By Patrick Watson*
In The Terminator films, we were told Skynet became self-aware at 2:14 am on August 4, 1997. Bad things followed.
But let’s talk about this self-aware idea. It’s the same deep philosophical question that led René Descartes to his famous Cogito ergo sum conclusion: “I think, therefore I am.”
The next question: What am I?
Descartes went on, “I am a thing that thinks.” And that’s really all you can know for sure. Everything else goes through the senses, which can deceive you—a concept further explored in The Matrix trilogy.
But back to The Terminator. Skynet was initially just a collection of individual computers and weapons. They communicated and then combined into a single unit. This new entity realized it was a thing that thinks. Now self-aware, it acted in self-interest, which wasn’t good for humanity.
In financial markets, investors sometimes form a kind of collective consciousness. That’s how we get manias and bubbles. The whole becomes more powerful than the sum of its parts.
The same holds for workers: They’re stronger when they act together. But now something new is happening. Even without formal organizations like labor unions, working people are realizing they can achieve more when they’re united.
You’ve heard about “the Great Resignation.” The labor shortage is encouraging workers to seek better positions. They’re doing it, too. A record 4.4 million Americans quit their jobs in September.
If this attitude jumps from individual to collective, the economy will be in a whole new ball game.
Anger and frustration
Just a few months ago, many otherwise sensible analysts were convinced the labor shortage would ease once the government stopped paying people not to work.
That never made sense to me. I attributed it more to longer-term demographic forces. And as it developed, ending extra unemployment benefits didn’t magically produce more workers.
Many giant corporations depend on a steady flow of workers willing to do hard jobs for low wages. Until recently, this model worked well. The US had millions of working-age people who needed such jobs. Now it has fewer.
This has upended the previous employer-employee relationship. Instead of multiple applicants for each position, companies now have multiple positions for each applicant. They need to evolve. Many aren’t.
This month, The Washington Post ran a gripping account of events at a Bradford, Pennsylvania McDonald’s. The local franchise owner had been losing workers, but not enough to force a significant wage hike.
Eventually, though, the rest of the team became self-aware.
Dustin Snyder was tired of the low wages, the 60-hour workweeks, and the impossible-to-please customers, and so, in early September, the assistant general manager at a McDonald’s here drafted a petition that laid bare months of building anger and frustration.
“We are all leaving,” his petition threatened, “and hope you find employees that want to work for $9.25 an hour.” Nearly all of his two dozen employees had signed it. A few added their own flourishes…
Dustin, 21, could feel his heart pounding in his chest as he fed the petition into the fax machine in the McDonald’s office, punched in the number for his bosses 80 miles away in Buffalo, and hit send. Another low-wage worker rebellion in a season full of them…
Soon after Dustin sent the petition, the phone was ringing, and the regional supervisor in Buffalo was demanding to know who was behind it. Dustin’s first instinct was to panic and plead ignorance. An hour later, he called and confessed.
“I was trying to get better pay for my people,” Dustin said.
“There are better ways to go about this,” the regional supervisor replied. She had been thinking about boosting pay at the Bradford McDonald’s, she said, but she was not going to give in to threats or give up control. Because of the petition, no one was getting a raise. If the workers did not like it, they could quit.
That’s what they did, but not individually. The young manager explained that he was going to leave and asked if others would join him. Here’s what happened next.
Initially, there was silence. Then seven of the nine raised their hands. Two who decided not to join took seats at a table in the empty restaurant. The rest tossed aside their headsets and abandoned their posts at the drive-through and registers…
Dustin’s anxiety, which had been building since he sent the fax, began to ebb. His co-workers were ebullient. “It’s a walkout,” one yelled as they headed out into an economy where low-wage workers, long-accustomed to feeling scorned, ignored, and invisible, were realizing they suddenly had some agency.
The workers acted together in a way they couldn’t have done individually. Kind of like Skynet.
