Month: May 2017

As part of its periodic Global Economic Outlook, SocGen traditionally includes a discussion of what it views are the biggest “black swans” both to the upside and the downside, and the latest just released edition titled “On a Plateau”, which took a rather grim outlook to the world economy predicting that a US recession will likely hit in the not too distant future while “China, South Korea, Australia, US, Germany, UK and Japan are in the more mature phase of the cycle”, and that current global growth is “essentially as good as it gets”…

… was no different. 

Which particular black swan is at the top this time?

As author Michala Marcussen writes, “to our minds, policy is the main potential source of both upside and downside risk, be it with respect to fiscal expansion, trade policies, wage outcomes, euro area reform or monetary policy. As China tightens policy, what happens next in the US has become critical, we look for modest US tax cuts but believe that, Trumpflation insufficient to offset fading Xiflation. Without tax cuts, the US economy could well slow more substantially as early as 2H18.”

Now, obviously, it is a stylistic misnomer to call these forecasts “black swan events,” as these are, by definition, impossible to predict. But if and when they materialize, the outcome is generally extensive, and usually in the negative direction, which is the point SocGen’s team to be making.

First, to summarize the bigger “black swan” categories together with probability of occuring, here are the “negative” possible events:

• No US Tax Cuts (30%)
• European Policy Uncertainty Shock (25%)
• Sharp market Repricing (15%)
• China Hard Landing (15%)

And events which would provide “upside risks” to growth:

• Upside Surprise on Fiscal Accomodation (15%)
• Stronger Capex (10%)
• Fast Track reform in Europe (5%)

These can be broadly grouped under the headings of (1) private sector leverage, (2) US and Chinese fiscal policy, (3) trade dynamics, (4) wage trends, (5) European integration and fiscal policy and (6) interest rate risks.

And with that, below is the full discussion of all the rare birds of color that are keeping SocGen up at night:

Policy uncertainty has long been part of our risk factors linked to busy electoral agendas. For Europe, there is still a busy electoral agenda ahead. Nonetheless, with the French Presidential election now safely concluded, we have lowered the risk of a drag from European policy uncertainty shock from 30% to 25% risk to our Black swan relating to this risk factor. Our main concerns at this stage are about Italy and an ugly Brexit.

 

Across the Atlantic, the risk has shifted increasingly to finally seeing no US tax cuts delivered in FY18. We see a 30% risk that Trump will fail to deliver tax cuts, which would see the US economy slowing sharply as early as 2H18. There is also the risk of upside surprise on fiscal accommodation, and this is true for both the US and Europe.

 

Fast track reform in Europe remains a hope, but we set a low probability on this at just 5%. We are slightly more hopeful as seen from the chart below that corporations may increase investment more than we expect. Our baseline discounts enough reforms in the euro area to offset demographics headwinds over the coming decade, but this will only come slowly and there is scope for disappointment. We link these to the political risks of anti-establishment parties wining a majority in a euro area member state.

 

In China, the risk of a policy error is an ongoing issue. With the approach of this autumn’s Congress, we believe the near-term risk of a China hard landing is reduced. We have thus lowered the risk hereof to 15% from 20% previously, but expect to raise it again after October.

 

Low interest rates are the lynchpin of global markets, should confidence in the ability of central banks to respond to either upside or down side risks decline significantly, the risk is to see a sharp market repricing. This links in closely to confidence that the current expansion can continue for the foreseeable future.

And visually:

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Authored by Michael Snyder via The End of The American Dream blog,

Is it fair to compare Congress to a toilet? If there is one institution that embodies the corruption that permeates Washington D.C., it is the United States Congress.

Dominated by extremely selfish career politicians that are primarily interested in raising enough money to win the next election, Congress has become a cesspool of filth, fraud and malfeasance. The American people are absolutely sick of this, and that is why approval ratings for Congress are consistently much lower than for any other political institution. In fact, at this moment Congress has an average approval rating of just 18.3 percent according to Real Clear Politics. Donald Trump captured the imagination of tens of millions of American voters when he pledged to “drain the swamp” during the last election, but I say that it is time to “flush the toilet” because the only way that we will ever be able to turn the federal government in a positive direction is by clearing out as many of these Congress critters as possible.

Getting Donald Trump into the White House was the biggest political miracle in American history, but now his agenda is almost completely stalled and it is Congress that is to blame.

For example, Trump repeatedly pledged that he was going to build a “big, beautiful wall” along the southern border to combat illegal immigration, but at this point funding for that wall is being completely blocked.

