or hundreds of terabytes of both structured and unstructured data. This data often resides in databases and data warehouses throughout these companies, sometimes in siloed, disparate systems.

Analyzing this data often requires the use of AI, machine learning, and predictive analytics techniques to sift through the data to identify trends and predict behaviors. These tools are becoming increasingly necessary, considering McKinsey estimates that the volume of all data continues to double every three years as information from digital platforms, wireless sensors, and roboticsbusinessreview.com 8 mobile devices are shared across systems.

Many organizations are finding that in order to deliver on customers’ heightened expectations, faster and more accurate ways to predict demand and behaviors are critical to successfully interact and engage with both prospects and customers.

Analytics, AI, and machine learning can be instrumental in meeting these goals. These solutions can offer timely and relevant alerts and next-best-action suggestions, which can augment outreach efforts and improve the overall customer experience across industries.

Call and contact centers are increasingly using AI through chatbots and similar tools. The algorithms in these systems can learn from the data they are exposed to. And, as more data is processed, more insights are gained, leading to better interactions. Machine learning is adept at discovering patterns, enabling improved prediction capabilities.

Similar benefits can be seen in the retail and manufacturing sectors as well. For example, McKinsey found that over the past five years, U.S. retailer supply chain operations that have adopted data and analytics solutions have seen up to a 19% increase in operating margins.

While organizations have realized much value from data management and analytics to date, there’s still plenty of room for improvement. The estimated potential value captured from the use of data and analytics has been uneven, with the retail industry capturing approximately 30% to 40% of potential value from such systems, and manufacturing only capturing about 20% to 30% of potential value, per McKinsey.

Also, PwC estimates that almost half of all manufacturing activities might be automated through robotic process automation (RPA), which could translate into a $2 trillion reduction in global workforce costs.

End users of automation increasingly require interoperability among a wide variety of systems. Common attributes of such systems often include:

Data: Includes both structured data that can be found in databases and data warehouses, as well as unstructured, text-based data. Data is often transformed into information, allowing a virtual representation of various systems.

Integration and interoperability: This includes integration with machines and devices within systems, as well as interoperability across systems. Such interoperability capabilities are often the backbone for Internet of Things capabilities. roboticsbusinessreview.com 9 Autonomous management: This includes the ability to make simple decisions about such things as equipment condition and adjustments as conditions change, and make appropriate adjustments to schedules, sequences, or timing of actions.

Robots and unmanned systems: This often includes some form of machine learning or artificial intelligence capabilities.

Another trend in business is greater end-user reliance on higher-level reporting, business intelligence, and analytics systems. This is a major change, as in the not-too-distant past, analytics solutions were used solely by quant staffs residing in some IT department.

However, over the past few years, new solutions that do not require deep knowledge of tools such as SQL, R, or SPSS have become available.

Newer solutions are designed to better understand and infer users’ intentions. They offer common result sets that are likely appropriate for specific scenarios.

These systems are not designed to replace quant teams; their primary role is to allow business users to try “what-if” scenarios. From these, subject-matter experts can test and refine various business and economic models.

In the end, the models can be better leveraged through higher-level analyses along with line-of-business experts.

Industrial AI Example 1: Comet Labs

Adam Kell, an investment partner at Comet Labs, shared some interesting observations about advances that are occurring in AI and machine learning.

“Learning theory in AI requires continuous improvement and a deep understanding of the underlying elements in various industries,” he said. “There is also a time lag between early experimentation and the availability of practical applications within the underlying solution infrastructure.”

Another observation is the use of gamification to provide an environment for systems to learn.

“For example, some firms, like Google, are using repetitive motion tests so robotic arms learn about finding and grasping objects without damaging them,” offered Kell. “The result could be improvements in applications like farming, recycling, and warehouse order-picking applications, where robot arm dexterity can be so important.”

Industrial AI Example 2: Bell and Howell

PTC’s ThingWorx IoT platform has provided insights into equipment performance, said Don Bullock, vice president of technical and professional services at Bell and Howell. This has helped fine-tune predictive maintenance and deployments through remote mechatronic diagnoses.

“The beauty of the PTC ThingWorx platform is it’s going to give us the ability to know beforehand when a machine is going to fail,” he noted. “Consequently, we can proactively schedule work at a time that is convenient to our customer and replace components and conduct maintenance, knowing that the machine is going to have high reliability.”

Industrial AI Example 3: Universal Logic Neocortex

Universal Logic’s Neocortex AI integrates vision, grasping, and motion control technologies to give machines human-like flexibility at high speed. Neocortex enables automated supply chain systems to handle high-mix, high-volume applications, such as bin picking, box moving, bag handling, machine tending, 3D inspection, and assembly/kitting.

