Platt Perspective on Business and Technology

From Ned Ludd to Bernie Sanders and Donald Trump, and the politics of the disenfranchised

Posted in macroeconomics, social networking and business by Timothy Platt on July 8, 2016

I have been writing in this blog, as one of its ongoing lines of discussion, about how we as a global society are entering into a period of profound change. And I have been writing about how this means we are entering into an equally profound period of uncertainty and dislocation too. Our increased capabilities in the fields of automation and artificial intelligence and the manner in which they combine synergistically have had a cumulative effect of taking more and more types of work out of human hands. And this is a trend that has really just begun. And this growing capability has combined with an increasing capacity of businesses to move their sites of manufacturing production and all of the work potential that it creates, to countries and regions with the minimum costs of labor currently available, for tasks that are still more cost effectively carried out by hands-on human labor.

• The nature and meaning of employability and of what it means to work are changing, and in ways that create alienation and anomie for many, and at the level of entire numerically significant population demographics and certainly in economically developed nations such as the United States.

I have been addressing these and related issues in a number of the directories of this blog. But to keep this introductory portion of this posting brief and to the point, I will only specifically cite one recent relevant series here, that I offer as providing background material for what follows: my series “Should We Do Something Simply Because We Can?”, which can be found in the addendum postings at the end of Guide to Effective Job Search and Career Development – 3 as postings 56-61.

The technology-based shift in what is possible and in what is becoming competitively viable for more and more businesses that I write of here, has been taking place in a context in which a particularly strong version of what economists refer to as the Pareto principle has in effect been forced to apply and for a significant number of key industries. And that has been happening as a direct consequence of political decisions made and politically motivated actions taken, and particularly at national governmental levels.

The Pareto principle as such, is an empirical observation-based rule of thumb, according to which some 90% of all business activity, and the revenue generated from it in an industry goes to just some 10% of the businesses that operate in it. And the rest of that business activity goes to the remaining 90% of those enterprises. This obviously does not hold true and even as just a loose observational principle in all industries. No 10% of all drycleaners in a country, for example, can capture 90% of all dry cleaning business there. But:

• Ubiquitously wireless communications and information sharing,
• And the emergence of anywhere to anywhere online marketing and sales that this has enabled,
• And our increasingly effective capacity to move goods globally, and both more quickly and at lower costs
• Have collectively removed the local-only blocks to this principle for its range of applicability,
• And for more and more industries and business types, and for more and more types of products and services that they might provide,
• Eliminating locality advantages for what have been local-only businesses (see my directory: Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation for a succession of more focused discussions relevant to this.)
• The dry cleaning businesses that I noted as a Pareto principle exception above, might remain so but a great many businesses that have assumed that type of exemption will find themselves facing the full weight of what can perhaps best be seen here as a technology-enabled Pareto challenge.

And to more fully acknowledge a third piece to this puzzle (that I briefly noted above, in passing), I more explicitly cite political decision and politically motivated action here too, as a prime mover in all of this. The United States and a wide range of other governments, as politically and governmentally lead by self-proclaimed “conservatives” and “ultra-conservatives” have promoted and pushed into law, measures that are based on extreme supply side economic models and approaches, trickle-down economics included, that can only serve to restrict still larger percentages of overall wealth generation into still smaller numbers of hands than a simple Pareto principle calculation would ever predict on its own. So we have arrived at a crossroads where some 90% of the wealth in the United States, for example, flows into the hands of approximately 1% of the overall population, and with a large majority of that flowing into the hands of 1% of that already small group: the so called top 1% of the top 1% (see my currently running series: Open Markets, Captive Markets and the Assumptions of Supply and Demand Dynamics at Macroeconomics and Business 2, postings 230 and loosely following, with Parts 1-13 live as of this writing, and with more installments to follow.)

What I am doing here, is to at least briefly outline how we have come to face what at least societally, can be seen as a perfect sociopolitical storm. I have found myself citing an economic concept: the Gini coefficient, as a measure of the concentration of income and wealth in a nation, a number of times now in this blog. And I return to that point of socioeconomic observation again here, to point out a few findings that are particularly important for understanding the politics leading up to our soon to arrive 2016 United States presidential election:

• A Gini coefficient value skewed towards greater and greater concentration of all wealth societally, into a smaller and smaller number of hands, correlates directly with the emergence of societal unrest and the discontent that feeds it,
• And certainly when a tipping point has been reached and surpassed in which a significant percentage of the citizens of that society, come to see themselves as unfairly left out in spite of effort made and work contributions achieved.
• And in the United States, the current Gini coefficient that is measured when tracking income distributions across society as a whole is tremendously skewed. And the last time it was this skewed in that country was in 1929, right before the start of the global Great Depression there.

And this brings me to the upcoming 2016 US presidential election and to Donald Trump (the presumptive Republican candidate) and Bernie Sanders (a still, as of this writing, strong contender in the Democratic Party as it seeks out its top nominee and chosen candidate.) Sanders might not end up being selected as the Democratic Party presidential candidate, but his voice and his followers and their dissatisfaction cannot be ignored.

But to put these two political voices and their followers into perspective, I would begin with an earlier historical precedent, that comes to us from a time of equal technological and socioeconomic disruption and a time of equal socioeconomic inequality: the the first industrial revolution and the rise of the first industrial age, and the story of Ned Ludd.

