US Working Class-Disposable or Just Recycable?

Investment Analysis Clubs Macro Economic Trends and Risks
1

Here’s the problem in a profit-maximizing economy: durability is intrinsically less profitable than obsolescence, so to maximize profits, Everything Is Disposable, either by design (planned obsolescence, accelerated product cycles, product no longer supported, software upgrades, etc.) or by the ceaseless reduction in quality to boost profits by cutting costs.

This dynamic goes hand in hand with the other problem in a profit-maximizing economy: competition threatens profits, so get rid of authentic competition via monopolies and cartels or just concentrated business sectors.

Once a monopoly or cartel dominates a sector, Everything Becomes Disposable because there is no other way to maximize profits.

The key attribute of profitably disposable products and services is their interchangeability, i.e. they are commodities. When products and services have been thoroughly commoditized, everything is interchangeable because it’s all the same quality and form factor. So every sugar-bomb cold cereal is basically interchangeable, every ultra-processed snack is basically interchangeable, every insurance option is basically interchangeable, every parody-of-true-customer-service AI agent is basically interchangeable, and so on.

This elimination of unique qualities enables globalized production and supply chains, as everything is interchangeable everywhere.

So guess what happens to us “unique” individuals: we’re basically interchangeable, too, and therefore disposable. As consumers and workers, we’re commodities, interchangeable with billions of other consumers and workers around the world.

If profits sag in the US, or labor costs increase in the US, no worries, we can mximize profits elsewhere, as consumers and workers are globally interchangeable commodities.

in some cases, we’re “recycled” into a lower paying job or a lower-price tier. Sure, you can still “afford” healthcare “insurance” (smirk), but there’s now a $5,000 deductible which you have to pay up front in cash before your “insurance” kicks in (oops, your claim was denied by our AI claims process, better luck next time), and since cash is tight you forego medical care and suffer the predictably dire consequences. Welcome to a lower-tier of “service” that you can “afford.”

Of course the commodization of products & services does not apply to the ultra wealthy. They have a wide array of products & services & superb customer service.

What about the middle class? Likely they are OK regarding housing. They got in when pricing was lower. New vehicle choices are much more expensive as they replace their older vehicle. As is their provided corporate healthcare with deteriorating benefits [higher deductibles more delayed care as denied claims are fought].
Pay for the middle class has kept pace with inflation. But now their job could perhaps be endangered by AI.
My Magic 8 ball is fuzzy on the future of the middle class.

2 Likes
2

Oversimplifying for sure, but not by much:

The printing press transformed human communications, economic organization, and radically accelerated research and its dissemination. The transformations brought on the Reformation and the 30 Years War, while also radically transforming human psychologies and sociologies and their ongoing evolutions.

The internet and related techs is causing even more profound transformations, both in human interactions and internal being.

AND, the zippers being zipped or unzipped have a lot further to go.

All humans are now “disposable”, and I think I can hear Pandora giggling as more novelties fly out of her barely cracked open chest of amazing things.

Will Hope survive?

That is the main reason why I left my beloved California for Mexico. I own arable land and reliable water here, will be shifting over completely to solar power over the next year, have good neighbors, and am helping the youngsters get grounded for the tumults to come.

And the USA (and the other “advanced”nations) are running their politics and governance grounded stickily in habits and outlooks with the characteristics of quicksands….

But hey, PARTY ON!

7 Likes
3

It will. It must.

I could be delusional, but I’m going to continue to believe the spirit of Americans, wherever they come from, will continue to lift this country. We just have to clean house and get back on track.

Though, I admit, your setup sur de la frontera sounds nice.

4

Get on the AI train, and you can look forward to a future of less drudgery, more creativity, and maybe even shorter work hours. Miss it, and good luck to you.

But viewed through the lens of shareholder value ideology – the flawed corporate governance system that took over America in the 1980s — the story looks rather different. You see that for the last forty years, every time productivity rises, wealthy executives and other shareholders with massive stock holdings are buying megayachts while workers are told to be grateful they still have jobs.

AI is being launched inside a machine built to send wealth upward. Why would it suddenly start working differently now?

Consider Microsoft. The exact mix changes from year to year, but whenever the company makes money, you can count on a big pile of it going out the door to shareholders and top execs.

Between 2006 and 2025, Microsoft spent $283 billion on stock buybacks and another $223 billion on dividends — a total equal to 71% of profits. And even as the company bets big on AI, it’s sending enormous sums to shareholders. This is happening while it lays off thousands of workers. The people who power the company are either fired or left wondering whether they’ll get a paycheck next month.