Universal Logic’s software platform is hardware- and sensor-independent and typically provides payback in less than 18 months. A sampling of some their AI solutions for robotic applications is shown on the next page AI and robotics are improving throughput in forward-thinking operations.

FUTURE INDUSTRY DEPENDS ON AI

Organizations that are laggards in learning about — and using — AI and robotics do so at their peril. The ultra-efficient factories of the future will rely on machine learning to achieve desired line speeds, flexibility, and reliability.

To meet the e-commerce expectations of custom and instant order fulfillment, manufacturing and supply chain operations must carefully tune their system performance. With deep learning, data gathered by sensors (and robots and drones) can be used to autonomously adjust processes in real time.

Also, with lean production and global competition as universal priorities, AI and machine learning can help to maximize equipment uptime. In some operations, downtime can cost up to $20,000 per minute, so unplanned downtime can have serious implications.

Although the automotive industry was among the first to focus on automation for 24/7 operations, other industries are now also looking to robotics and AI. Logistics, healthcare, retail, and hospitality are joining manufacturing as lucrative markets for automation.

Looking ahead, AI, machine learning, and deep learning will provide tremendous opportunities to increase the value of business data. These benefits are derived from a deeper understanding of equipment use, partner requirements, consumer demand, product throughput, and market trends, as well as identifying new patterns and trends.

https://www.roboticsbusinessreview.com/wp-content/uploads/2018/01/RBR_TrendsAI_UL.pdf

Trends in AI: Solving Business Challenges With Automation

Gary Reber Comments:

This is an excellent white paper by Robotics Business Review’s Ed O’Brien, which comprehensively summarizes the projections for the application of artificial intelligence (AI) in all means of production of goods, products and services. Such tectonic shifts in the technologies of production will result in far less necessity for human input in production, which means dramatic employment reductions throughout industries as “machines” replace humans.

This means, that workers who now depend on earning income through a job, will be jeopardy of losing demand for their labor. This prompts the question: Who Owns The AI Technology?

The question that requires an answer is now timely before us. It was first posed by binary economist Louis O. Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what capital ownership is. Therefore, by ignoring such issues of economic justice and capital ownership, our leaders are ignoring the concentration of power through concentrated ownership of non-human productive capital, with the result of denying the 99 percent equal opportunity to become capital owners.

The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and services,” and thus, “how do we get from a world in which the most productive factor — physical capital — is owned by a handful of people, to a world where the same factor is owned by a majority — and ultimately 100 percent — of the consumers, while respecting all the constitutional rights of present capital owners?”

The answer requires system reform in our monetary system (see http://capitalhomestead.org/page/monetary-justice) and enactment of the Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

 

‘World’s Richest 1% Get 82% Of The Wealth’, Says Oxfam

On January 22, 2018, Katie Hope writes on BBC News:

The gap between the super rich and the rest of the world widened last year as wealth continued to be owned by a small minority, Oxfam has claimed.

Some 82% of money generated last year went to the richest 1% of the global population while the poorest half saw no increase at all, the charity said.

Oxfam said its figures – which critics have queried – showed a failing system.

It blamed tax evasion, firms’ influence on policy, erosion of workers’ rights, and cost cutting for the widening gap.

Oxfam has produced similar reports for the past five years. In 2017 it calculated that the world’s eight richest individuals had as much wealth as the poorest half of the world.

This year, it said 42 people now had as much wealth as the poorest half, but it revised last year’s figure to 61. Oxfam said the revision was due to improved data and said the trend of “widening inequality” remained.

Number of Billionaires since 2000

‘Unacceptable’

Oxfam chief executive Mark Goldring said its constant readjustment of the figures reflected the fact that the report was based “on the best data available at the time”.

“However you look at it, this is an unacceptable level of inequality,” he said.

Oxfam’s report coincides with the start of the World Economic Forum in Davos, a Swiss ski resort. The annual conference attracts many of the world’s top political and business leaders.

Inequality typically features high on the agenda, but Mr Goldring said that too often “tough talk fades away at the first resistance”.


Reality Check branding

Analysis by Anthony Reuben, BBC Reality Check

It’s really hard working out how much wealth the super-rich and the very poor have.

The super-rich tend not to publicise their worth and many of the world’s poorest countries keep poor statistics.

