I Ask Again: Is Technology Blocking the Path to Full Employment?

June 14th, 2013 at 4:54 pm

One of the more important economic questions of the day is the one I pose, but alas, do not answer here: is an acceleration in labor-saving technology displacing workers in an historically unique and problematic manner?  Will the increasing presence of robotics and AI software make it harder to achieve full employment?

Most economists say no, because they’re all hung up on evidence and history…imagine that.  On the evidence, it’s mostly anecdotal, as per these guys, who’ve certainly influenced my thinking on the issue.  On history, as I always stress, the past is littered with the prediction that technology is replacing workers in a lasting way.

And yet…there may be something there.

The idea gets a nod from Paul K this AM.   The traditional technology story is that it’s just “skilled-biased”—it gives a relative wage edge to say, college-educated workers.  Paul argues that even that part of the story didn’t explain increasing inequality well enough, because it failed to account for the intensive income concentration among not just college grads, but the top 1% (for that, you need to incorporate financialization and power into your model).  But he goes on:

Today, however, a much darker picture of the effects of technology on labor is emerging. In this picture, highly educated workers are as likely as less educated workers to find themselves displaced and devalued, and pushing for more education may create as many problems as it solves.

I’m not sure I’d go that far, though he’s right that college workers were by no means insulated from the recession—trough to peak, both high-school and college grad jobless rates more than doubled (the college unemployment rate went from around 2% when the recession began to 5% at its peak; the HS rate, from about 5% to 11% at its peak).

Paul also cites the historically low level of labor’s share of national income.  That’s true too and certainly reveals that income inequality remains a serious problem as economic growth in this recovery is once again looking like a spectator sport for most working households (“it’s early in the first half, and look at that folks…Paulson goes long on gold and…and…he’s down a few hundred mil…and whose got it??  It looks like Buffett’s intercepted it at midfield…he passes to Goldman, they securitize the asset at the 45 and slip it downfield to the China market…etc…”).

But my question has more to do with jobs and we’ve seen periods of growing inequality with pretty robust job growth, i.e., the 1980s (I’m talking job quantity here, not quality), and periods with growing inequality with lousy job growth, i.e., the 2000s.

In this regard, the anti-Luddites—those who argue that history has been unkind to the argument that technology displaces workers (which is subtly different than “it lowers their relative wages”)—point to the long linkage between productivity growth and job growth.  If technology were increasingly labor saving, these lines should diverge.  They don’t, so goes the argument, because of the intervening variable of demand, which increases as we become more productive thus absorbing those who would suffer technological unemployment back into the workplace.

Except for since around 2000, the lines don’t converge.  The figure below plots full-time equivalent employment against productivity, and the anti-Luddites to whom I’ve showed this find it a head-scratcher.  On the other hand, it makes sense to Brynjolfsson and McAfee, the authors of Race Against the Machine (see link above), and on alternative Wednesdays, to me.

On the other hand, Dean Baker points out that productivity hasn’t much accelerated over the period of the split, which you’d expect if labor saving technology was a key factor.  More wonkishly, the growth of capital inputs into total factor productivity has considerably decelerated over the last decade, the opposite of what a Luddite might expect.  That just means that there’s been a slower rate of capital spending feeding into growth relative to earlier periods.  (But wait—if labor’s share is tanking doesn’t that mean capital’s share must be rising?  Yes, but interestingly, not because of accelerated investment but because of a higher return on capital—and lower return to work—see “spectator sport” point above.*)

All of which is to say is that we just don’t yet know the extent to which tech is displacing workers.  One way to think about it is to ask yourself “in terms of job growth, are we at the cusp of a period that will resemble the 1990s expansion or the 2000s expansion?”  The latter sucked for job growth; the former was strong in that regard.

Me, I fear that the path back to full employment is looking very steep, and I suspect accelerated labor-saving technology is one reason for that.  So I’m keeping my powder dry and my spreadsheets open.

