Rednecks and Robots

Kim Jong-Don got elected because enough of the uneducated and unskilled who used to have high wage jobs in high value industries voted against their own self interest. Some of that wage escalating leverage was driven by oligopoly (autos) and some by inherent demand (energy). The Great Recession put an end to much of that. Kim Jong-Don promised such folk that, by making 'America Great Again', he'd get them their high wage, low skill jobs back. Now. That's just a really, really Big Lie and always has been. The former Rust Belt of the blue collar middle class was built on market control by industry, and countervailing power of industrial unions. Industry sucked monopoly rents from consumers, and unions sucked some of the vigorish from industry for workers. Redistribution by any other name, thy result is sweet.

Reagan set out to fully destroy the blue collar middle class, aided in large part by those very folks. Stupid is as stupid does. And the lunatic Right has only gotten more bold since. So, now we have a billionaire and his billlionaire buddies claiming to be the champions of the lost blue collar middle class, working hard every day to restore them to wealth and happiness. Sure they will.

The Left, and some of the Right, cling to the farm-to-factory history of job destruction/creation from the early 20th century as the panacea. No problem; we've been through this before and it turned out all right, and so again. That's some powerful intoxicant.

Well, today's reporting will be declared fake news by Kim Jong-Don and his mouthpieces. Texas, land of the free, and home of the robot. The stupid who voted for him may well continue to believe that their ship has come in, captained by Kim Jong-Don. But the captains of industry tell a different story. And they're not blaming Mexico, China, or Obama. Imagine such honesty!! As stated before in these endeavors, the early 20th century migration was possible just because the skill/brains needed for the created jobs was no worse, even lower, than those destroyed. And the volume of jobs created was commensurate with those destroyed. Successful employment migrations only work simply if labor is homogeneous or, less simply, if labor can be re-trained at a cost sufficiently smaller than the net income increase over the person's remaining worklife to make it worth the effort. For those who lost out on their high wage, low skill jobs over the last decade or so, the only realistic options:
1 - let 'em starve; they wouldn't keep up their skills so it's their ownself's fault
2 - welfare; they were blue collar middle class, so they deserve to be blue collar middle class forever

Some might posit re-training, but as stated in earlier missives, we really don't need more 55 year old London Whales from 50 year old coal miners. Now, do we?

First, the basic issue:

Oil and gas workers have traditionally had some of the highest-paying blue-collar jobs -- just the type that President Trump has vowed to preserve and bring back. But the West Texas oil fields, where activity is gearing back up as prices rebound, illustrate how difficult it will be to meet that goal.

Then, the slap upside the head:

"People have left the industry, and they are not coming back," said Michael Dynan, vice president for portfolio and strategic development at Schramm, a Pennsylvania manufacturer of drilling rigs. "If it's a repetitive task, it can be automated, and I don't need someone to do that. I can get a computer to do that."

And that's exactly what's been going on. Yes, new jobs are happening in the oil patches. No, these jobs are a fraction of the number lost, and demand skills that the oil rig roughneck hasn't a chance of owning.

Recall what's been pointed out more than once here in the past; labor is a variable cost, so it is easily (in Red states, anyway) expanded and contracted as production waxes and wanes. Automation, capitalized production generally, transforms each replaced worker into fixed cost capital. No matter the level of production, those robots and machines have to be amortized. The nut gets bigger. So:

S.O.C. Industries, a small local pump truck operator and chemical services provider, is forced to invest $100,000 a year to keep up with the computer programs and monitoring equipment its clients request. The added expenses are one reason the company has let go 15 of the 60 field workers employed three years ago. Another is that well operators that once hired five or six people on a drill site to mix chemicals and drilling fluids as well as clean up spills are now hiring only three as mechanization has sliced their drilling time in half.

More fixed capital expense of production. The only way the arithmetic works, of course, is for production demand to at least continue at the level when the switch from rednecks to robots happened. Any falloff in demand means Chapter 7. Arithmetic is a bitch.