Certainly not California

January 28, 2010


It just amazes me that nobody in power, nobody in the “know,” actually understands what is going on. This is an enormous economic shift, one of the largest in our history, maybe the largest. I don’t say this lightly. Between the oldest baby boomers approaching retirement, meaning their accumulation years – the years they buy a lot of stuff – are over, and the advent of the mechanized manufacturing and service industries by robots and computers, we are faced with the same thing that happened in 1929. Only, potentially, worse. I kick myself for not seeing this coming sooner, but I underestimated how quickly technology would actually take over everyday life. While I have been talking about this eventuality for some time, it is happening a generation ahead of where I originally thought it would.

Massive numbers of sharecropper farmers were put out of business when the tractors took over in the 1920s and 1930s. One tractor would put 12 sharecropper families out of business. In turn, this put many stores and companies out of business that were supported by those families.

There are several shows on TV, such as How It’s Made on the Science Channel. I know very few people watch these shows, but ironically these are the most important shows on TV showing what is happening to our economy and society. They show how all kinds of products are made, from guns to tofu. What you can’t help noticing is the vast majority of these products are now made on manufacturing lines with almost no human intervention, and when there is human intervention I can’t help noticing that most of their jobs could easily be replaced by robots and computers, too. The owners of the company just haven’t gotten to it yet.

Far more jobs are being outsourced to computers and robots than to foreign countries today. Ironically, many manufacturing workers in foreign countries are now losing their jobs to computers and robots, including in China.

I just found out that even cow milking is now done completely automatically. They found that cows will come to get milked when they are ready, like going to the bathroom. They walk in the milking stall on their own, their teats are automatically disinfected, a laser system lines up the four milking cups over the teats, the milk is tested automatically for quality as it is collected and then all the equipment is automatically disinfected for the next cow. Each cow wears an electronic collar identifying the cow and the computer keeps track of how much milk comes from each teat from each cow. Next, the entire floor of the entire dairy milking operation, including where the cows hang out and poop, is automatically cleaned, disinfected and tested for cleanliness by a mechanized system. No people involved.

The garbage man has been replaced by trucks with robotic arms that pick-up the trash can and dump it in the truck. A couple of million jobs replaced. Eventually, sometime down the road, the drivers of the truck will be replaced by computer, laser, gps technology. Eventually, when I don’t know, but drivers of trucks, trains, etc. will all be able to be replaced by computers. Speaking of GPS and iPhone technology – how many paper maps are being sold these days?

Service people are also losing their jobs in mass. How many primary customer service representatives have been replaced by computers? Literally, several million in the U.S. alone.  Every bank, utility and large manufacturer has you initially talking to a computer or online at their website.

This is what makes this moment in time much different from the Great Depression. The Great Depression involved worker dislocation. Farm workers losing their jobs in mass were living far from the cities where the new manufacturing jobs were located. Not until after WWII was this fixed. When the GIs came home many of those from the farming areas with no jobs elected to stay in the cities to work. Others went to college on the GI Bill.

Right now, there are no prospectives for large job creation in the U.S. We are not even close to losing all the jobs that computers and robots will be replacing. Incidentally, they call this worker efficiency. More work produced per U.S. working person. It sounds good when the Chairman of the  Federal Reserve tells the Congress and President that the U.S. worker is the most efficient worker in the world. The problem is this efficiency gain is because of robots and computers replacing  the working people and doing their work. Unfortunately, the politicians in Washington each blame the other party for the job losses. Both parties are dangerously blind to the truth.

Ten years ago the conventional wisdom was that as the manufacturing jobs were replaced by robots this would open up more service industry jobs. However, the service industry jobs are starting to be replaced in mass also. Unlike the Great Depression when farm jobs shifted to manufacturing jobs, we don’t have new service jobs for the displaced manufacturing workers to move to. In fact, service jobs will continue to be lost as they are replaced by computers and eventually robots. I am waiting for the first fast food company to have computerized order takers. As soon as voice recognition technology is perfected this will happen.

I have racked my brain for a couple of years now trying to figure out what the answer to jobs is. What will be the new jobs for all of the currently displaced workers, as well as the 300,000-plus a month additional jobs we need to be created for the young people entering the work force?

For the first time in my adult lifetime, I can’t come up with a reasonable answer. I don’t understand what the new class of jobs will be. When computers and robots are doing the work of what the people used to do, what do the people do now? Health care is big right now, but eventually I see this also going more and more to computers and robots. Not to mention, once the baby boomers die off there is going to be an enormous drop in the need for health care workers for about 15-20 years as the much smaller X Generation hits their senior years.

The current wisdom of the politicians in charge is that the new manufacturing jobs will come from the green industry. Solar, wind, etc. The politicians still think that manufacturing is largely done by people. It is not. When a new solar panel manufacturing plant is built using $100,000,000 of venture capital, I guarantee it will be a state-of-the-art plant using the latest in computer and robotic technology to manufacture and assemble the solar panels. Very few manufacturing people needed. It will also be located in the location that gives the best mix for transportation and business tax costs. Certainly not California. The owners of the company may live in CA part time, but they won’t put their new plants or pay taxes here.

Greg Kudlick is a financial adviser living in Templeton.



  1. whatisup says:


    Here is a story about multi-million dollar tax credits going from the new Obama green stimulus fund to Nanosolar to build their newest plant in California. Fully automated with robots and computers. Very few workers employed compared to the output. Obama tax credits = no jobs for you! The politicians are idiots.