Who was Ned Ludd? That is, in fact, not just a rhetorical question as very little is known with certainty, if anything about Ned Ludd: the historical, living man. Most of what we know of him in its story-telling variations is about Ned Ludd, the mythic figurehead. But a Ned Ludd, possibly born Edward Ludlam became a guiding symbol and a caricatured face to an uprising against the ending of a way of life, with the closing out of traditional cottage industry businesses as they were supplanted by new large scale industrial production facilities. And young men left the small farms that their families had lived and worked on and for generations as larger scale farming began to take hold and they left their family’s cottage industry businesses that could not compete economically with new mass produced products such as factory made cloth and related woven products. And an entire traditional way of life disappeared to be replaced with New.

Ned Ludd’s image and his growing story became a rallying cry for the many who saw despair in all of this change, who were seeing their old, traditional way of life and their prospects for making a living from it disappear before their eyes – but who found they did not fit into this new emerging industrial world either.

Dramatic and disruptive change might create new and long-term better, but it does so by creating disruption. And this type of change by its very nature leaves casualties too, and the more profound such a change societally, the more casualties it will create. This includes those too old to make a transition into what for them would be an entirely new way of life. This includes those who lack the training or opportunity to make the necessary changes, and even if they want to. When joining into and becoming part of the New emerging out of such a change would require relocating and leaving family and friends behind, that creates insurmountable barriers for at least some and often for a significant “some” too. All of these people and all who depend upon them for their happiness and wellbeing can and too often do become casualties here, and if not for the rest of their lives then for stressful and challenging periods of them.

And I wrote that paragraph with the people of Ned Ludd’s day in mind in the early years of the 19th century. But every point made there, applies with equal force here and now too, almost exactly two centuries later in the similarly early years of the 21st century. So many hard working, productive citizens in the United States who lost their jobs in the still recent Great Recession, for example, have returned to work but as under-employed or at lower level work positions and with lower salaries and much lower levels of employee benefits – if any at all. A vast number of Americans have not seen a real pay increase after adjusting for inflation for quite literally, an entire generation now. And many of them feel justifiable concern as to how secure their new work lives are and certainly long-term. And to repeat from above, these same people read and hear in the news of how the top 1% and its top 1% are doing, grabbing up in so much personal wealth for themselves while this happens. There are reasons why I added my series: Developing a Career Out of Gigs and Short-Term Work, among other specifically relevant resources to this blog (for that specific series, see Guide to Effective Job Search and Career Development – 3, posting 368 and following.) That type of jobs and careers resource has become actively and even compellingly needed, and by many.

And with that, I arrive at a statement that I would add here that I see as fundamentally valid but that would enrage the ardent followers of both Donald Trump and Bernie Sanders:

• Trump might primarily appeal to middle aged and older whites who are perhaps more skewed demographically towards having less formal education (to pick up on the Trump supporter demographics cartoon that prevails.)
• And Sanders might have his strongest hold on younger voters who are more educated (to pick up on his version of that cartoon.)
• But the seemingly largely non-overlapping demographics that these two politicians most strongly appeal to, are in fact the same for the core criteria that really count here. Both camps are primarily populated by people who feel left behind, and who see themselves as fundamentally betrayed by what has become the status quo, and by politicians and their politics as usual who support it and benefit from it.

Donald Trump comes across as a foul mouthed egotist and narcissist, and as an ignorant man who sees direct attack as “trumping” any reasoned argument, and every time. He presents himself as a bigot and a sexist and has in fact painted himself with a great many other antisocial labels too in all of this. But his followers are willing to overlook all of that because they like it that he attacks the status quo, the Republican Party itself definitely included. And they like and support him because they see hope that their world might somehow be restored and their futures returned to them, in Trump’s bombastically repeated “make American great again” tagline. Ultimately, the Donald Trump that his followers see and hear and support, is as much a mythic caricature as Ned Ludd has ever been.

Bernie Sanders presents himself very differently and that is why he is capturing the support of very different segments of what in reality is a single huge and varied disaffected community at heart. But ultimately, his followers believe in and follow what amounts to just as much of a mythic caricature too, and with similar long-term hopes. Sanders denigrates and challenges what he sees as the top 1% for the harm they cause, and every chance he has: every time he makes a political statement in his campaign. And he continuously challenges and speaks against the status quo and even when that means his specifically and even stridently challenging his own Democratic Party too.

• Trump and Sanders might be very different as people, but they seek to strike what amounts to a common chord in addressing this country and its challenges and in reaching out for voter support.
• Their respective supporters comprise groups that most probably cannot and will not come together, at least this election cycle in the United States.
• And it is quite possible that with this vast potentially-single voice of dissent divided, a more traditionalist Hillary Clinton will capture both the Democratic nomination and the White House. If she does, she will likely win a second term of office too.
• But when (… not if, but when) this larger community does come together, under the yes: probably still largely caricature leadership of some new voice, nothing will stop it.

And I write this on May 20, 2016, fully expecting the Democratic Party to have selected their standard bearer and presidential candidate too, by the time this posting goes live. And at least as of now that will probably be Clinton, baring the unexpected. This is going to be an interesting year until, and beyond the November, 2016 elections.

You can find this posting at Social Networking and Business 2, and also see that directory’s Page 1. And I offer this posting as something of a continuation of another recent blog entry that I also write in anticipation of the November elections: Thinking Through the Words We Use in Our Political Monologs. And I also include this posting in Macroeconomics and Business and its Page 2 continuation.

Nota bene: I have made a practice of not writing consecutive series installments to go live on this blog in immediate succession, and have only intentionally done so in one directory here: Reexamining the Fundamentals. I have decided to make an exception to that editorial decision here and will offer a Part 3 to this brief series the day after tomorrow. My goal is for all three of these written and here-planned installments, to go live before the Republican and Democratic Parties can hold their big 2016 National Conventions.

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