Capitalism Overreach

Should All Americans Participate in the Benefits of the Fourth Industrial Revolution?

A Study of  West Virginia Coal Mining in the 20th Century

And Which Plan for the Future and Who is Going to Choose It?

Dated: January 1, 2018

Nick Mullen

Background

Nick Mullen – Personal History

The Situation was Forecast

The Usual Refrain – Competition Kills Wages

Another Curse

A New Theory – hope to restart economies

So here We Are

The Future – A Glimpse

Currently

The Future is Now

The Consequences

Going down the Same Road – Again?

The New American Dream

So Here We Are  – Again

Plan the Transition

Work the Plan – Invite all Americans to this Revolution

I read an article yesterday regarding the state of the coal industry. The article detailed how Capitalism and greed reared its head in creating the industry. It reviewed the toll coal mining took on humans physically, emotionally, and mentally. It clearly demonstrates what happens when capitalism overreaches its good side and displays its bad side. What struck me was how our coming situation in the US will not be much different than what is portrayed here in West Virginia.

The article appeared in Quartz.com. The title is “The 100-year Capitalist Experiment That Keeps Appalachia Poor, Sick, and Stuck on Coal”. It is immensely well written by Gwinn Guilford. It is the story of a Coal Miner Nick Mullen.

I strongly recommend that you read this article. Another recommendation is “The Gathering Storm” by Winston Churchill. If you don’t have the time or inclination for the book I recommend an article by Joe Scarborough of MSNBC “A Storm is Gathering”. Google it and you will be directed to it.

I have been struggling to get the last post of the year finished for my blog “deepeducationweb.com.” But it just isn’t getting to the point where I have “put myself into it”. Perhaps you know that feeling. I try to put my brain, my heart, my soul into whatever I am writing. That doesn’t mean the writing is good, I wish it did. But the writing comes from deep inside. Woodworking seems to do the same for a lot of men. I do not know what it is like for women but I imagine it is similar.

So.

I think events have led to a forecast: 2018 will be a year like no other.  Sad.

NICK MULLEN

As a playwright, I would designate Mr. Mullen as the protagonist of this piece and the coal companies as the antagonist. We can look at the miners’ desire to be free as the unrequited love.

BACKGROUND

Early in the 17th Century, the Crown Head of England gave huge tracts of land to his faithful hangers-on.

NICK MULLEN-PERSONAL HISTORY

In the 17th Century Nick’s ‘people’ had been given land in what was eventually to be found as a very rich ‘seam’ of coal.

Around the turn of the last century, the early 1900’s rogue smooth-talking land agents from back east burned through the area and coaxed the mountain people into selling their land for cheap.

In Nick’s case, his ancestor received 12 rifles and 13 hogs (one for each of the children, one for himself (probably someone’s grandfather at the time).  This land later yielded billions of dollars worth of coal, yes BILLIONS.

The main problem with West Virginia coal was that it was remote. It was so hard to reach that the railroads did not burrow their way through the Cumberland Mountains until the 1870’s. But later in 1910 US Steel was West Virginia’s largest employers with almost 100,000 miners producing 90 million tons of coal. Coal employment peaked in 1940 with 140,000 miners. Now it is around 11,600.

Nick tried many other jobs because his family very strongly urged him not to go into the mines, he finally got a job at a call center earning $18,000 per year. After seven years he was earning $34,000 but he had a wife and two kids. The end of every month came and brought the end of the month and the end of the money. There was nothing left to save.

As a miner-trainee, he could earn what he was earning but with better health benefits and a matching fund retirement plan. He pushed his family’s fears aside and went down into the mines.

 

Coal miner shoveling coal. His back was black from the tar black coal dust. via Google Images
The blackened skin of a coal miner. It was so hot that some miners worked naked. Some crawled their bellies because the ceilings were so low.

 

Click to view captions

Nick had talked himself into coal mining’s “cult of self-worth”. He wanted to be like his forebears, a proud, self-sacrificing guy who worked two miles underground to provide for his family. Most guys wouldn’t do that.

 

THE SITUATION WAS FORECAST

One hundred years ago (approximately), a West Virginia man named Henry Hatfield was elected governor.