To illustrate that, this time last year, Oxfam told us that eight individuals have as much wealth as the poorest half of the world’s population. Now it has revised that figure to 61 people for last year, falling to 42 people this year – that’s a pretty big revision.

And there are other caveats around the data on which all this is based, such as that the people on the list with the lowest wealth are not necessarily poor at all – they may be highly qualified professionals with large amounts of student debt, for example, or people with high incomes but enormous mortgages.

But whether it’s eight people, 42 people or 61 people who have the same wealth as half of the world, there is still great wealth inequality around the world, which is the message Oxfam is taking to Davos.


The charity is urging a rethink of business models, arguing their focus on maximising shareholder returns over broader social impact is wrong.

It said there was “huge support” for action with two thirds (72%) of 70,000 people it surveyed in ten countries saying they wanted their governments to “urgently address the income gap between rich and poor”.

But Mark Littlewood, director general at free market think tank The Institute of Economic Affairs, said Oxfam was becoming “obsessed with the rich rather than the poor”.

“Higher taxes and redistribution will do nothing to help the poor; wealth is not a fixed pie. Richer people are also highly taxed people – reducing their wealth won’t lead to redistribution, it will destroy it to the benefit of no one,” he added.

It was a criticism echoed by Sam Dumitriu, head of research at another free market think tank – the Adam Smith Institute – who said the charity’s inequality stats “always paint the wrong picture”.

“In reality, global inequality has fallen massively over the past few decades.

“As China, India and Vietnam embraced neoliberal reforms that enforce property rights, reduce regulations and increase competition, the world’s poorest have received a massive pay rise leading to a more equal global income distribution.”

gold barsImage copyrightAFP

How does Oxfam work out the figures?

Oxfam’s report is based on data from Forbes and the annual Credit Suisse Global Wealth databook, which gives the distribution of global wealth going back to 2000.

The survey uses the value of an individual’s assets, mainly property and land, minus debts, to determine what he or she “owns”. The data excludes wages or income.

The methodology has been criticised as it means that a student with high debts, but with high future earning potential, for example, would be considered poor under the criteria used.

But Oxfam said even if the wealth of the poorest half of the world was recalculated to exclude people in net debt their combined wealth was still equal to that of just 128 billionaires.

http://www.bbc.com/news/business-42745853

http://www.newsweek.com/billionaires-money-end-poverty-report-786675

Gary Reber Comments:

I gotta wonder whether the people writing the report even understand “wealth OWNED by a small minority.” Although the report does state: “The survey uses the value of an individual’s assets, mainly property and land, minus debts, to determine what he or she ‘owns’. The data excludes wages or income.”

So it does boil down to how much OWNERSHIP of wealth-creating, income-producing capital assets one has that determines their level of wealth.

Study after study studies the poor, which boils down to the poor do not OWN productive capital assets. Instead, logically should be study the rich and determine why they are rich. If we did, the reality would be that they OWN productive capital.

In our pre-industrial society, labor was the principal factor in the creation of wealth and there was far, far less economic inequality. In today’s world that is no longer the case, as the human input is exponentially being replaced by the non-human factor –– productive physical capital.

What needs to be understood is that fundamentally, economic value is created through human and non-human contributions.

The role of physical productive capital is to do ever more of the work efficiently, which produces wealth and thus income to those who OWN productive capital assets. As such, “capital” can be defined as productive assets, including job-displacing physical and informational technologies, structures, land and other natural resources, patents and copyrights — or non-human “things” (property) contributing to the production of marketable goods, products, and services.

People invented “tools” to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive — the core function of technological invention and innovation. Most changes in the productive capacity of the world since the beginning of the Industrial Revolution can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary.

The fact is, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. If both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, this is virtually never addressed in study after study or report after report. Instead, the solution involve redistributing the wealth of those who now OWN to those who do not OWN, without diminishing their wealth, but through means of taxation to generate revenue to support government-controlled “welfare” programs, wether government “make-work” job creation, social services or guaranteed annual income.

What is missing is a discussion of how to empower EVERY American child, woman, and man to acquire personal OWNERSHIP of productive capital assets to be formed in the future, without taking anything away from those who already own. This can be accomplished using insured, interest-free capital credit, repayable out of the future earnings in the investments of our future.

Conventionally, most people do not have the right to acquire productive capital with the self-financing earnings of capital; they are left to acquire, as best as they can, with their earnings as labor workers and the pledge of past savings as loan collateral. This is fundamentally hard to do and limiting. Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the earnings of capital.

Solutions that broaden capital OWNERSHIP simultaneously with the growth of the economy involve the following system reforms:

Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.

Support the Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.