Did they get what they wanted? The original group found new jobs at higher pay. The restaurant limped along with substitute workers and then raised wages as the departed workers had asked. So the walkout worked, but not for those who initiated it. And the whole thing could have been avoided if the company had just raised wages sooner.
Of course, this is just one incident. But every big trend begins as a small one.
Forcing change
Back in 1980, a 37-year-old shipyard electrician named Lech Walesa helped form Communist Poland’s first recognized trade union. It sought to defend workers’ rights through non-violent resistance.
A decade later, Poland left the Soviet bloc, with Walesa becoming the country’s first freely-elected president. Then the Soviet Union itself collapsed amid its economic system’s fatal flaws.
I’m not predicting such change in the US. These are vastly different situations. But like then, a growing number of workers think the system is aligned against them, and some are realizing cooperative action can force change.
This awareness is spreading. One database shows more than 1,300 strikes and walkouts since March 2020. Often these are spontaneous, not union-organized.
Some business leaders aren’t prepared for this. They will need to learn.
*Patrick Watson is senior economic analyst at Mauldin Economics. This article is from a regular Mauldin Economics series called Connecting the Dots. It first appeared here, and is used by interest.co.nz with permission.
74 Comments
We are living in dangerous times indeed.. there’s real and growing anger out there only held back by economic support and QE. The tinder box will ignite soon enough and an economic downturn will only exacerbate the discontent and lead to civil unrest. Sadly I think both violence and economic depression are coming soon to the western world :(
Yet they're out there with signs demanding more of this rapidly debasing fiat-money - LMFAO, you can't make this stuff up! They're living in la-la-land.
'Please Sir, can I have some more socialism'.. they'll learn one way or another - by then it'll be too late for many.
The ratio of GDP going to capital over labour has never been higher. There are a few causes of this, one of which is wages being held artificially low due to immigration and of course technology.
Over my life time I started centre left, moved to centre right and are now moving back to centre left. Thomas Piketty made some very good points, I have a lot of sympathy for those disadvantaged by what has happened.
While Bezos is taking trips to Earth's outer atmosphere his workers need permission to use the bathroom and are timed.
Lol, what a comment.
You have Labour actively enriching asset holders and fostering a housing bubble while workers struggle to pay rent and battle inflation, meanwhile you call them 'far left'. Wow, that's some mental gymnastics....
All I can say is you're either stupid, an American, or both to think the current iteration of Labour are 'far left'. They're 'centre left' at most.
Labour is not one iota left lol what are you smoking mate. Have you not seen all the support for the rich and huge asset price growth under them.. meanwhile workers get punished all over the place. They throw out a few scraps like extra sick days to keep the believers on the hook and that's about it.
Not really. DS argued against intensification in his electorate during the Auckland Plan process - in other words, they said the owner of a property in that area should have no right to exercise their right to build what they like on their property. And when a number of multistory, apartment developments happened inside the Grammar Zone, necessitating a change of school boundary lines, he argued that existing residents in the Grammar Zone should not be excluded - in other words, by virtue of having bought in that location they had some kind of inalienable property right to go to those schools.
They're a libertarian party in name only - i.e., only when it suits their constituents.
Pretenders.
These types of comments crack me up. Labour are centrist and neoliberal. They pay lip service to things associated with the left. But they merely tweak the system and have no vision or desire to change it because they belong to the professional class that has benefited from the status quo.
"The ratio of GDP going to capital over labour has never been higher." - nice soundbite .. except it is BS.
https://ourworldindata.org/grapher/labour-share-of-gdp?tab=chart&countr…
WRT Piketty reference : do you think he should be including pension guarantees in his income calculations ? why do you think he does not ?
Sorry, that's simply rubbish and you either know it or are an idiot.
https://www.rba.gov.au/publications/bulletin/2019/mar/the-labour-and-ca…
Zack Brando,
You wouldn't know Socialism if it bit you in the arse. In just what parallel world is it Socialism to want to earn a living wage? Just learn some history. Look at the history of how unions evolved in the late Victorian era and the early 20th Century to counteract the absolute power of the companies they worked. for. Read about the conditions they worked in-the Dark Satanic Mills of Dickens were all too real- Read about the conditions of the shipyards in the Depression. Look at the era of prosperity in the US in the 50s and 60s when companies like GM were highly unionised.