West Virginia was producing 70 million tons of coal. It was making West Virginia rich. Not the miners. But the state.

But Governor Hatfield, in his inaugural address, stated: ” more than 80% of our fuel and raw material is utilized in the state.” He continued, “as a result low prices fixed  at a standard of wages for the miner at a rate that is an injustice to him.” The reason? The coal had such a long railroad haul to market that was hard to compete against the coal of Kentucky or Virginia.

THE USUAL REFRAIN

“Competition sets the price.” As today so it was back then, the refrain meant cut the cost better known as, cut the wages. Statistician Isador Lubin, the head of the US Bureau of Labor Statistics under President Franklin Roosevelt, wrote, in his 1928 book Wages and Cost of Coal, ” The operator sold his men rather his coal”. He paid his men less so he could compete. This produced a larger demand for the non-union coal of West Virginia. (Miners in Kentucky and Virginia were unionized). Non-union coal was produced “more rapidly than the country required” which also forced down wages.

So while Governor Hatfield dreamt that coal profits would lead to local investment such as factories and manufacturing to enrich the state’s economy, he saw it chug out of states on the railroad tracks.

West Virginia produced a lot. But it manufactured almost nothing. It still does. Where US Steel was the dominant employer then, Walmart is today.

In his book “Wealth of Nations” Adam Smith rang the bell loudly proclaiming that the key to prosperity in capitalist societies, was to specialize in what they were good at. Seems to make sense. Since West Virginia has some of the best coal on the planet and was pretty much a one-industry state why wasn’t Mr. Smith’s hallowed premise working?

ANOTHER CURSE

Additional research from MIT economist, Daron Acemoglu wrote “Why Nations Fail” with University of Chicago political scientist James A Robinson. They argued “that the fate of a nation is determined in large part by its economic institutions i.e. “financial systems, tax regimens, property rights laws, labor institutions and so on.

“Institutions level the playing field among business and create competitive markets. They encourage investments in new technologies and enable people to acquire skills to pursue their talents.” “These institutions are underpinned by a political system that empowers a broad base of citizens to influence political decisions, preventing a single interest from holding sway. (above quotes from Gwinn Guilford’s article)

A key takeaway is their conclusion that “inclusive institutions drive self-perpetuating ‘virtuous circles”, extractive ones fuel “vicious circles.” Extractive institutions are those found in West Virginian, structures that concentrate power in a few, they enrich themselves and their political allies and put a stranglehold on other organizations.

A NEW THEORY

New research by Cesar Hidalgo from MIT and Ricardo Hausmann from Harvard’s Kenndy School of Government, started to poke holes in Adam’s Smiths theory. They measure an area’s “economic complexity”- the mix of products produced. They found that with less economic complexity growth was slower and has bigger gaps between the rich and the poor EVEN AFTER taking into account factors like income and education.

SO HERE WE ARE

The history of West Virginia points out its absolute dependence on extractive institutions going back in time to before the coal boom.

Lands were handed out to landlords who didn’t reside in WV. When coal came into prominence the land was already owned by remote landowners so the local power was given to coal operators who happened to be in political consort with these same landowners. The coal operators held so much sway as to even control state legislators. The ‘”vicious” circles kept going round and round.

The circles led to the company stores that required, (illegally), that workers purchase their necessities like food, clothing etc from them. Interestingly, the company stores resided in the company towns that were owned by the coal operator and remote landlords. These company towns also provided the housing for the miners.

A bunkhouse overfilled with miners. Miserable quarters. Google Images
The coal operators provided quarters for miners in the company owned coal towns.

Since there was no competition, the towns highlighted the greed of the remote landowners and beholden coal operators: squalor, ugliness, disease. No freedoms, no choices, no opportunities. This was the landscape of West Virginia, the land that helped bring Donald Trump to power.

 

Downtown Logan WV Google Images CCL
Downtown Logan WV Google Images CCL

THE FUTURE – A  GLIMPSE

I have been researching the Fourth Industrial Revolution. The growth this time is powered by artificial intelligence, machine learning, deep learning and neural networks.

