My grandfather, John Henry Elledge, joined Riegel Manufacturing Company in 1932 when he was just 18 years old. And he stayed at that South Carolina-based textile business for the next 42 years.
The Great Depression had already begun by the time he started, and textile workers were paid just $0.15 to $0.22 per hour. While that kind of money stretched a whole lot further back then, my grandfather was hardly living a high-roller life.
By 1977, when he retired, those entry-level positions earned around $3.50 per hour, or roughly $250 per week. Part of that hefty hike was due to inflation, part of it was due to a much stronger economy…
And part of it came from the technological advances that increased productivity, lowered costs, and created new markets.
For example, in the 1950s, air-jet and water-jet looms were created to propel yarn across the loom. The result was faster production, lowered energy costs, and reduced labor requirements.
Early prototypes of synthetic fibers such as polyester, nylon, and acrylic also began to emerge around that time. And while these developments did eliminate positions altogether and pave the way for still more jobs to be outsourced overseas, they didn’t cause economic Armageddon.
The plant my grandfather worked at continued to provide gainful employment for him to support my grandmother and their three children. So much so that he went on to enjoy a comfortable retirement.
Brad (on the right) and his grandfather
In fact, over 1 million Americans worked in textiles by the early 1970s, mostly in the Southeast. My hometown of Spartanburg, South Carolina, was even known as the “textile town.” At its peak, it and its neighboring areas had over 40 textile mills, many of them among the nation’s most productive.
And while that local industry did eventually fall apart as times continued to change, life still went on. The town adapted. Today, it’s better than ever.
Keep that in mind whenever you hear how artificial intelligence is set to destroy every job available today.
Human History Shows We’re Fairly Resilient
Change is inevitable. It’s part of the reality this universe and everything in it has always had to deal with, for better or for worse.
On the definite better side, we humans seem to be pretty decent at adapting, as Spartanburg shows.
When the textile industry collapsed in the early to mid-1980s, we went through a rough time, it’s true. But shortly after I began working here in the latter part of the decade, we began to experience a major economic shift as local businesses banded together to encourage a whole new kind of commercial endeavor: automotive manufacturing.
As a result, we saw Michelin open its North American headquarters in nearby Greenville in 1988. And six years later, BMW invested $600 million to build its largest global plant right in Spartanburg itself.
Since then, that latter operation has provided one of the largest economic effects of any industrial project in the Southeast. We’re talking about a direct impact of more than $12 billion, with the BMW plant itself employing over 11,000 people.
Analysts estimate each of those jobs then supports another four to five outside positions by way of suppliers, logistics, construction, engineering, and local services. In which case, we’ve gained roughly 40,000 to 60,000 jobs statewide.
Spartanburg went from rags to riches to rags to riches again through varying economic cycles that, at times, seemed overwhelming. But it survived each time regardless.
So, forgive me if I just can’t be too scared about today’s AI developments.
Current AI Capabilities
No, I don’t have my head in the sand. I’m well aware of last week’s report, which showed that the U.S. economy lost a whopping 92,000 jobs in February.
I also know how many people are speculating that it will only get worse from here as AI capabilities continue to advance. Nor does anybody need to tell me that:
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Square and CashApp maker Block announced it will be laying off 40% of its 10,000-plus employees because, as founder Jack Dorsey put it, AI has “changed what it means to build and run a company” – though many tech insiders are saying the company actually has “issues” it’s trying to deal with.
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Oracle has its own reported plans to cut thousands of positions – though that’s because it’s desperate to fund its ongoing AI efforts, not because AI itself warrants that action.
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Morgan Stanley is cutting 3% of its global workforce – a move that hasn’t been officially attributed to AI at all.
Speaking of speculation, Wall Street Journal Chief Economics Commentator Greg Ip wrote late last month that while “it was only a matter of time before the AI apocalypse theory went mainstream,” those panicking forgot that:
… new technology enhances the skills of some survivors, who become more productive and better paid: it helps create new businesses and new jobs; and it makes some stuff cheaper, increasing consumers’ incomes adjusted for inflation, which can be spent on other stuff, generating more jobs.
In short, while there’s no doubt that AI is a disruptive technology that will result in losses to the status quo, there will be plenty of winners as well. And those winners will be much easier to spot if we set aside apocalyptic opinions to study the facts instead.
AI Can’t Replace Humans Completely – Not Even Close
Here at Wide Moat Research, I’ll be completely transparent: Our team is embracing AI for all it’s worth.
We’re using it to automate time-consuming tasks such as scrubbing financial statements, updating models, and extracting key outcome indicators. I also use it to aid my research, schedule meetings, and help write TikTok scripts.
Yet we’re not cutting a single job in the process. If anything, we’re hiring.
That’s because we still believe in the power of human judgment. When grounded in morality, trained through experience, and based on facts, it’s unbeatable.
Our team of analysts has deep industry expertise and business relationships that span over three decades. We understand how the personal touch – from boots-on-the-ground investigations to sit-down meetings with CEOs to analyzing data ourselves – can make all the difference.
And, unlike a computer program, we actually care about how our decisions and recommendations affect you.
So here at Wide Moat Research, our business model will thrive by pairing AI efficiency with human insight. We’ll use it to work smarter instead of harder. And since I truly believe that most other companies are taking a similar tack to the technology revolution we’re experiencing…
The result will be that, like my grandfather all those decades ago, our economy will come out ahead in the end.
Regards,
Brad Thomas
Editor, Wide Moat Daily
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