 

emp_prod-fte

Source: Moi

*Here’s what I’m talking about:

Y=Kr+Lw: national income equals captial (K) times its return (r), and labor (L) times its return (w, for wage).

Divide through by Y to get shares: 1=(K/Y)r+(L/Y)w.

We know that L/Y is going down fast, and w is stagnant.  But (K/Y) isn’t growing that fast.  So r must be rising quickly.

 

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25 comments in reply to "I Ask Again: Is Technology Blocking the Path to Full Employment?"

  1. Sandwichman says:

    It seems to me you’re making it more complicated than it is by trying to weave a thread through disparate narratives, some of which are plausible but inaccurate and others of which are sheer ideological cant masquerading as eternal wisdom. Have a look at George Beaumont’s wonderful pamphlet, “The Beggar’s Complaint against rack-rent landlords, corn factors, great farmers, monopolizers, paper money makers and war, and many other oppressors and oppressions. Also some observations on the conduct of the Luddites in reference to the destruction of machinery, &c. &c.” The title just about sums it up. It’s not the machines, stupid. It’s the exploitation and oppression.

    You see, the “Luddites” had a sense of humour, something the purveyors of the anti-Luddite slanders and disinformation utterly lack.


    • Sandwichman says:

      The jobs/technology “dilemma” could easily be resolved by everyone working less and having more leisure. But that kind of policy is inherently egalitarian and thus is resisted tooth and claw by the oligarchy and is ridiculed by the oligarchy’s hired-hand “technocrats.”

      Just let me walk you through the history of the “lump of labor claim” someday, Jared. It originated as a vicious anti-trade union slander and “evolved” into an economic textbook truism. If anthropology had the same “standards” of scholarship as economics, we would today all be descendents of Piltdown Man!


  2. Rima Regas says:

    “Today, however, a much darker picture of the effects of technology on labor is emerging. In this picture, highly educated workers are as likely as less educated workers to find themselves displaced and devalued, and pushing for more education may create as many problems as it solves.”

    When I look at the underlying reasons why productivity and unemployment growth look the way they do, I keep coming back to our dysfunctional politics as the reason. In my opinion, today’s unemployment has nothing to do with structure or technology, and everything to do with an obstructive policy of greed and wholly insufficient demand.

    For example:

    Engineers who were laid off from such firms as Boeing and Northrup can’t find work in their fields locally and won’t be rehired unless and until the GOP’s chokehold on Congress is finally lifted by the electorate. Have their jobs been replaced by technology? No. Have their remaining former co-workers picked up most of the slack? To some extent, but that is more due to the cancellation of government contracts and contraction of the scope of ongoing projects. Those firms do work in avionics, space and other technologies. Renewed government funding of certain programs, including a brand new space program would put not only those engineers back to work, but all of the non-engineers who were let go in 07-09.

    The same kind of story is true all across the board.

    If we hadn’t gone down the path of austerity starting in 2010, and sequestration starting at the end of last year, where would we be now?

    Does this absolutely mean that technology will never get in the way of employment? Of course not. But with policy planning and funding, partnerships between labor, industry, government and academia (in a post-Boehner/McConnell world) there is no reason to believe that needs can’t be anticipated and met on both ends of the equation.

    I guess this is where I diverge from PK’s piece. It doesn’t make sense for the future and present to be so bleak – only if you expect the political polarization to be our new normal. Do you?


  3. smith says:

    The link to Brynjolfsson and McAfee states:

    “After that point they started to diverge, with labor productivity continuing to grow nicely while employment growth leveled off, then turned negative during the Great Recession.”

    This statement is false, employment growth did not level off after 2000, per the graph on this page. At best, it’s an optical illusion. To see this with your own eyes, just take any straight edged piece of paper, hold it up to the computer screen where you see the graph above. Have one end touch the beginning of the red line, have the other end touch the high point in 2007 or 2008 before the recession. It’s pretty much a straight line, goes up a bit late 1990s as employment improved, dipped in post 9/11 recession. It’s easy to see the 2000s did not represent any leveling off but follows the same trajectory as the previous 40 years. The tail end is just a valley from the severe recession (because the 2009 stimulus package was too small).

