The issue at the root of the American economy is cheap lending practices. When Nixon ended the gold standard in 1971, it marked the end of limitations on borrowing. Since then, corporations have been able to borrow from banks without any quantitative limitation.
What Does This Mean for the Labor Class?
Corporations would rather have an employee base full of robots and a select few humans to monitor the robots because it saves them money in labor cost.
Borrowing without a maximum limitation means it is easy, and often more affordable, for corporations to invest in automation or robotics than their labor force. It is cheaper to take a loan from a bank to finance the purchase of Artificial Intelligence software than it is to re-train workers or engage in improving work skills. So the bottom line is that corporations would rather have an employee base full of robots and a select few humans to monitor the robots because it saves them money in labor cost. You can thank the floating currency system inaugurated by Nixon for this change in the work culture of American corporations because it made technological innovation less expensive to finance which makes it harder for people to earn enough for a decent quality of life.
The changes have been far-reaching already. A feature article in the Digital Journal points out how prevalent AI already is in the manufacturing space. Accenture, in their report ‘Reworking the Revolution’ found that 75% of millennials were enthusiastic about adopting AI into their work. Do they realize it will cost them all their jobs? It appears not.
From the perspective of a bank, an economy based on debt is exactly what they like. It makes it easy to rake in profits from huge loans to corporations looking to automate their workforce. The companies, for their part, are confident they will make enough revenue from technological innovation to cover the terms of the debt. The only piece left out of this puzzle is the worker, who finds themselves surplus to requirement.
How Money Works Today
The banking system caters only to the wealthy people and does an excellent job of excluding poor people with their credit rating application process.
The entire loan infrastructure of the American monetary system is rigged against the little guy. Money is printed to help finance a loan. The money can be used right away to invest in some new technology for a business. Since a loan must be paid back, the only possible recipients for a loan are wealthy people, business owners or CEOs of corporations.
Banks sell loans to individuals to help them finance the purchase of a new house, car, or take on some credit card debt. The only way an individual could get the loan in the first place was if they were deemed financially secure enough to pay back the loan. That’s the first bulwark banks set-up against ‘risky’ lending practices — i.e. offering money to low-income people who need it most. The banking system caters only to the wealthy people and does an excellent job of excluding poor people with their credit rating application process. After all, banks want to make a profit on their loans.
A Market Economy with No Tethers
When automation comes for your job the wealthy are already very capable of not giving a damn.
The unfortunate reality of our economic system is that there is no incentive for banks to stop making loans to rich people and corporations — even if the end-result is a decrease in jobs due to automation and artificial intelligence. This is scary since millions of people die every year from poverty. When automation comes for your job the wealthy are already very capable of not giving a damn.
The only solution to this dire circumstance is the complete redesign of the federal reserve. Interest rates must go up to increase the cost of new technologies. In addition, demand side stimulus must be pursued directly by the federal reserve to increase job creation and the need for workers. Finally, the only way this will happen is by removing bankers from the federal reserve and replacing them with a multidisciplinary panel of experts.