The results are staggering, even at such an early stage. Self-driving cars, self-driving city buses, self-driving semi-trailer trucks (UPS bought 145 after the first public demonstration). This is only the bright beginning.

The changes to come are staggering. Robots as cashiers in grocery stores, as stock clerks in the same stores and convenience stores. Robots with the ability to beat the human champion in the most complex board game “Go” and then watch as its next in line computer taught itself the game and beat the first computer. Computers can do that, is there any reason why they won’t replace bookkeepers, accountants and any other tedious job that can be done faster and more accurately by a computer with artificial intelligence?

CURRENTLY

I watched the CEO of Google give a presentation that touted the “Google Assistant” that powers the search for any question you may have and present the answer on your mobile device. Google’s AI “Deep Mind” has an IQ of 47.28, a six-year-old child 55.5, an  18 year old 97. China’s Baidu has a score of 32.92, Microsoft’s Bing 31.98, Apple’s Siri 23.94. The battle is joined.

What are they fighting for? Maybe finding unknown planets in distant galaxies, not in our Milky Way like the Kepler Space Telescope. Kepler just ‘discovered’ and exomoon (exo for out of the Milky Way) K1625b in orbit around planet K1625. They are 4,000 light years away.

Maybe finding the ‘executioner’ cell that will kill cancer without harming surrounding tissue. A team at the Albert Einstein College of Medicine led by Dr. Gavathiotis is doing just that.

Maybe find a way to use solar energy to generate hydrogen fuel out of seawater as assistant professor Yang Yang of the University of Central Florida is developing.

The Rio Tinto mine in Australia is using 416-ton behemoths to haul iron ore. These are the same type of truck, Caterpillar, used on the Mesabi Iron Ore Range of Minnesota.

 

India is still the only major nation still deriving its power from coal but it too is losing that battle. It was projecting that even with a massive input of resources it still would not be able to meet its needs by using coal. The result? In May 2017 it canceled plans to build nearly 14 gigawatts of coal-fired power stations and convert to solar electricity as prices for that commodity are in free-fall.

It still needs to construct coal powered stations to generate electricity in places for the foreseeable future but it is recognizing the expenses in pollution and the cost to humans in terms of health and medicine are part of the cost of the fossil fuel research named “Coal”

THE FUTURE IS NOW

Ten million jobs have been lost in the last decade to technology.

Over 100,000 coal mining jobs have been lost can be attributed to changing methods of power generation.

The projection is for 47% of jobs will be lost in the US due to applied artificial intelligence. The current number of employed people in November 2017 was 126 million. The unemployment rate is 4.1% in October or 6.6 million people. Economists consider 4.0% to 6.4% as the full employment rate. (The actual number of people that can be employed at 35 hours per week.) wikipedia2

Someone should be planning. Planning to determine new jobs that will be needed in what parts of the country. Planning on what type of retraining is going to be needed. Planning on who is going to train and pay for the massive amounts of training.

“Succeeding in the Global Economy” by Alanna Petroff,  CNN TECH, March 24, 2017, is an article that explicitly lays down the risks.

“Thirty-eight percent of jobs in the US are at HIGH risk of being replaced by robots and artificial intelligence over the next 15 years.” All of the numbers are reported by PwC.(PriceWaterhouseCoopers International Limited a network of accounting firms around the world.

“Meanwhile, only 30% of jobs in the UK are similarly endangered. The same level of risk applies to only 21% of positions in Japan.”

The U.S. and U.K. labor markets are both dominated by services jobs, and roughly the same share divided into key sectors such as finance, transportation, education, manufacturing, and food services.

However, there are major differences in the nature of the work with the same names. An example: in the US 61% of the jobs listed as financial services are at high risk. In the UK the risk is 32%. The reason? According to John Hawksworth, PwCs chief economist in the U.K., said that “Many workers in the US are focused on domestic retail operations, ie. bank tellers.

The U.K. sector is “much more focused on international finance and investment banking, functions that required significantly higher levels of education and expertise.”

“Workers doing more routine tasks are easier to automate than an investment banker,” Hawksworth said.

THE CONSEQUENCES

Someone had better be planning on how people are going to buy food, buy housing,  afford to live.