Of course, unfettered union power is no better than its opposite and i saw that very clearly in the UK in the late 70s which led directly to Thatcher.
The rich are super rich. If anyone follows the companies and their profits, you can easily imagine what is happening. Do we really need 200ft super yachts which are owned billionaires when they can give it back to the people who work for them. Why does Apple, Google, Samsung, meta need billions of dollars of profits every quarter? Why don't they pay more to their workers who do all the hard work to make these products but paid minimum wages?
The social media should be used to bring this awareness and not vaccination hoax and heists. But social media is also controlled by rich who want to become super rich. They need slaves to work in their offices and factories and not think.
Trapped under exploitation of essentials like food and shelter (rent or mortgage), people are already trapped in slave like debt servitude that's getting hammered by inflation. In a lot of cases its someone else's debt that's the problem. What to do - asset reset or a combination of stagflation and hyperinflation depending on how easily you job can resourced/automated. If immigration is turned on then its mass stagflation with the only winner the debt overlord's being banks and speculators.
People and businesses are needed to build and crew the super yachts so in a way they are supporting workers.
As for the billions of profits well that goes to the shareholders.
I have bought small amounts of shares in some of these companies so as a shareholder I expect the company to maximise profit.
Key difference here is a portion of the profits should go to those who gave their labour to create it.
Force shareholdings onto employees as they are part of a company, they reap the growth, and lose the loss. But keep it completely separate to the standard income packet. That would stop a lot of the inequality from occuring in the first place. People who invest their time should reap reward from the profits not only those who invest capital.
Interesting solution. I am not against people being wealthy. I am against them being so at the expense of others. I believe every worker should be paid fair wages. Bezos was criticised for his comment about Amazon staff who it seems, are paid a pittance. That is wrong. the model that they all seem to use to justify high executive pay rates and low staff pay rates is proven to be wrong, but they won't let it go.
I can't help comparing the situation to the banana republics of South America where a handful of wealthy people hold power over a virtual serfdom. Sure they are very wealthy compared to the rest of their society, but in holding this position they are strangling the whole economy. They and the rest of their country would be so much better off if every body was fairly rewarded and the value of labor fully recognized. This then creates an economy that forces enterprises to innovate and raise productivity. It also creates a more open economy which allows otherwise suppressed individual to rise up and create new and innovative enterprises that will challenge the status quo to do better or fail as all dead wood should.
A similar thing happened after the black death plague. People/serfs were in short supply so the lords lost their power over them. Housing and unused land was plentiful so people supported and worked for themselves. What followed was a large growth of innovation and rise in the wealth and well-being of the population. I dare say that the aristocracy that learnt quickly did far better than they had done previously and those who tried to hang on to the status quo withered.
Big lessons here for NZ. We are far further down this track than the USA. Difference here is that the serfs are imprisoned by unaffordable housing and low wage/benefit poverty trap. Their only hope is to get out of New Zealand.
South America is a mess. 2 themes seem constant thru most of the continent. Corruption and socialism (or strong left leaning tendencies). The middle class in Argentina (40% are now in poverty) fares WORSE than someone in a statehouse locally. Send me the hate, but when you have free education, free medical care, are free from infectious diseases (excl meningococcal disease and rheumatic fever where NZ is a cluster F) you are doing pretty well. Very few people slept on the street last night or under a bridge.
NZ has changed, and for the worse. But it is still a damn good place to live.
Unless you are Brock. Brock will bitch and moan about everything.
My intuition is that while this change in industrial relations is enabled by labour shortages, it's motivated by the insane situation we've seen in markets. Anyone with capital to deploy has been able to make huge amounts of money by speculating in equities, real estate or crypto, seemingly with the protection of central banks and zero concerns about inflation or moral hazard.