    Further obscuring the trend McAfee’s graph ends in 2010 before growth resumed with the same trajectory as before, but showing the self-inflicted pain of anti-keynesian policy that prevents full recovery.


  4. smith says:

    From the quote of PK:
    “Today, however, a much darker picture of the effects of technology on labor is emerging. In this picture, highly educated workers are as likely as less educated workers to find themselves displaced and devalued, and pushing for more education may create as many problems as it solves.”

    I don’t understand how you square that with the college educated only half as likely to find themselves unemployed.

    Perhaps it’s not technology giving greater returns, it’s unpaid internships and office workers putting in 50 to 60 hours a week. Restore the 40 hour work week. Office workers are the new factory workers. They don’t strike because they’re sitting in an air conditioned office.

    Also GDP is a totally bogus inflated figure, as E.J. Snowden’s $120,000 salary proves, easily done in a service economy, cut and paste and charge the Pentagon $240,000 (standard consultancy markup).


  5. David C says:

    I think the affect of technology on American jobs has an element that’s much more important than automation, robotics, and AI. That element is the explosion in communications technology. It has made it possible for college educated people in developing countries to compete for high-level jobs, basically reducing or eliminating the barrier to competition that immigration policy used to represent.

    While the US has been slashing public support for education, countries like China and India have been investing heavily, and the numbers of people with high-quality college degrees have been going up dramatically.

    The Europeans are doing better than the US, but the trends are very much in the wrong direction. I met a young British woman who finished her education with GBP12,000 of student debt. That seemed crushing to her, and the GBP35,00 of debt that current students will face seemed impossible. She was wide-eyed when I told her that many US students have $150,000 or even $200,000 in debts when they graduate.

    Here in Switzerland, college has been basically free up to age 30 (and parents are required to provide room and board up to that age for full-time students). But fees have been creeping in, and the amounts have been rising pretty rapidly.

    As Professor K said in his piece, even if having more technology (or more college grads) expands the economy in the long run, it can be very disruptive in the short term. I worry a lot about this, because I really don’t see any solution.


  6. Bob Wyman says:

    During recessions, when companies are producing less, technology blocks the path to full employment by increasing the profitability of producing less. During expansions, when companies are producing more, technology smooths the path to full employment by increasing the profitability of producing more.

    To increase employment, companies need to either produce more or decrease productivity. Technology driven productivity enhancements allow companies to produce the same amount with fewer workers or produce more with the same number of workers. Thus, if you wish both improved technology and full employment, you must have a growing economy.

    I remember well discussing this endlessly back in the early 1980’s when we were first introducing office automation products to businesses. We were constantly being asked if our customers were able to reduce labor expenses. With few exceptions, the answer was “No!”. In fact, we usually saw increased employment after introducing office automation. Our customers typically used the increased productivity to produce more.


  7. Perplexed says:

    It seems that any detective worth his salt would have to make rents his/her top suspect. Were the looms protected by patents? If so for how long? Isn’t this time different mostly due to the impacts of rents, and don’t these rents preclude the “intervening variable of demand” from “working its magic?”

    You mention that: “We should always remember that the intervening variable of demand has made all the difference in terms of offsetting these technological advances in ways that lifted living standards for the broad public.” But how exactly does this “magic” trick work? Where does this new demand come from? If the price of looms were equal to their marginal cost, and the price of the clothes fell to their new, much lower marginal cost, certainly the demand for clothes would increase. But, more importantly, all of those buying clothes would now be buying the same (or slightly more) clothes at much lower prices. They would all now have income “left over” to spend on other things and the demand for all of these “other things” would increase. But, if the prices didn’t fall to their marginal costs, rents would concentrate the gains among loom patent holders with a only a relatively small drop in price in price of clothes. The result would be income and wealth would be highly concentrated, and the “magic” of demand trick would fail (sound familiar?). What is the marginal cost of a copy of Windows, and what is its price? What’s the difference between the prices of most patented drugs and their marginal costs? What percentage of all the declines in marginal costs have made it into the hands of the middle & lower classes who would then increase demand by spending the saved income on other products? If they never get the increased income, they can’t use it to “generate demand.”