What is the problem?

Congress.

Trump also pledged that Obamacare would be repealed very rapidly once he became president, but that obviously has not happened.

What is the problem?

Congress.

In fact, it is looking quite doubtful that a bill to repeal Obamacare will ever get through the U.S. Senate…

Senate Majority Leader Mitch McConnell (R-Ky.) is tempering expectations that the Senate will pass an overhaul of the nation’s healthcare system, promising his colleagues a vote but not success.

 

McConnell in his public comments and private conversations about the ObamaCare repeal and replace bill is painting a more sober picture than Speaker Paul Ryan (R-Wis.), who in March guaranteed passage through the House.

 

McConnell is stopping well short of any grand pronouncement.

Trump also promised all of us that our taxes would be going way down, but even though the Republicans control both houses of Congress this also seems to be going nowhere fast. The following comes from the Wall Street Journal…

The GOP’s dreams have collided with interest-group lobbying and the tax system’s reality. Politicians all profess to hate the tax code, but they don’t agree on exactly what they hate. Voters gripe about complexity but are wary of losing cherished breaks that are woven into the economy.

 

“Eventually you run out of ways to pay for your promises,” said Alan Cole, an economist at the Tax Foundation, which favors a simpler code with lower rates. “There aren’t any free obvious sources of money where you can just do the thing and nobody gets mad.”

I could bring up a whole bunch of other issues such as the national debt, trade with China, unconstitutional government surveillance, etc. but I think that you get the point.

Trump’s presidency is going to be mostly wasted if we do not get him some help. And I am not just talking about clearing out more Democrats. Right now the Republicans control the Senate and the House, but the problem is that most of them are “establishment Republicans”. Career politicians from both parties have sold their souls to the special interests and big donors that fund their campaigns, and this is why such a dramatic political revolution is necessary.

Sadly, most Americans don’t realize just how deep the corruption goes in Washington these days. To illustrate this, I would like to share just a few quotes from “The Confessions of Congressman X”. It claims to have been written by an anonymous Democratic member of the House of Representatives, and the following quotes very much ring true to those of us that understand how things in D.C. really work in our day and age…

-“Most of my colleagues are dishonest career politicians who revel in the power and special-interest money that’s lavished upon them.”

 

-“My main job is to keep my job, to get reelected. It takes precedence over everything.”

 

-“Voters are incredibly ignorant and know little about our form of government and how it works.”

 

-“It’s far easier than you think to manipulate a nation of naive, self-absorbed sheep who crave instant gratification.”

 

-“Fundraising is so time consuming I seldom read any bills I vote on. Like many of my colleagues, I don’t know how the legislation will be implemented, or what it’ll cost.”

 

-“We spend money we don’t have and blithely mortgage the future with a wink and a nod. Screw the next generation. It’s about getting credit now, lookin’ good for the upcoming election.”

And it isn’t just political corruption that is the problem. When you start peeling back the onion, you find some of the most disturbing things imaginable in political circles. For example, just consider what police just uncovered in New York City…

New York City Mayor Bill de Blasio is hiring! There’s a vacancy in his administration for a computer programmer analyst, in the Department of Design and Construction. That’s because Jacob Schwartz, 29, a DNC staffer and former analyst, has been arrested and charged with being in possession of “kiddie porn” involving children as young as 6 months old.

 

Schwartz is also the president of the Manhattan Young Democrats and the downstate region vice president of the New York State Young Democrats. In other words, he was a “made” Democrat, part of the inner circle of budding influential NYC politicians, who was even friends with Hillary Clinton’s campaign manager, Robbie Mook.

 

Schwartz was caught with 3,000 child pornography images and 89 videos on his laptop after he downloaded them from the Internet. He surrendered his laptop to police, signed a release granting them permission to do a search of his hard drive, and was subsequently arrested. He has since posted $7,500 bail.

Of course stories such as this are just the tip of the iceberg. There is so much more out there, but we aren’t really supposed to talk about those things.

So what can be done?

Well, we can sit back and keep on complaining as our country deteriorates right in front of our eyes, or we can do something about it.

On Memorial Day back in 1982, President Ronald Reagan delivered a stirring address at Arlington National Cemetery. The following is an excerpt from that address…

I have no illusions about what little I can add now to the silent testimony of those who gave their lives willingly for their country. Words are even more feeble on this Memorial Day, for the sight before us is that of a strong and good nation that stands in silence and remembers those who were loved and who, in return, loved their countrymen enough to die for them.