Microsoft CEO Satya Nadella doesn’t have that problem.

The future of work looks great – if you’re holding vast amounts of stock awards.

SpaceX shows the same dynamic. Musk maintained a huge equity position, helped establish a private-market valuation at sky-high levels, and accumulated even more paper wealth as that valuation climbed. Now that SpaceX has gone public, many shareholders will likely be focused less on building the company’s productive capabilities than on how high the stock will go and when they can cash out.

Why focus on future innovation when you can get rich squeezing the juice out of the last one?

As Lazonick put it, “Musk has taken the Wall Street playbook and perfected the game — you have a founder with a massive equity stake, genuine innovation, and then traders chasing the stock who can turn technological progress into yet another machine for concentrating wealth.”

1 Like
5

This is why UBI and “AI will make everything so abundant” is a giant scam. And they know it.

9 Likes
6

Their sales spiel is so transparent, all unicorns and rainbows.

UBI would just adjust with inflation and people would be trapped, depending on it.

We need to tax wealth to make a fair playing field for workers.

Then we’ll see what abundance comes from AI, with workers having options.

7 Likes
7

But but What about shareholder value?

8

It’s there until… it’s gone

2 Likes
9

$10k invested in MSFT in 1990 is worth $5.6mil today exclusive of dividends. You didn’t have to be a top exec to do well. You just had to stay along for the ride.

10

True.
What happened to the manufacturing working class lost their jobs reduced to retail & service jobs-poof-savings gone. Neither establishment political party has represented their economic interests for a long time. [Those political parties represent the professional class] In fact accelerated the change starting with NAFTA. Move along. Nothing to see here.
And people were surprised when Trump was elected in 2016.

And luckily the children of the working class had reduced opportunity for a college education. So many enlisted for tuition benefit derived from military service. And our bipartisan interventionist foreign policy needed a lot of cannon fodder to meddle into other sovereign nations. A big Win-Win for our nation! And no impact upon the professional whom continue to stack up capital gains. An illustration of good parent selection. Ha

2 Likes
11

Pulling up the ladder.

DREAM HOARDERS: HOW THE
AMERICAN UPPER MIDDLE CLASS
IS LEAVING EVERYONE ELSE IN THE
DUST, WHY THAT IS A PROBLEM, AND
WHAT TO DO ABOUT IT
BY RICHARD V. REEVES
WASHINGTON, D.C.: BROOKINGS
INSTITUTION PRESS, 2017, 156 PAGES

Like in the UK; there is a class structure in the USA.

1 Like
12

I’m not surprised by it. Politicians will say and do what they think will get them elected. Trump has failed to deliver and so the pendulum will swing, maybe full blown socialism this time.
I despise the term working class. I know people rich and poor doing blue and white collar jobs, businesses owners, all “working” and hard. I view them all as part of the working class. The reality is jobs that are less skilled are going to move to areas of the world where labor is cheap or technology can be a substitute. Politicians have promised to protect them but they little control over these global movements, at least not without doing harm elsewhere. In some ways, it ignores the creative destruction that actually spawns new employment opportunities, makes products more cost effective and helps reduce the cost of living.

The reality is you can’t stand still and expect to do the same job with the same company. We need to give up some romantic notion that competition simply sits still for individuals or businesses. It seems to me in more recent years, the professional is just at much at risk as the unskilled laborer.

I’m a child of the working class. If you want to get an education and better yourself, there is alway a way to do it. In fact, growing up with little was an incredible motivation to never want to be poor again. The reality is that anyone that can save more than they spend can stack up capital. There are some things that can and should be done to ease the cost of higher education and even realign tax rates. But, on the whole, those things won’t change the economic realities.

I have zero interest in having non-shareholders, labor or governments weigh in on capital allocation of private businesses, whether they want to buy back shares, pay dividends or allocate funds towards the business. Conscientious management may include input from the people that work for them (labor) or the impact to the community at large. Ultimately, the decisions need to be based on what prioritizes the customers and the going concern of the business. VW is a perfect example that is now struggling to make the necessary changes because it has board members that include labor and govt with differing short term interests.

If one doesn’t like how MSFT treats its employees or how it decides to allocate capital, that person is free to work elsewhere, for themselves and to invest their capital elsewhere. The rest of the world is going to continue to innovate and most businesses have a terminal existence and so do the employees that work for them.

13

Harder for those with lower IQs.

