Tag Archives: uneployment

What hath technology wrought?

JP Bio PhotoDr. John Psarouthakis, Executive Editor of www.BusinessThinker.com

On May 24, 1844, the painter and inventor Samuel F.B. Morse took center stage among a group gathered in the U.S. Supreme Court chambers, housed at that time in the Capitol basement. Morse was demonstrating his electromagnetic telegraph to mark the official launch of a pathfinding service that reached 30 miles, from Washington to Baltimore. He clicked out dots and dashes to spell a Bible quote chosen by the daughter of the U.S. patent commissioner: “What hath God wrought.”

Sending and receiving a telegram required a code-skilled operator, who could transmit 30 characters per minute. Another operator on the other end was needed to translate the code, and unless the recipient came to the Baltimore train station a courier would be needed to hand deliver the message.

Thirty-two years later Alexander Graham Bell shouted into a mouthpiece: “Mr. Watson, come here—I want to see you.” It was an iconic moment that yielded another of history’s most famous quotes. The world press corps, on the other hand, paid no attention to whatever was said by the first shopper who prowled grocery aisles while conversing, by cell phone, with someone on the other side of the earth. Such is technological progress. Such are ever-higher expectations for the next gizmo.

Such is the easy danger of not paying enough attention to how new technology impacts society.

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A Free Lunch in a Perfect Storm

Dr. H. Nejat Seyhun, contributing writer to The BusinessThinker magazine, is the Jerome B. & Eilene M. York Professor of Business Administration and professor of finance, Ross School of Business, University of Michigan. He is an internationally recognized authority on financial issues and Derivatives.

As we welcome 2012, it is a good idea to take stock of the lessons of the roller-coaster stock market of 2011. The year ended on a mixed note.  The Dow Jones Industrial Index was up about 6%, S&P 500 index pretty much flat and Russell 2000 down about 4% for the year. Overseas, European and Asian stocks fared worse.   MSCI Europe ETF and iShares S&P Asia 50 Index ETF were both down about 15%.

Investors’ concerns in 2011 were about existential issues.  They worried about a possible collapse of euro, wide-spread European sovereign and bank defaults, and possible global depression.  Investors also worried about disorderly Greek, Irish, Portuguese, Italian and Spanish defaults.  A new term was coined, Private Sector Involvement (PSI), to euphemistically refer to private investor’s losses on their European sovereign debt holdings, a concept that would have been unthinkable a year earlier.  Consequently, the prices of European periphery sovereign debt plummeted and their yields skyrocketed.

Against this dooms day scenario, a surprising bright spot was the U.S. economy.  The U.S. economic picture steadily improved during the year.   The U.S. GDP growth rate rose from 0.4% in the first quarter to 1.8% in the third.  Retail sales increased about 8% year-on-year and unemployment declined from 9% to 8.6%.  Forecasts of S&P 500 stock earnings in 2012 surpassed $100.

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Michigan’s Economy

I have come to wonder, particularly since the recent recession,  of  what is lacking or better what needs to be done in Michigan to cushion some of the up and downs of the Auto industry and the inevitable reductions in employment created by ever increasing automation incorporated by large manufacturing corporations.

I have made the following observations:

1)    We have in recent years entered a new economy, one whose core is fundamentally different from its predecessor’s, say the automobile age was from the agricultural era.

2)    The economy is barely chugging along and there is apprehension about employment levels . . .

The reality we have is very troubling, because what is disappearing is not just certain number of jobs or jobs in certain industries, or even jobs in America. What is disappearing is the very thing itself: The Job. The job is becoming a vanishing species an antiquated notion of employment.

3)    Nationally the manufacturing sector is employing an ever decreasing percentage of total labor; currently I believe at 11%.

4)    The civil service, etc employs approximately another 20%.

5)    Unemployment is at 9.1%

6)    Therefore approximately 60% must be working in other sectors of the economy.

Now what do these observations tell me, a non-economist?

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