    What’s happened in the past is that “trusts” were “busted.” Now we’ve been so thoroughly sold the propaganda that monopolies are a “normal” part of capitalism that even our economists have “drunk the coolaid” and can’t (or won’t) help us solve the problem in the most efficient manner – outlaw the rents! We have lots to gain and nothing to lose but our wealth and income concentration by trying: http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.27.1.3


    • smith says:

      The link in the comment points to a paper that advocates phasing out patent protection. This seems to me throwing out the baby with the bathwater. The reforms needed are less radical, simply implemented, and represent a return to a previous system that was changed to benefit big business.
      1) Change the way the patent office is funded. Currently there’s an incentive for the division to encourage filing for patent protection because that is how they are funded, from the fees they charge (which doesn’t mean shortchange the understaffed office).
      2) Business method patents and other types of frivolous claims that in the past didn’t merit consideration should once again be cast aside.
      3) Reverse the anti-inventor, anti-science, anti-progress, information inhibiting, research blocking implementation of first to file. Go back to first to invent which existed for over 200 years up until last year when big business won a major victory.


      • Perplexed says:

        -“The link in the comment points to a paper that advocates phasing out patent protection.”

        Precisely. Patents were allowed under the Constitution with the understanding that they would be short in duration and that the public would benefit from allowing them. They are certainly not short in duration by any measure and, as the paper shows, there’s no evidence that benefits to the public exceed the costs of allowing them. They are not a “feature” of capitalism, they are protection from competitive capitalism and the benefits it provides to all. They act as a tax on everyone buying the products they protect but the public derives no benefits from the tax. Instead its transferred directly to private interests and there is no accounting for the amount of the tax and who it goes to. While the Tea Partiers and other anarchists attack the taxes that are used to derive public benefits, they don’t seem to have any problem with monopoly taxes from which the public derives no benefits.

        -“This seems to me throwing out the baby with the bathwater. The reforms needed are less radical, simply implemented, and represent a return to a previous system that was changed to benefit big business.”

        We are effectively a “banana republic” with a wealth Gini of .87,an income Gini of .48, and 120 million, or 40% of the population dividing up 0.3% of the wealth of the county, see: http://taxprof.typepad.com/files/129tn0251.pdf. Its no longer about “tweaking” a largely functional system. Any real solutions will be quite radical indeed. Getting rid of patents and other rents and reinstating competitive capitalism just happens to be the “low hanging” fruit that would provide tremendous benefits at very low (may no) costs. The monopolies that used to be outlawed & “busted” are now embraced and held up to be “models of successful capitalism.” So now avoiding the competition of capitalism is the way to be a successful capitalist. And the “losers” in this so called “meritocracy” have bought the propaganda that capitalism and monopolies are no longer incompatible systems. The “baby” was thrown out when we overturned and stopped enforcing our anti-trust laws; all that’s left is the dirty bath water to flush and the sooner we flush it, the better off we’ll be.


        • smith says:

          If the paper says that benefits exceeding costs of the patent system can not be proved, that doesn’t mean there aren’t benefits, just that their study, designed to see if there weren’t net benefits, (surprise) didn’t find them.

          Since for over 200 years, the system worked well enough to give us the most innovative country in the world, I’d submit there’s your evidence.

          The solution to weak anti-trust enforcement might more properly be strong anti-trust enforcement.

          Last year’s radical pro-big-business change to our patent system, particularly implementing first-to-file from first-to-invent should be reversed.

          The other steps I outlined are also valid. I believe reform can best be achieved by showing it as a return to policies that worked, Eisenhower top marginal tax rates of 90% are not radical.