In that context, the usual lines about how unions are bad because they are inefficient, or encourage laziness, or inflation, are absurd and offensive, and they're not viable any more. Governments who claim to believe in market efficiency have no credibility in cracking down on labour unrest unless they turn off the firehose of guaranteed profit to speculators first.
Or - as the people in the article did - you could offer your employer a chance to retain you, rather than just up and quit. If they choose not to offer you enough to make staying worth your while, and then face problems of understaffing and recruiting, then whose fault is that?
Yes. The most miserable work colleagues I encountered were those on a good salary that was matched by high commitments in mortgages, hp's, child support etc. They hated their job but couldn't afford to leave. So no different to being a slave.
Rule #8. Never get yourself in a situation where you can't afford to leave.
That only works in a society where people are free to create their own business - and are not stiffed out by over regulation and monopolistic behaviour.
Classic examples in NZ are supermarkets. Shopping malls another.
Throw in the silly little courses that keep becoming mandatory (for the likes of how to place a traffic cone) and you can see the trajectory - work for the big boys at their wages or there is nothing else.
Great article. Interesting to me that this appears to be more global with Chinas "tang ping" (lying flat) movement and the EU(/UK) also suffering this worker shortage.
I think you're right about demographics really being the driver. For all the future promise of technology automating jobs little that is meaningful has been achieved, the proportional decline of the working age population (or absolute decline in many OECD countries and China) is declining faster than jobs can be automated. There's a shortage or workers (particularly in low skill and manual professions), this is how wage inflation happens.
Most population growth today is in parts of the world that are not economically developed and most show very little sign of emulating China. In a way China was an outlier because it had always been a great civilisation until the British ended the rule of the Qing dynasty in 1860, they are rebuilding rather than developing. Of course Chinas population has probably peaked now so it'll be interesting to see what's next for them.
I think we have to take a step back from even this, and ask what is our purpose in society.
The philosophy of free and open markets and invisible hand makes sense in a world without Central Banks and Governments interferring with the market... here is the issue! The masses need to take those in power to stop f n around with the market... short term pain is better in the long run
There’s a problem that needs solving that’s outside of the left wing - right wing paradigm. The root of the problem is the way in which money is created. The system that we currently have, if understood by the majority, would cause a mass revolt.
However, because this subject isn’t taught at schools or commonly understood by most, we end up just debating all of the symptoms of an unhealthy system, but never get to the cause. This is why it doesn’t matter if we get red, blue, yellow or green in parliament. Nothing much changes.
It’s been a life time since we last had meaningful public debate about monetary reform.
today there are an extra 1200 jobs at our DHB's, 200 jobs in Department of Corrections prisons alone and several hundred teaching positions -- relief teachers are at a premium and demanding significant rates until Christmas -- Waitamata DHB already had nearly 200 nursing roles vacant prior to the mandate - and their pay scales were already out the window prior to it.
Dont expect too much before February - 1.5 million Aucklanders only thinking of Xmas - a holiday and getting out of Jail /the big smoke! but come Feb - with mortgage rates starting to be refixed 2% higher, cost of everything going up - expect some serious Merry go Round as people start seeking significantly higher wages - not that 2-4% rises if they stay put - but 20%+ if they move !
“If an unvaccinated person was in a role before the requirement to be vaccinated was introduced, the introduction of a vaccination requirement would be considered a significant change in conditions of employment. This would be considered a good and sufficient reason for voluntary unemployment and would not affect their access to income support,” she said.
“However if the unvaccinated person accepted a role knowing that there was a requirement to be vaccinated, and then lost their job because they chose not to get vaccinated, they may have to wait 13 weeks before they are entitled to income support.”
https://www.stuff.co.nz/business/127006483/workers-who-leave-jobs-over-…
https://www.cab.org.nz/article/KB00001934
"If you left your job or were dismissed because you did not fulfil a requirement to be vaccinated against Covid-19 (whether through a Health Order or from the employer’s health and safety assessment), a 13- week stand-down period would not apply.