 

Yet, we must try to honor them—not for their sakes alone, but for our own. And if words cannot repay the debt we owe these men, surely with our actions we must strive to keep faith with them and with the vision that led them to battle and to final sacrifice.

 

Our first obligation to them and ourselves is plain enough: The United States and the freedom for which it stands, the freedom for which they died, must endure and prosper. Their lives remind us that freedom is not bought cheaply. It has a cost; it imposes a burden. And just as they whom we commemorate were willing to sacrifice, so too must we—in a less final, less heroic way—be willing to give of ourselves.

There is no war for us to fight, but let there be no doubt that we are in the midst of a great battle for the soul of our nation.

If this generation of Americans does not stand up and defend liberty and freedom, the forces that seek to destroy our country will win by default.

For years, many of us have been trying to persuade our leaders to do the right things, but by now it has become exceedingly clear that they simply are not listening.

So if we want the direction of our country to change, we have got to vote them out and replace them with others that will listen to the will of the people.

I am under no illusion that this will be easy. The special interests and the big donors have a tremendous amount of money, and the mainstream media is very closely allied with the establishment.

But the election of Donald Trump showed us that anything is possible, and I choose to believe that it is possible for us to take our government back.

We just have to be willing to try.

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When the Fed released last month’s Beige Book, as part of the explanation why employers are having an increasingly more difficult time finding jobs, it presented the following disturbing anecdote from a Boston Fed respondent:

Restaurant contacts, particularly in heavy tourism regions, expressed concern about possible labor shortages this summer, exacerbated by an expected slowdown in granting H-2B visas. Half of contacted manufacturers were hiring, though none in large numbers; several firms said it was hard to find workers. One respondent said that during a recent six-month attempt to add to staff for a new product, two-thirds of applicants for assembly line jobs were screened out before hiring via math tests and drug tests; of 400 workers hired, only 180 worked out.

Fast forward to today when the Fed released its latest, May, Beige Book (which, as always, found that the pace of economic expansion remained modest to moderate), and while it did not have any quite as vivid stories about the deterioration of the US labor force, there were some troubling observations.

But first, among the “bigger picture” observations, the Fed noted that Consumer spending had softened, with many districts reporting little or no change in non-auto retail sales. The Fed also said that agricultural conditions remained mixed with some regions negatively affected by unusually wet weather, and also observing tthat “the creditworthiness of applicants for agriculture loans worsened for a third straight quarter.”

Furthermore, there was little inflationary pressure, as recent data has confirmed, and as a result pricing pressures little changed from prior report although rapidly rising costs for lumber, steel, and other commodities tended to push input costs higher for some manufacturers. More troubling was the partial return of deflation as “some Districts noted falling prices for certain final goods, including groceries, apparel, and autos.”

But, as last month, the most interesting observation had to do with labor shortages which were noted across a broadening range of occupations and regions, even though most firms across districts noted little change to the recent trend of modest wage growth. Here are some excerpts from the Beige Book on the topic:

• Labor markets continued to tighten, with most Districts citing shortages across a broadening range of occupations and regions
• Labor markets remained tight, with employers facing limited supply
• Labor markets remained tight, and wages for skilled workers have continued to grow moderately
• Labor markets tightened, with employers looking to enhance benefits packages as a means of employee retention
• The labor market tightened further, and wage pressures grew moderately
• Contacts from staffing firms in labor markets with lower unemployment rates have noted greater wage pressure

But how is this possible with virtually no wage growth and with over 90 million Americans outside the labor force? Here is the exlanation, courtesy of an anecdote from the San Francisco Fed:

Leisure and hospitality contacts said they have not been able to fill many entry-level and seasonal positions due to a lower number and inferior quality of applicants compared with past years… Attracting qualified applicants for low-skilled manufacturing jobs is difficult, and many newly hired workers prove to be unreliable… Several contacts observed that applicants for some low-skilled positions did not meet the minimum job requirements or were unable to pass pre-employment screenings such as drug tests.

.. and then there was this:

staffing-firm contacts reported revenue declines, mostly reflecting a dearth of applicants to fill their clients’ positions

Although there is some hope…

That said, competition for low-skilled workers is strong and is driving up starting wages…. one firm increased driver pay by 3 cents per mile, equating to a 7.5 percent wage increase

And one company appears to have even found the solution to America’s problem: if you can’t find qualified workers at a low wage… just raise it:

a manufacturing firm that was expanding raised wages for unskilled workers 10% and noted a significant improvement in retention and the quality of applicants.