          • Perplexed says:

            -“Since for over 200 years, the system worked well enough to give us the most innovative country in the world, I’d submit there’s your evidence.”

            The roosters always want credit for the sum coming up in the morning! Your making the same mistake recently made famous (again) by Reinhart & Rogoff – mixing correlation with causation. As the paper articulates quite well, there are already significant awards that accrue to innovators in an actual capitalist economy without the addition of patent protections. The middle & lower classes can no longer afford this form of government welfare for the wealthy which redistributes wealth from everyone to the 1%.

            Rational ways to encourage innovation do exist, our patent monopoly system just doesn’t happen to one of them. Check out these free (published under creative commons licenses) books from Dean Baker for more on the subject:

            http://www.cepr.net/index.php/publications/books/the-end-of-loser-liberalism

            http://deanbaker.net/index.php/home/books/the-conservative-nanny-state


  8. Geoffrey Swenson says:

    This is why we need to start taxing profits at a reasonably high rate. The owners of the fancy new high-tech machines may make a lot of money without the need for human workers to do complex, but repetitive tasks.

    So we need to tax the immense profits and then spend the tax money liberally on public works, environmental cleanup, arts, sciences, and education. This will put the people displaced by technology into real jobs that would benefit everyone.

    We could even start paying teachers a living wage and perhaps have smaller classes.

    So the current low-tax ideology of the Republican party has got policy completely backwards. Tax and spend is not bad policy at all — it’s the only way we can compensate for the jobs lost by the increasing automation / efficiencies provided by modern technologies.


  9. Kevin Rica says:

    “So r must be rising quickly.”

    Well, actually not if you have checked the interest rates that banks are paying.

    The readily available return on capital is pretty low. Curious that this should escape your notice since you advocate aggressive policy to keep real interest rates negative.

    I had to get the old textbook off the shelf to refresh my memory on this one, but:

    Y=Kr+Lw

    is just based on Euler’s Theorem that if Y = f(K,L) and is linearly homogenous, the shares of labor and capital are equal to output (no rents). That’s a convenient, tractable mathematical assumption for grad students to play with, but no one ever claimed it was based on reality.

    It doesn’t explain that much, but you ‘ve left out land rents (returns to natural resources e.g. mineral rights)

    + don’t forget returns to agricultural lands. Those are waaay up, thanks to all the things we do to incentivize the ownership of land (if people don’t own land, who will?): making cheap immigrant labor available to corporate farmers + misguided biofuels policies (the farmers haven’t stopped telling environmentalist’s daughter jokes since).


    • Jared Bernstein says:

      r here isn’t the interest rate that banks pay. It’s the return on corp investment which is very high right now. Inv itself is ‘meh’–they’re sitting on tons of capital–but profitability is historically in record-breaking territory…I’ll post on this soon.


      • Kevin Rica says:

        You are correct r should be the “marginal physical productivity of capital” (MPK). However market interest rates should be a good, first proxy barring Chinese-style financial repression.

        Yes, corporations do have lots of retained earnings at the same time as MPK is near zero. All dressed up and no place to go! What is surprising is that corporations have been successful at retaining their rents.

        So I hope that when you write about the corporate cash hold, we will have a discussion of Bernanke’s “Global Savings Glut” (GSG). It is amazing that so many self-described Keynesians (I’ma Keynesian, I studied Samuelson’s cross!) haven’t understood the significance of the GSG hypothesis.

        I guess that proves that this is the very long run, because Keynes is very dead.


