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Technology, income loss and protests

October 20, 2010

By Drs. Robert & Sonia Vogl
President and Vice President
Illinois Renewable Energy Association

This past week saw protests across the European Union (EU) declaring the public should not foot the bill for the actions of international bankers who created the global fiscal crisis. As in the United States, industrialized workers of Europe have already suffered job losses, income reductions, delayed retirements and pension reductions as a result of offshoring industrial jobs to low-cost labor in Asia and Eastern Europe.

European leaders seek to impose income reductions of 30 percent on unionized workers in the public sector. Economist F.W. Engdahl points out that job losses and pay reductions are similar to actions taken by political leaders in Europe in 1931, paving the way for the rise of the Third Reich, which gained public support by its call for jobs for all.

Engdahl believes there are alternatives to shrinking government, but recognizes existing dominant political interests would have to be replaced. One alternative would be to repeal debts and change tax policies so average workers would have more money to pay their bills.

Former National Security Adviser Zbigniew Brezinski is alarmed by having millions of people unemployed and losing their homes in the U.S. while aware that an extraordinary amount of wealth has been transferred to a few individuals. Dean Baker is concerned the non-elected International Monetary Fund is demanding elected governments cut spending, which will reduce consumer demand and increase unemployment. He fears the actions will provoke social unrest and lead to a military crackdown.

In his book The Lights in the Tunnel, Martin Ford suggests the focus on globalization and peak oil misses the significant economic impact arising from accelerating automation.

The computer and the Internet have had a major role in facilitating globalization, as they enable rapid global communication. With the computational ability of computers doubling every two years and the ongoing improvements in robots, Ford sees an escalating global loss of jobs as a result of technological innovations. The rate of technological innovation far exceeds the growth of human intellectual abilities, so computers and robots will increasingly displace both unskilled and highly-skilled labor.

Since jobs distribute income, the widespread loss of jobs will undermine the mass market. As income continues to accumulate in fewer hands, there are fewer customers able to make purchases. A billionaire such as Warren Buffet and his friend Bill Gates can only share so many Cokes in a day, in contrast to the millions of people who might buy the drink if they had the income to afford it.

Ford wonders what happens when technology eliminates most jobs. If people are without income or have little money to spend, they are unable to meet the rising costs of goods and services, and the market economy stagnates.

To meet the challenge, Ford calls for new taxes to redistribute income to sustain consumer demand and incentives for renewable energy. Warren Buffet calls for increased taxes on the very rich to increase government income, while acknowledging the need to cut government spending. Harvard Professor Stephen M. Walt believes the United States would be more prosperous and safer if it had a more restrained military policy and was willing to cut defense spending.

As jobs continue to disappear and inflation takes hold, it will be difficult to transition to a more sustainable energy system.

Drs. Robert and Sonia Vogl are founders and officers of the Illinois Renewable Energy Association (IREA) and coordinate the annual Renewable Energy and Sustainable Lifestyle Fair. The Vogls and the IREA are members of the Environmental Hall of Fame. Dr. Robert Vogl is vice president of Freedom Field, and Dr. Sonia Vogl is a member of Freedom Field’s Executive Committee. The Vogls consult on energy efficiency, renewable energy and green building. They have 3.2 kW of PV and a 1 kW wind generator at their home. Forty acres of their 180-acre home farm are in ecological restorations. They are active in preserving natural areas and are retired professors from Northern Illinois University. E-mail sonia@essex1.com.

From the Oct. 20-26, 2010 issue

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