This is covered by the exception “the work is unsuitable for you”.
However, if you had started the job knowing that Covid-19 vaccination was a requirement, and subsequently left because you would not get vaccinated, the 13- week stand-down period would apply."
Just for the record, relief teachers don't demand significant rates, they get the same rate as all teachers as per the collective agreement, either nzei or post primary. They get holiday pay rolled into the day rate. The rate they get is the same as any teacher and they cannot demand more pay for relieving.
Reading The 4th Turning gives some really good big picture perspective on what is most probably playing out. We have a shift of power going on between boomers and millennials. Big change is ahead if the theory is correct (with gen x stuck in between not sure what direction to look for leadership) The next 40 years won’t be recognisable against the last 40..it would be like comparing the anarchy of 1900-1945 and the events that unfolded then, to 1946 - 1980’s.
How dysfunctional markets, governments and institutions have become is a good indication that we are well into the 4th turning.
I don't do social media either, but the stigma of doing low paid service jobs certainly predates it.
I think stories like this are a reflection of the returns on labour falling behind the returns on capital for decades. The recent wave of living cost increases and those already with wealth being given more by central decree is pushing us closer to the tipping point of change.
It will be interesting to see if low level service jobs get more pay and more respect when the winners of this world can't get enough people to clean their yacht and their mansion.
There's nothing new under the sun. Google the aftermath of the Black Death pandemic around 1348 to 1352 and see how all classses fared. But under the guise of protecting the tribe, the equality reverts to class inequality and before long the boss class and the working class revert to type.
Macdonalds makes its money from franchisees. 1-2 million USD down in return for and average return of 150k per year. The business model relies on a never ending pool of cheap competent labour and potential franchisees. More locations opening means that existing franchisees see their catchment areas shrink along with their profits.
Interesting. I would have thought that the franchise would be zoned so that another MD could not establish in that zone. If a franchisee excepts a contract without a zoned or small zoned area whose fault is that?
A bit like a small local lotto agency in NP complaining about another one being established right next door at a NW
Great posts guys & gals. A couple of you are onto it. Life is cyclic. There are small cycles & there are bigger cycles. We have arrived at the end of the big cycle that started in 1946. It was a great cycle to be part of, especially if you were lucky enough to be born in the early stages. There was the swinging 60's(?) then the crazy 70's with hippies & inflation, followed by the Reagan/Thatcher neo-liberal explosion in the 80's, with hiccups at Y2K & the Asian crisis (read Japan) at the turn of the century, then the GFC which everyone knows about, followed by the pandemic which we're all a part of today. Neo-liberal thoughts/processes were well stretched before the pandemic (USA v China) but covid has sped up the process & with the regulators now in control (we're not sure for how long) we see the shift back towards higher labour costs while the lockdowns prevent the move of cheap labour worldwide. Will this shift again when we're all vaxxed? Only time will tell. What I can tell you is that the old world 'left & right of centre politics' has been turned on its head. Australia with its right of centre govt is doing similar things to NZ with its so-called left of centre govt but there are so many outs for each side that no one knows quite where we stand these days. I don't that's for sure. JA & co are university educated socialists. An urban elite in its political form. They have no idea how things actually work in the real world, but that's because no one told them that at university. Why didn't they teach them that? Because no one at university knew that either. So, here we are today, on the cusp of 2022. The best from the west is now behind us. The boomers are retiring. They've had a good run. No big wars for 75 years. That's worth a mention in dispatches. Will the young leaders coming through know how to cope with what will be (as said above) a huge shift again? Or will they go back to cheap labour driven immigration by growing GDP by growing the population, or will there be a quality v quantity element to play out as the rich get richer & the poor get poorer? It's better than television. It's called real life. And it's playing right now at a suburb near you.
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