  10. Will says:

    I’m 2/3rds through http://amzn.com/B002S0NITU and like it so far–it makes a lot of unsubstantiated claims, but they’re easy enough to wade through. I do side with the view that technology will replace workers–i.e. capital and labor become the same. I just don’t think that’s what we’re seeing now on a widespread basis. I still think most of today’s problems are due to a lack of aggregate demand, not labor being replaced by technology. In the future, though, I think the effects of automation, particularly knowledge worker automation, will be huge. (McKinsey agrees– http://www.mckinsey.com/insights/business_technology/disruptive_technologies ).
    I can give anecdotal evidence of my own experience with knowledge worker automation. I was began my first job 4 years ago in an engineering position. It was routine work but required substantial technical knowledge. I created a simple software package that reduced the workload for that job from 40 hours per week to only 15 minutes per day. I didn’t use any special technology, just simple algorithms and heuristics. Today’s workforce simply lacks the number of workers necessary to perform this type of automation on a wide scale, but it is conceivable for businesses to hire people like me to automate targeted jobs in this way. I don’t see how this can create more jobs–it is only going to enrich those very few high skilled workers and the owners.


    • Bob Wyman says:

      In technical fields, one often creates jobs for others by eliminating their own job and then moving on to a new job.

      In a recession, if you reduce your job to a 15 minute/day non-technical task, your employer is likely to fire someone else and have you do both jobs.
      In an expansion, he’d give your old job to someone less skilled and assign you to automating more jobs.


      • Will says:

        Reality followed the expansion route you outlined. Through a combination of automation and breaking tasks into smaller pieces the company eventually eliminated many high skill jobs and replaced them with low skill positions. In a healthy economy that high skill labor would find employment elsewhere, but it isn’t difficult to imagine highly specialized workers being automated out of their jobs and unable to transfer their skills (eg radiologists). What happens to the economy when a large number of willing workers are either unnecessary or can’t find employment commensurate with their skills? What happens when wide swaths of routine labor, eg cashiers, truck drivers, salespeople, are also automated away? This isn’t what we are facing today, but we could be facing this soon. I hope Jared and other economists start thinking about what to do when capital can be substituted for labor in the short run.


  11. smith says:

    Correction needed:

    http://www.technologyreview.com/featuredstory/515926/how-technology-is-destroying-jobs/

    The story of the graph and the optical illusion of vanishing employment growth spreads. I left a comment there pointing out the fallacy of interpreting normal variation as a trend (2000 – 2007). I did my best to point out the obvious explanation of post 2007 figures, employment drops in a recession. This blog, PK, and other Keynesians have duly noted the sustained gap in post-recession induced employment (2010 onward) is mostly if not wholly unnecessary. It is caused by initial stimulus too small, poorly allocated and unsustained, followed by a policy opposite to that pursued following every other recession since the great depression (austerity vs. fiscal stimulus).

    There was an exception in that 2001 recession for the first time ever featured no extension of unemployment benefits.

    I would like some assistance in this regard. I think the graph in question is important and revealing, and the increasing GDP rate merits attention (my theory is the new govt. method of computing GDP and/or unproductive inflationary paper and intangible illusionary overpriced product of a service economy explains)

    However, with all due respect, the originator of the graph still has a responsibility to point out that it does not show a leveling of employment growth anywhere. Those previously giving statements to that effect should be so notified, and those statements withdrawn, corrected, qualified or amended.

    This is the third different time and place I’m seeing this, and attempting to correct the record. I have yet to see any refutation of my analysis, nor do I believe is one possible. Employment growth didn’t level off after 2000. I suppose I should do a regression with the actual figures.


  12. Avedon says:

    If labour-saving technology is in any way responsible for high unemployment and wage stagnation/deflation, what is the big push for expanded guest-worker visas about?

    How can we need foreign workers to do jobs that millions of skilled Americans are being laid off from?

    This isn’t about technology, it’s about the aristocracy rising again.


  13. smith says:

    More questions about the graph (not beating a dead horse, this story has legs)

    Is the employment graph accounting for declining population growth? (from 1990 to 2010 and also from 1945 to 2010) Age adjusted? Workforce participation?

    Our trade deficit used to be all about oil. How has this changed? How much of the employment gap could also be tied simply to our account balance? This is an overlapping but separate and distinct issue from globalization. Tariff issues and protection of local manufacturing have existed since the colonial era. Globalization implies American companies moving their own operations overseas. This is something other countries try to discourage. Do Germany and Japan open American factories only reluctantly, in part to preemptively forestall counter measures? Or to spend their excess dollars somewhere? As China will inevitably have to too?