So simple even a Fed economist gets it.

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Authored by Patrick Buchanan via Buchanan.org,

By the time Air Force One started down the runaway at Naval Air Station Sigonella in Sicily, to bring President Trump home, the Atlantic had grown markedly wider than it was when he flew to Riyadh.

In a Munich beer hall Sunday, Angela Merkel confirmed it.

Europe must begin to look out for itself, she said, “take our fate into our own hands. … The times in which we could rely fully on others, they are somewhat over.”

Merkel’s apprehensions are understandable. A divorce could be in the cards. During his visit to NATO in Brussels and the G-7 in Sicily, Trump, with both his words and body language, revealed his thinking on who are friends and who are freeloaders.

Long before arriving, Trump had cheered Brexit, the British decision to quit the EU, and shown a preference for nationalist Marine Le Pen in the French election won handily by Emmanuel Macron.

But when it comes to leaders, Trump seems to prefer Deke House to student council types. He has hailed Vladimir Putin as a “strong ruler” and “very smart.” In Riyadh, Trump declared King Salman a “wise man.” He calls China’s Xi Jinping “a great guy,” and welcomed Turkish autocrat Recep Tayyip Erdogan to the Oval Office: “It is a great honor to have you with us.”

When Egypt’s President Abdel-Fattah el-Sissi, who has imprisoned and killed thousands of the Muslim Brotherhood, came to visit, Trump said, “He’s done a fantastic job in a very difficult situation.”

In a phone call, Trump also praised Philippines President Rodrigo Duterte, who has had narcotics dealers gunned down in the streets, for doing an “unbelievable job on the drug problem.”

Trump has even found merit in Kim Jong Un, the 33-year-old dictator of North Korea, describing him as a “a pretty smart cookie.”

And where Trump was photographed by the Russians grinning broadly with Foreign Minister Sergey Lavrov, his confab with Merkel was marked by a seeming reluctance to shake hands.

But the disagreements with Europe are deeper than matters of style. Trump and Secretary of State Rex Tillerson have indicated that in dealing with foreign nations, U.S. support for democratic norms and human rights will now take a back seat to strategic interests.

In Riyadh, Trump signaled the Sunni King of Bahrain we will no longer be giving him instructions on how to treat his Shiite majority. We’re not “here to lecture,” Trump assured the Arab royals.

After the conclave, the king’s police killed five and wounded dozens of demonstrators outside the home of a Shiite cleric, and arrested 286 of his supporters.

Of greater concern to Trump and Tillerson is the retention of the Persian Gulf naval base of the U.S. 5th Fleet in Bahrain.

Trump also tilts toward GOP skepticism of the threat of global warming and is considering pulling out of the Paris climate accord that is the altarpiece of the environmentalist international.

In Brussels, Trump praised NATO’s decision to back the U.S. war in Afghanistan after 9/11, but did not specifically recommit to Article 5, requiring all NATO nations to treat an attack on one as an attack on all, which our nervous NATO allies had wanted to hear.

Instead, they got an earful of pure Trump about how they owed back pay for NATO and that only five NATO nations were meeting their obligation to allocate 2 percent of GDP to defense.

Merkel seemed to take this as an implied threat that the U.S commitment to defend Europe from a Russia with one-tenth of NATO-Europe’s GDP may be contingent, and may have a time limit on it.

Moreover, France, Britain and Germany appear far more solidly committed to the Iran nuclear deal than are Trump and Congress.

A U.S.-NATO collision could come here, and soon.

The Iranians have signed on to purchase 100 Airbus aircraft and 80 commercial airliners from Boeing. If the Republicans impose new sanctions on Iran, or scupper the Boeing deal, Europe would have to decide whether to abandon the Airbus sales, or deliver the planes and perhaps take over the Boeing contract. That could bring a crisis.

And any U.S. confrontation with Iran, pressed upon us by Saudis, Israelis and Sunni Arabs could find Europeans bailing out wholesale on the next U.S. war in the Middle East.

Trump also seems less committed to the sanctions on Russia for its reannexation of Ukraine and support of pro-Russian rebels in the Donbass than does NATO Europe or Congress.

From his rough remarks, Trump sees the Europeans as freeloaders on U.S. defense, laggards on their NATO contributions, and mercantilists who craft policies to run endless trade surpluses at our expense, especially the Germans who are “bad, very bad.”

The European half of Trump’s trip should be taken as a fire-bell-in-the-night warning: Shape up, Europe, or you may find yourselves on your own when it comes to the defense of your continent.