The US military will not accept personnel with IQ below 85. [1 in 6 in US population]
That was a problem during the Vietnam War. Cannon fodder was needed and sons of the middle class had college deferments.
SO Secretary of Defense started the Project 100,000 the “Moron Corps”[9]). They had scored in Category IV of the Armed Forces Qualification Test, which placed them in the 10th–30th percentile range.

The project was sold as McNamara announced Project 100,000 in a speech on August 23, 1966, saying that the poor could be “salvaged[d] . . . first for productive military careers and later for productive roles in society”

A 1995 review by Myra MacPherson in Washington Monthly of McNamara’s book, In Retrospect: The Tragedy and Lessons of Vietnam, severely criticized the project, saying that “the program offered a one-way ticket to Vietnam, where these men fought and died in disproportionate numbers … the men of the ‘Moron Corps’ provided the necessary cannon fodder to help evade the political horror of dropping student deferments or calling up the reserves, which were sanctuaries for the lily-white.”

Project 100,000 was highlighted in a 2006 op-ed in The New York Times in which former Wesleyan assistant professor and then Tufts assistant professor Kelly M. Greenhill, writing in the context of a contemporary recruitment shortfall, concluded that "Project 100,000 was a failed experiment.

What to do with the 1 in 6 lower IQ folk?
UBI is very unpopular on this board. What about Medicare for all US citizens?

Or we migrate to like societies portrayed in Gattica or Elysium.

[1] Project 100,000 - Wikipedia

2 Likes
14

I’m more than happy to prioritize those that are the most fragile in our society. We should provide an adequate safety net. They are already eligible for Medicaid, Medicare, Disability and low cost policies under the affordable care act. I guess we continue to do what we have also done. We try to support them with public and private charitable efforts.

But, you’re mixing concepts if those benefits should simply apply to all Americans universally. Are we prioritizing the low IQ group or now this extends to everyone?

15

Which has reimbursements rates 30% less than Medicare.[1]
Doctors limit the number of Medicaid & Medicare patients due to low reimbursement rates. It is especially harder to find a doctor in New Jersey, Florida, Louisiana, and California due to that fact.[2]

As in the past, this year’s report also provides a “housing wage”—an estimate of the hourly wage full-time workers must earn to afford a rental home at fair market rent without spending more than 30% of their incomes. Nationally, the 2023 housing wage is $28.58 per hour for a modest two-bedroom rental home and $23.67 for a modest one-bedroom rental home.

To put this in context, this is more than three times the federal minimum wage and more than what most of our country’s low-income seniors, people with disabilities, families with children, and low-wage workers can comfortably afford.

Oh I’d say that’s pretty much nothing.

Universal Medicare would save our nation billions of $.
Corporations would LOVE not having to provide healthcare for employees.

The low IQ folks should IMO be prioritized more.
Europe after WW2 decided to prioritize their population in healthcare & higher education. They saw was nationalism & high defense spend wrought-WW1 & WW2.
A well educated population does benefit a nation’s productivity.

I pointed out in a previous post about Americans discontentment with the current economic system as evidence by socialist victory in Florida & other states. I cannot link it as it has been pulled. Your post was flagged as off-topic:

We can continue to ignore the signs of discontentment but only until violence from the disgruntled arise.

[1]

[2]

1 Like
16

The average individual income is over $50k per year. It’s far above minimum wage standards. All minimum wage raises do is start to displace workers and businesses. Take a look at what happen in California with the fast food worker minimum wage.

Agreed

The left is always apt to pursue violence.

No it won’t. It may be the final approach but it will come at a heavy expense. It does in every other nation now going broke trying to provide it. If you think finding providers is difficult now, look at the shortages now occurring in Canada. A million people a year defer going to the ER because of wait time that may last more than 24 hours. There is a severe shortage of specialists that at no longer accepting new patients.

“CRFB calculated that financing a $30 trillion plan could require a 32 percent payroll tax, a 25 percent income surtax or more than doubling the national debt. Even doubling all individual and corporate income-tax collections would not fully cover the highest estimates.

“Advocates insist that families would no longer pay premiums, deductibles and out-of-pocket expenses. But shifting a bill from an insurer to the IRS does not make it disappear — and does not make it free. Promising unlimited care does not create unlimited doctors, nurses, hospital beds or operating rooms.”

universal care won’t make people happy. They’ll want free childcare, free pensions, and free groceries. New York City is spending $70 million to build 5 grocery stores they will subsidize with another 30 million. They will put small grocers out of business and use the taxpayer to do it.

Socialism is the last stop before the bottom of the economic toilet bowl.