Ed,
I wouldn't want to quarrel with most of what you have written, except the
view that emerges in the middle of this paragraph:
<<<<
While many of these workers would have been employable in former times or
in much better economic times, during recent years the US economy has moved
from a major concentration on goods production to an increased emphasis on
services production. Services, such as financial services require
considerably more specialization than most of the unemployed carry.
>>>>
Yes, as a proportion, there are many more service jobs today than those
involved directly in manufacturing. But, for at least 75,000 years, ever
since early man traded perfectly matched sea shells over long distances to
be used for personal high-status ornaments, the bulk of trade and wealth
has depended on the production of goods. Yes, we have more specializations
than ever before and they're more specialized than ever before, but by far
the most service jobs are by way of circular servicing within a growing
proportion of the population who are not adding wealth at all.
Essentially, jobs in advanced countries are make-work -- and increasingly
so -- because populations as a whole have not yet adapted to a situation in
which only a minority of the population are necessary. In England, the
first into the Industrial Revolution, we have developed a system over the
past 200 years by which only 7% of the children who go to private schools
grow up, are educated, and network themselves into a class (about 25% of
adults of working age, but no more) which dominates business, banking,
politics, civil service, scientific research and innovation (and a lot else
of lesser importance).
The rest are becoming redundant. What with increasing automation,
innovation, versatile machine tools and individualized consumerism, mass
markets are becoming steadily less important except to catch-up countries
like China.
England isn't unique. The same symptoms are developing apace in other
advanced countries also. Mankind has always had elites, of course, but the
elites of today are becoming increasingly self-dependent, tending to live
and work separately and not requiring the efforts of the majority as they
did in the past.
Keith
.At 15:23 22/06/2010 -0400, you wrote:
New York Times columnist and Nobel Laureate Paul Krugman urges the
<?xml:namespace prefix = st1 ns =
"urn:schemas-microsoft-com:office:smarttags" />US government to keep spending:
Right now, we have a severely depressed economy and that depressed
economy is inflicting long-run damage. Every year that goes by with
extremely high unemployment increases the chance that many of the
long-term unemployed will never come back to the work force, and become a
permanent underclass. Every year that there are five times as many people
seeking work as there are job openings means that hundreds of thousands of
Americans graduating from school are denied the chance to get started on
their working lives. <?xml:namespace prefix = o ns =
"urn:schemas-microsoft-com:office:office" />
Penny-pinching at a time like this isnt just cruel; it endangers the
nations future. And it doesnt even do much to reduce our future debt
burden, because stinting on spending now threatens the economic recovery,
and with it the hope for rising revenues.
But how much can high levels of spending really do about the American
unemployment rate? Perhaps a little, but perhaps only a
little. Currently the US unemployment rate is given as 9.7% by the Bureau
of Labor Statistics, down a little from the 10.1% in the latter months of
2009, but this is an optimistic figure that does not include millions of
discouraged workers who have given up searching for work. Nor does it
include those forced to work part-time, whenever some work comes
along. If all of these were included the real jobless rate could be as
high as 17 to 18 percent.
It is questionable whether continued large-scale spending of the kind
Krugman advocates would do very much about this problem. One question
that needs to be asked concerns just who the unemployed are and, given the
state of the economy, how employable are they? One source states that
unemployment is concentrated among the young, less educated, and low
skilled. For example, according to the March 10th report of the Bureau of
Labor Statistics, (seasonally adjusted) unemployment rates in February of
this year was 16% for high school dropouts, 11% for high school graduates,
only 8% for persons with some college or associate degrees, and a quite
low 5% for persons with a bachelors degree and higher levels of
education. Similar differences are found by age and skill level. So
. the
burden of increased unemployment is still being mainly borne by the young
and less skilled. (Becker Posner blog, 03/15/2010)
While many of these workers would have been employable in former times or
in much better economic times, during recent years the US economy has
moved from a major concentration on goods production to an increased
emphasis on services production. Services, such as financial services
require considerably more specialization than most of the unemployed carry.
So would the kind of spend, spend, spend remedy envisaged by Krugman
really work? The answer depends in considerable part on what the money is
being spent on. Much of the anti-recessionary money spent in the US
during the past two years has gone toward bailing out banks and other
financial institutions that bought up the troubled assets created during
the sub-prime mortgage crisis in other words, the prime beneficiaries
were financial institutions and not the long-term unemployed.
In Canada, a primary focus of stimulative spending has been on
shovel-ready jobs. Via Canadas Economic Action Plan, roads are
widened, swimming pools and sidewalks are built, and community buildings
are repaired. While the plan is useful in providing some work in
communities, the Action Plan will not result in the kind of change needed
to help people move into a future of permanent employment.
So really, the question is spend on what? How should governments go about
ensuring a higher level of employment in the future? Several things need
to be considered. One is whether spending on investment banks and
shovel-ready projects is really doing anything. Yes indeed Bear Sterns
and AIG will live to scam the public another day. And yes indeed
sidewalks and swimming pools will be built, but then what? If the money
was spent on educational programs aimed at getting the long-term
unemployed back into the work force, might that not be better than bailing
out banks that deserved to go broke or sidewalks that could be rebuilt if
really necessary?
So, yes indeed, spend, spend, spend, but do give a lot of thought to what
is being spent on. Otherwise the only thing that will happen is what is
already happening the build up of huge and unmanageable deficits.
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Keith Hudson, Saltford, England
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