    (2) 4 Total Votes - 3 up - 1 down
  2. Goodhelpweb says:

    Unbridled growth has another name: cancer. Perhaps we are at the stage of recognizing the need to reinvent the American Dream. Quality vs quantity?

    Cancelling corporate personhood will reset American business across the board. Then we can build a second American Revolution for the people and the public commons.

    How about a “green attitude” for generating power, “sustainable” city planning and scaling down the public’s “carbon footprint” for starters?

    The high-speed rail project planned for California is a good start.

    Solyndra, Inc. manufactures innovative cylindrical solar photovoltaic panels that generate electricity. The groundbreaking ceremony for the new Solyndra factory in Fremont, CA, ocurred last September.

    Nanosolar Inc. is building the world’s largest solar cell manufacturing factory in Palo Alto.

    Don’t forget the high-touch and intellect-intensive, human occupations of the health industry, education and high tech service sectors.

    (1) 3 Total Votes - 2 up - 1 down
    • whatisup says:


      Wow, wow, wow. Nanosolar just finished their state-of-the-art fully automated, robotic plant in Germany to produce solar cells at one every ten seconds. That will provide lots of jobs for robots. There is a six minute YouTube video on their site showing the plant. Very few workers compared to the unbelievable production output. They brag that the fully automated plant can run 24 hours a day.

      (1) 1 Total Votes - 1 up - 0 down
  3. rogerfreberg says:

    oh please, don’t kick yourself over this… there are plenty waiting in line to perform this vital public service.

    Why not suggest ‘cold fusion’ or tapping into another alternative reality to rob energy from them? It makes as much sense.

    In the meantime, there are old solutions to both the energy and economic realities we are facing… it’s not rocket science; however it takes courage and a strength of will which isn’t present in California.

    I’ll try to keep the hot air blowing for you…. it may help.

    Roger Freberg

    (1) 5 Total Votes - 3 up - 2 down
    • whatisup says:


      I usually agree with you, but not this time. I think you are dead wrong that there are old solutions to the economic realities we are facing. Is there one CEO looking to replace computers and robots with human workers. I think not. The creation of jobs that can be replaced by computers and robots is a waste of time. When computers and robots are doing so much of the work we actually don’t need the rest of the human beings that used to do that work. I do not believe you can actually come up with a solution to this very real problem using traditional methods as you suggest. Do you actually have any solutions in mind or was this just a general statement that things will eventually take care of themselves?

      (0) 0 Total Votes - 0 up - 0 down
  4. sbowner says:

    The true death of the American manufacturing employee is not automation but over regulation. The amount of paperwork that a small business has to submit to the government in order to employ even one person is a huge burden on said owner. For a brief period I had an employee and the amount of time and money required to satisfy the government made it a net loss to productivity. I would have much preferred to pay the worker a higher wage than pay all the associated fees. I subsequently replaced the employee with more automated machinery simply to relieve myself of all the extra paperwork.

    (1) 9 Total Votes - 5 up - 4 down
  5. bobfromsanluis says:

    Greg: You make some very salient points but you have left out an important consideration, the “model” of business. Business has, for the most part, always been about expanding markets, and more and more growth, at any cost. It is time for a reset; the new model has to follow some sort of “sustainable” model. I have been in retail most of my life, so that is what I know, not manufacturing or healthcare, but even the biggest in retail has realized that growth is not the panacea for the sins of unbridled lust for the almighty dollar. Society is going to have to be reorganized, eventually, if we are really going to pull through this. I too don’t have “the” answer, but our current economic setup is heading us toward the path of becoming the world’s largest third world nation. Some say that liberals like myself that rail against the nature of the largest corporations are “anti-business”, but the truth is that I am very pro “individual”. Is the United States going to become more like India where the very rich live on the backs of everyone else, no social safety nets, just those not in the top one percent struggling to get by? I certainly hope not. One possible answer might be a more “socialized democracy” similar to what is the current form of government in Norway; conservatives like our own Matt Kokkonen get really upset if anyone even thinks of somehow making it difficult for them to enrich themselves as much as they want, it is somehow “un-American”, but then again, what is the homeless rate in Norway? What is the unemployment there? What is the situation with regard to healthcare access and affordability? Norway unemployment; Homelessness in Norway (pdf file), Healthcare in Norway, please read the link there to part two of that article. Is Norway the best model to follow? Well obviously there are many differences that would probably not translate the Norway model seamlessly here in the US, but how about a real study of what they are doing? The main difference of course, is the lack of corporate input in how the government works there. With the latest ruling from the Supreme Court here, the possibility of real change in America is slipping away faster and faster. I don’t know what the solution will be, if there ever is going to be one. Thanks.

    (-1) 9 Total Votes - 4 up - 5 down
  6. nrpowell says:

    I think a policy limiting advertising would certainly help. America’s built on a foundation of throwaway consumption and immediate gratification fueled by hyper-advertising. If that could be reduced somehow, people would likely shift their focus from quantity to quality, and people almost always produce better quality than robots, especially in the service sector.

    Capitalism is great, but rapid growth isn’t sustainable. We might be reaching the plateau right now where even the most successful businesses will only be able to produce enough profit to keep going, not enough to expand.

    (1) 5 Total Votes - 3 up - 2 down

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