    • smith says:

      Guilty I am of distracting from the real cause of elevated unemployment by mentioning account balance. Just want to stress the current employment gap (I believe evidence is overwhelming) is 98.5% recession induced, account balance hurts perhaps only the last 1.5% of the problem which depresses wages, the difference between 5% (near full employment) and 6.5% (the point the Fed starts hiking interest rates to combat wild 2.01% inflation rate)


  14. Perplexed says:

    -“Paul also cites the historically low level of labor’s share of national income. That’s true too and certainly reveals that income inequality remains a serious problem as economic growth in this recovery is once again looking like a spectator sport for most working households”

    Is it possible that after all of the carnage we may be getting around to asking the right questions? http://krugman.blogs.nytimes.com/2013/06/19/how-are-these-times-different/

    Maybe the best question to ask at this point is why, with the exception of Dean Baker, is this so “mysterious” to professional economists? What “assumptions” are they making that are preventing them from seeing this and how sound are these assumptions? Or is it something more “personal” than that? Why is something that was so obvious to economists in the 1900’s & 1910’s so mystifying today? Why does Alan Krueger give a speech about the music industry calling it a “a microcosm of what is happening in the U.S. economy at large” without ever addressing the fact that it is almost entirely driven by monopoly profits? He rightly points out that: “We are increasingly becoming a ‘winner-take-all economy,’ a phenomenon that the music industry has long experienced” without ever addressing the fact that monopoly profits are the key factor in allowing the “winner” to “take” it all? He goes on to say that: “While we rightly celebrate the achievements of those who have been able to scale new heights of success in our economy, the shift toward becoming more of a winner-take-all economy has also had a number of adverse consequences for the U.S. economy that merit great concern.” “Success” in a capitalist economy used to be equated with factors like “efficiency,” “innovation,” and “superior execution.” Now “success” is driven by the ability to avoid competition and extract monopoly profits and we “rightly celebrate” this success? Our .87 wealth Gini is clear evidence that we “celebrate” what is going on but when an economist as prominent as Krueger makes the “judgement” that it is “right” to celebrate this kind of success it raises serious concerns about what his motivations are. So now we’re supposed to believe that “Price and wage controls” and “the patriotic spirit” that “we’re all in it together during World War II” caused inequality to fall and implementation of the Sherman and Clayton acts of 1890 & 1914 played such a “minor” role that they don’t even deserve to be mentioned? Krueger finds it “Interesting” that “the compression in income gaps brought about by World War II persisted through the 1950s, 1960s and 1970s” but never connects the dots to anti-trust policies? He doesn’t seem to find interesting though that it was about this time that we began to disable, undermine, and cease to enforce our anti-trust protections? It kind of makes one wonder just who’s “interests” are “interesting” to Alan Krueger.

    As usual, the wrong diagnosis leads to ineffective treatments: “To rebuild the economy from the middle out, the private sector will have to step up and reinvigorate the norms and institutions that have supported inclusive growth in the past. The government has an important role to play as well, but with severe budget constraints and limited political will, the government can only set the conditions for the private sector to grow, and provide more jobs and opportunities for middle class families. It is, to a considerable extent, up to private sector businesses, organizations and communities to ensure that economic growth leads to widely shared prosperity and a decent living for the vast majority of our people.” – Alan Krueger. So our Government is so “weakened” now that “we” need to rely the “private sector” to “ensure that economic growth leads to widely shared prosperity and a decent living wage for the vast majority of our people.” You know, just like the serfs of old were “forced” to rely on their lords and monarchs to provide sustenance in exchange for a life of hard labor. Now there’s a revolutionary concept! http://www.ted.com/talks/lawrence_lessig_we_the_people_and_the_republic_we_must_reclaim.html


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