For we Americans have had about enough.

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With Trump reportedly set to leave the Paris Climate Deal, this has prompted one of Trump’s “advisors”,  Elon Musk, to tweet moments ago that he has done “all he can” to advise “directly to POTUS, through others in WH & via councils” that the U.S. remain in the Paris climate deal. 

And, in response to a Twitter user asking him what he will do if Trump decides to leave the climate deal, Musk tweets “we will have no choice but to depart councils.”

Don’t know which way Paris will go, but I’ve done all I can to advise directly to POTUS, through others in WH & via councils, that we remain

— Elon Musk (@elonmusk) May 31, 2017

Will have no choice but to depart councils in that case

— Elon Musk (@elonmusk) May 31, 2017

And just like that, Tony Stark became head of the resistance.

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The showdown between Donald Trump and James Comey will be televised after all.

According to CNN, the former FBI director plans to testify publicly in the Senate as early as next week to confirm bombshell accusations that President Donald Trump “did push Comey to end his investigation into a top Trump aide’s ties to Russia.”

As a reminder, it was allegations that Trump was urging the former FBI director to end the FBI’s ongoing probe into Michael Flynn (all allegedly written down in Comey’s notebook, which so far few if anyone besides Comey has seen), that prompted the worst stock market selloff in mid-May, when some interpreted Trump’s actions as an attempt to obstruct justice, with some speculating that Trump could even be impeached if Comey’s allegations were confirmed.

As CNN adds, “final details are still being worked out and no official date for his testimony has been set. Comey is expected to appear before the Senate Intelligence Committee, which is investigating possible connections between the Trump campaign and Russia during last year’s presidential election.” Additionally, it emerged that Comey has spoken privately with Special Counsel Robert Mueller III to work out the parameters for his testimony to ensure there are no legal entanglements as a result of his public account, a source said. Comey will likely sit down with Mueller, a longtime colleague at the Justice Department, for a formal interview only after his public testimony.

When he testifies, Comey is unlikely to be willing to discuss in any detail the FBI’s investigation into the charges of possible collusion between Russia and the Trump campaign — the centerpiece of the probe, this source said. But he appears eager to discuss his tense interactions with Trump before his firing, which have now spurred allegations that the president may have tried to obstruct the investigation. If it happens, Comey’s public testimony promises to be a dramatic chapter in the months-long controversy, and it will likely bring even more intense scrutiny to an investigation that Trump has repeatedly denounced as a “witch hunt.”

Comey’s termination unleashed a firestorm of press coverage, with reports emerging in the New York Times, WaPo and elsewhere about the confrontations with Trump that Comey memorialized in memos afterward. A week after he took office in January, Trump allegedly demanded Comey’s “loyalty” if he kept him on as FBI director, and he urged Comey to drop his ongoing investigation into Michael Flynn, Trump’s fired national security adviser, in a separate, one-on-one meeting.

“The bottom line is he’s going to testify,” the CNN source said. “He’s happy to testify, and he’s happy to cooperate.”

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Authored by Charles Hugh Smith via OfTwoMinds blog,

The existing platforms of for-profit cartels/monopolies and the central state are no longer able to provide enough paid work and high-touch services for everyone.

We all know that automation is eating its way up the human-labor food chain at an increasing clip. Yet there is remarkably little insight into this process.

Let's see if we can't connect two insightful essays on this topic, one from musician-essayist David Byrne and the second on the business model of Amazon.com:

Eliminating the Human (via GFB). Here is an excerpt:

"We’re a social species–we benefit from passing discoveries on, and we benefit from our tendency to cooperate to achieve what we cannot alone. In his book, Sapiens, Yuval Harari claims this is what allowed us to be so successful. He also claims that this cooperation was often facilitated by a possibility to believe in 'fictions' such as nations, money, religions and legal institutions.

 

Machines don’t believe in fictions, or not yet anyway. That’s not to say they won’t surpass us, but if machines are designed to be mainly self-interested, they may hit a roadblock. If less human interaction enables us to forget how to cooperate, then we lose our advantage.

 

I’m wondering what we’re left with when there are fewer and fewer human interactions. Remove humans from the equation and we are less complete as people or as a society. 'We' do not exist as isolated individuals–we as individuals are inhabitants of networks, we are relationships. That is how we prosper and thrive."

Why Amazon is eating the world. Here is an excerpt:

"I believe that Amazon is the most defensible company on earth, and we haven’t even begun to grasp the scale of its dominance over competitors. Amazon’s lead will only grow over the coming decade, and I don’t think there is much that any other retailer can do to stop it.