One idea is Universal Basic Income. There is no doubt that Republicans in power and hell-bent on erasing “entitlement” programs like Socia Security, Medicare, and Medicaid, there won’t be much energy expended in addressing these new issues for the foreseeable future.

Researchers at Oxford University determined that 47% of all jobs in the United States are at risk of computerization. A very real concern with the conversion to robots and artificial intelligence labor is that the wealthy will have easier access to it and that as a result, their use of it will have an even more depressing effect on wages. Why pay a person $15 an hour when I can use my machine that only costs $10. Are the wealthy or the working classes more apt to buy AI Assisted Machines?

So now we see what the coal miners have been faced with since early in the  20th Century. We are now faced with the same problems in the 21st Century.

Look at this tidbit of information:

In the US:

Top 1% control 35%   of the wealth

Top 10% control 75% of the wealth

Top 20% control 87% of the wealth

In the World:

Top 1% controls 50% of the wealth

Top 10% of adults control 85% compared to the bottom 90% controls 15%

Top 30% of adults control 97% of the wealth

Based on our research neither one of these displays the economically complex and diversified landscape that we need to see.

Taxpayers Paying to Elect Republicans to Congress for the Next 10 Years!

Did you see this headline? The United States Congress just gave $1.5 trillion to the already wealthy. It will be interesting to see how the above numbers will change.

GOING DOWN THE SAME ROAD – AGAIN!

It has been proven that the “Trickle Down Theory” invented by President Ronald Reagan and to a lesser extent by President George W Bush does not increase spending, nor does it improve the health or wealth of those that support the wealthy by paying the taxes. It is merely a clever invention of the Republican party to transfer wealth to their donors, in effect, making the ‘normal’ taxpayer PAY FOR THE FUTURE DONATIONS TO THE REPUBLICAN CAMPAIGNS. Pretty sneaky or pretty deceitful?

THE NEW AMERICAN DREAM

It was said that the American Dream was to get a good education, buy a home, and raise a family.

THE AMERICAN DREAM HAS MOVED

It appears to have moved to Canada.

America:      College Education – 48%

Canada:       College Education – 58%

America:      Home Ownership – 63%

Canada:       Home Ownership – 68%

America:     Life Expectancy    – 78.7 years

Canada:       Life Expectancy    – 81.2 years

It is often noted that in the early 20th century, Canadian prime minister Sir Wilfred Laurier declared, “Canada shall be the star towards which all men who love progress and freedom shall come.” Let’s make that line as famous and meaningful as this once was: “Give me your tired, your poor, your huddled masses yearning to breathe free.”

SO HERE WE ARE – AGAIN

The Trump Administration is working diligently to prepare for these coming events. Not even close. He has focused the first year of his administration to destroy the climate change, economic development programs of President Obama.

He has pulled the US out of the Trans-Pacific Partnership which ceded to China the sphere of influence in the east.

He has destroyed confidence in US Policy with NATO.

He is working to destroy NAFTA.

He has resigned US from World Leadership. Fareed Zakaria, the

click the entry to read the caption

PLAN THE TRANSITION

I believe that:

since we know that not all parts of the country are going to be in transition at the same time,

since we know that not all part of the country are going to be affected negatively by the transition,

since we know that the parts of the country that are going to be affected negatively by the transition will look, act and feel much the same as West Virginia did in the last century,

should our work be focused on the impending crisis both to plan on how to press the advantage of the good things

should our work be focused on a plan to lessen the negatives that can have the same disastrous consequences as West Virginia?

WORK THE PLAN

Should we do the smart thing, the right the by the citizens of all of the United States?

Should we continue to divide the citizens, making fun of some, ridiculing others, separating still more for depriving of rights already given (DACA)?

Who is going to choose the plan?

Should all Americans join in the promises of the Fourth Industrial Revolution or should some be left behind?

“We can have democracy in this country, or we can have great wealth concentrated in the hands of few, but we can’t have both.” Louis Brandeis, Associate Justice of the Supreme Court

 

“This country, with its institutions, belongs to the people who inhabit it. Whenever they shall grow weary of the existing government, they can exercise the constitutional right of amending it, or their revolutionary right to overthrow it” Abraham Lincoln

 

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