Morning Commentary
Bernie Picks Big Capitalism Target
“Everybody knows that the major economic force here in Anaheim is the Disney Corporation
Anybody here work for Disney? Anybody make a living wage, working for Disney?
I’m probably the only politician to go to Anaheim and say this; I use Disney not just to pick on Disney, but as an example of what people are talking about when they talk about a rigged economy”
-Bernie Sanders
What a week for Anaheim, California, the location of back-to-back events by Bernie Sanders and Donald Trump. It was the Democratic candidate for the White House that brought down the house with his diatribe against Disney, which Sanders acknowledged was just a convenient symbol of capitalism.
The notion a successful American company could be an example of a ‘rigged economy’ could only be sold to an under-educated populous fixated on getting things they haven’t earned. It’s the slippery slope of rewarding and encouraging mediocrity. It goes hand and hand with a higher minimum wage and forced overtime pay.
The fact of the matter is that Disney is a godsend for Anaheim, and the 37,000 (union) jobs they provide in the area allow folks with limited skills to make a living in the first place.
A Walk Down Memory Lane
The town of Anaheim was founded in 1857, largely by fifty German immigrant families who named the town after the local Santa Ana River “Anna” and the German word for home ‘Heim.’
The town was quickly known for wine production as 47 wineries popped up. However, that industry was wiped out by a string of viruses. The locals decided to give orange-growing a shot and soon began to hire Yaqui Indians and Chinese laborers.
It was still a sleepy town of 14,556 by 1950, but Disney Corporation began construction of Disneyland theme park four years later. By 1960, the town’s population spiked to 104,184 (+616%). The sizzling growth dwarfed every city in the Golden state, and established Anaheim as the center of commerce and opportunity.
There are other elements to Bernie’s pandering and incendiary charges against capitalism that were implied in Anaheim. It’s a town where the population has changed dramatically to being more than 50% Latino. Essentially, this message conveys this big American company where the CEO makes billions and pays its Mexican and other Latino employees ‘slave wages.’
Anaheim Population Trends |
1980 |
1990 |
2000 |
2010 |
White |
76.4 |
56.6 |
35.9 |
27.5 |
Latino |
17.1 |
31.0 |
46.8 |
52.8 |
Asian |
4.1 |
9.5 |
12.3 |
15.1 |
The fact of the matter is that people are getting paid for the skills they possess. The amount of time and finger-pointing in this blame game is a waste of time; a dangerous waste of time. The next 100 years will be the Knowledge Century- in fact, it’s already begun.
Disney |
|
Movies |
36.7% |
Media |
26.3% |
Parks |
15.9% |
For the record, Disney doesn’t net that much from its theme parks. (Net is the optimal word for folks that count revenue without considering costs associated with generating said revenue.)
In the most recent quarter, operating margins for parks didn’t speak to greed. On the contrary, it speaks to an expensive operation with little room to increase wages by up to 50% for its hourly workers.
I understand the notion of people being stuck in predicaments, but that shouldn’t be the pretense for allowing governmental domain over corporate income statements and balance sheets. This is a major reason why businesses are not investing and to a degree, hoarding money.
Businesses are also looking to technology.
Rosie the Robot to the Rescue
Back in September 2013, Oxford University published a research report that shocked the world. Looking at 702 separate occupations, the paper concluded that 47% of all jobs in the United States were at risk of being taken over by robots and artificial intelligence over the next two decades.
The timeline allowed many to breathe a sigh of relief, but it’s becoming abundantly clear that was false hope and the future is now.
Two separate news reports out yesterday are the most critical news in the world.
From the BBC, we’ve learned that Foxconn- that controversial Chinese manufacturer that is the proxy for the loss of American jobs is suffering a massive job drain of its own. This one, however, was planned by management, which replaced 60,000 jobs with automation-robots.
The company’s 1.2 million workers make products for Apple, Samsung, and Sony, and cower to keep a significant workforce, but it released this statement:
"We are applying robotics engineering and other innovative manufacturing technologies to replace repetitive tasks previously done by employees.”
Then there’s Germany that should be celebrating the return of Adidas after more than 20 years of manufacturing outside the country.
Of course, there was no champagne because the 4600 square meters plant will be run by robots, not humans. The company churns out 300 million sneakers a year, and needs to bump that number to 330 million by 2020.
So, what does this mean for a nation starving for a return of manufacturing? If iPhones are being made by robots, there is no inherent advantage for China, but it means limited job opportunities as well.
The bottom line is while we need more welders, plumbers, and construction workers right now, the next one hundred years will see the most job growth for computer programmers and engineers. It’s time we start churning them here.
The Market
The stock market will be strong again, but major indices are still range bound. The good news is that energy and materials lead the way….these are the industries that I call dirty fingernails and the ones that American men so desperately need right now, even if the long-term future is to make and fix those robot replacement workers.
Today’s Session
Crude oil is trying to breakout above $50 and a mixed picture on earnings have equities slightly higher into the opening bell.
Retail is having a better reaction to earnings as Costco had its first flat same store sales in years, but shares pointing higher along with dollar store stocks.
Initial Jobless Claims down 10,000 to 268,000 is fodder for Fed hawk, but its legitimate fodder. The market bounce waned a little into the close yesterday. Let’s see how well market holds up through 10:00-10:30.
Comments |
We are in another huge wave of technology advancement in the area of robotics for manufacturing and security. The American educational system better get its act together and start turning out highly trained engineers and mathematicians. NOT community organizers! Gregory Sheehy on 5/26/2016 9:41:22 AM |
The saddest thing of all is the position we are in as a country is not compatible with increasing the number of engineers being produced. We have 2 hurdles to cross, and the second may be insurmountable. The first is the gross mismanagement of STEM advertising. They hired advertising experts to push STEM, but advertising experts are all about making something LOOK good to the audience. They focus on the short term. So, they are making STEM careers LOOK good, but are doing it to a crowd which does not have the inherent talent to succeed. Some people are born as artists, some as engineers, some as scientists, and some as politicians. Putting an artist in an engineer's job gets you a very pretty road with so many cracks in the pavement that it can't be used. It gets you a computer program with outstanding graphics, but which fails to accomplish the job that needed done and is ripe for viruses and hacks. The STEM advertising I last saw talked about the fun of making a helicopter which looked like a fish or a tiger, but not one with great fuel economy, efficiency, payload, etc. They are targeting the artist crowd with their commercials instead of the born engineers. The bigger hurdle is the education system, which now has a mandate to pass everyone. That means you can get the engineering degree without being competent, and then can try to get a job selling cars. It is an insurmountable hurdle to producing good engineers to want to pass everyone. Bob G on 5/26/2016 6:15:47 PM |
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