 

…each piece of Amazon is being built with a service-oriented architecture, and Amazon is using that architecture to successively turn every single piece of the company into a separate platform — and thus opening each piece to outside competition."

There is much more of interest in each piece, but these short excerpts offer a taste of each.

Byrne is commenting on our built-in need for human connection and cooperation, not just for emotional-social reasons but as a competitive, adaptive advantage.

Zack Kanter (author of the essay on Amazon) explains how Amazon's model avoids the flaws of vertical integration (i.e. each division becoming bloated, inefficient and ineffective due to lack of outside competition).

Correspondent GFB observed that Kanter did not describe a major component of Amazon's success: the consumer's willingness to buy commodity-goods without actually seeing the product on the shelves, trying it on, etc.

The unifying thread here is high-touch, low-touch, a concept I covered in my book Get a Job, Build a Real Career and Defy a Bewildering Economy. I was endeavoring to explain why certain kinds of labor are easily automated and other kinds are more immune to automation.

Low-touch transactions / interactions don't offer much value, connectedness or cooperation. A common example is ordering a fast-food meal or checking out at a market. Our interaction with the human being behind the counter is brief and not something valuable enough that the company can charge extra for being served by a human rather than a machine.

The vast majority of consumers would be OK with (or actually prefer) having a low-touch transaction served by a robot or automated system. Rather than wait in line, many of us prefer to use the self-checkout or airport ticket kiosk. Most of us would be delighted to bypass the entire time-wasting hassle of renewing our licenses at the Dept. of Motor Vehicles and many other low-touch interactions.

In effect, Amazon is automating many ordinary low-touch transactions, and few consumers miss what's been lost in the move to home/office delivery of commodity (i.e. basically interchangeable) goods and services.

The kinds of connections Byrne is referencing are high-touch: transactions and connections that require communication, sharing, cooperation, and all the other bonds of human relationships.

If ordering a fast-food meal is low-touch, dining at a swank bistro is high-touch. Most people would hesitate to pay a lot of money for food delivered by a robot to a bland sound-proof booth. In other words, we're paying not just for the food but for a high-touch environment: a knowledgeable wait-person, a sommelier, an atmosphere of conversation, people-watching, etc.

As goods and services become commoditized, the cost of low-touch interactions declines and the cost of high-touch interactions rises.

For example, it's easy to order a commodity set of house plans for $150 off the Internet. Hiring an architect with whom you establish a professional relationship will cost 10 times more for some consulting and 100 times more for a customized set of architectural plans and specs.

There are many other examples of the difference. Consider the future of medical care. Many observers expect robots to perform many routine care tasks such as visiting patients and making sure they are taking their prescribed medications. This is a low-touch interaction.

While ill people won't mind interacting with a helpful robot, what they really want is a human being to stop in and express some interest and concern for their condition. This is the high-touch connection we all want as a human birthright.

A great many of the current jobs in our economies are low-touch, and these will relentlessly be automated, as the value of the human interaction is not worth enough to consumers to pay extra for. If consumers will pay significantly extra for a human taxi driver rather than an automated taxi, then human-driven taxis will be available. But if consumers aren't willing to shoulder the higher costs of humans performing low-touch tasks, human labor in low-touch environments will disappear as a financial necessity.

One of my concerns is that high-touch interactions and connections may well become too costly for many people to afford.

This may not matter much, as most high-touch connections are not monetary–we communicate, share, and cooperate with friends, family members, neighbors, etc., and there is no direct financial facet to these transactions.

It seems obvious to me that we need a new organizational structure to enable high-touch transactions and connections that aren't necessarily for-profit or personal (friends/family). This is the foundation of my proposed CLIME system: community labor integrated money economy— that I outline in my book A Radically Beneficial World: Automation, Technology & Creating Jobs for All.

CLIME is a non-corporate, non-state platform for a high-touch, high-value-creating community economy.

Within the high-low-touch spectrum, clearly there is much middle ground between for-profit commoditized home delivery of goods (low-touch) and personal relationships (high-touch). This middle is what appears to be at risk of disappearing as automation eats up all the low-touch human labor.

This is not a recent trend. Labor's share of the nation's output (GDP) has been declining for decades:

The existing platforms of for-profit cartels/monopolies and the central state (government) are no longer able to provide enough paid work and high-touch services for everyone. We need a Third Economy— what I call The Community Economy, with its own platform, network and non-state, non-central-bank-controlled currency.

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