We may increasingly have to recognize a distinction between goods and services
that can be produced anywhere in the world and/or with decreasing labour input
and goods and services which have to be produced on the spot, where the people
consuming and using them live. Electronic goods and clothing, for example, can
increasingly be produced anywhere in the world and will be produced in places
that can make them most cheaply. On the other hand, food, infrastructure,
housing, medical and educational services, etc., need to be produced nationally
and locally, and it is with respect to them that Keynesian principals would
seem to apply. Yet there tends to be a problem here, that of fiscal restraint
because of government debt.
Ed
----- Original Message -----
From: Keith Hudson
To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION
Sent: Thursday, October 25, 2012 5:04 AM
Subject: Re: [Futurework] future of work and income
At 22:18 24/10/2012, you wrote:
Agree. Except the mainstream media, here the NY Times, has trouble even
raising the idea. Why? I guess it goes against the "religion" of continuing
"progress", the nostrum of continuing economic growth.
Arthur
And, if so, this is where Keynes would not be helpful. He never thought --
even in the Depressed '30s -- that we would have anything other than an
increasing amount of consumer goods and services at our disposal in the years
to come. But there's no reason why GDP shouldn't move over from a predominantly
consumer-led economy to a producer one.
If my own hypothesis about status is correct, however (that it is the main
driving force behind the precise choice of most [pricey]consumer goods) then
status will have to revert to its original context -- the social/working group
in which reputation and rank ordering is arrived at voluntarily.
Keith
From: [email protected] [
mailto:[email protected]] On Behalf Of Keith Hudson
Sent: Wednesday, October 24, 2012 2:02 PM
To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION
Subject: Re: [Futurework] future of work and income
Excellent though Leonhardt's essay is in many respects, it doesn't mention
the possibility that the thundering herd of the industrial revolution might
have finally halted. Other periods of exuberant economic growth have occurred
throughout history -- two or three times each in India and China alone -- only
to be followed by long periods of quiescence. Is there any reason in principle
why that shouldn't be happening now?
Keith
At 14:55 24/10/2012, you wrote:
Standard of Living Is in the Shadows as Election Issue
a.. by DAVID LEONHARDT NY Times
b.. Oct. 23, 2012
c.. http://tinyurl.com/9qaw2y5
d..
e.. WASHINGTON Taxes and government spending. Health care. Immigration.
Financial regulation.
They are the issues that have dominated the political debate in recent
years and have played a prominent role in this presidential campaign. But in
many ways they have obscured what is arguably the nation's biggest challenge:
breaking out of a decade of income stagnation that has afflicted the middle
class and the poor and exacerbated inequality.
Many of the bedrock assumptions of American culture about work, progress,
fairness and optimism are being shaken as successive generations worry about
the prospect of declining living standards. No question, perhaps, is more
central to the country's global standing than whether the economy will perform
better on that score in the future than it has in the recent past.
The question has helped create a volatile period in American politics, with
Democrats gaining large victories in 2006 and 2008, only to have Republicans
return the favor in 2010. This year, economic anxiety, especially in industrial
battlegrounds like Ohio, is driving the campaign strategies of both President
Obama and Mitt Romney.
The causes of income stagnation are varied and lack the political
simplicity of calls to bring down the deficit or avert another Wall Street
meltdown. They cannot be quickly remedied through legislation from Washington.
The biggest causes, according to interviews with economists over the last
several months, are not the issues that dominate the political debate.
At the top of the list are the digital revolution, which has allowed
machines to replace many forms of human labor, and the modern wave of
globalization, which has allowed millions of low-wage workers around the world
to begin competing with Americans.
Not much further down the list is education, probably the country's most
diffuse, localized area of government policy. As skill levels have become even
more important for prosperity, the United States has lost its once-large global
lead in educational attainment.
Some of the disconnect between the economy's problems and the solutions
offered by Washington stem from the nature of the current political debate. The
presidential campaign has been more focused on Bain Capital and an "apology
tour" than on the challenges created by globalization and automation.
But economists and other analysts also point to the scale of the problem.
No other rich country not Japan, not any nation in Europe has figured out
exactly how to respond to the challenges. "The whole notion of the American
dream," said Frank Levy, an M.I.T. economist, "described a mass upward mobility
that is just a lot harder to achieve right now."
For the first time since the Great Depression, median family income has
fallen substantially over an entire decade. Income grew slowly through most of
the last decade, except at the top of the distribution, before falling sharply
when the financial crisis began.
By last year, family income was 8 percent lower than it had been 11 years
earlier, at its peak in 2000, according to inflation-adjusted numbers from the
Census Bureau. On average in 11-year periods in the decades just after World
War II, inflation-adjusted median income rose by almost 30 percent.
Matching the growth rates of the postwar period when the country was
poorer, when harsh discrimination against women and minorities was receding and
when the rest of the world was weaker is probably impossible. Yet there is
still a vast difference, both economically and politically, between incomes
that are rising modestly and not at all.
Historically, periods of economic stagnation have tended to bring
pessimism, political turmoil and a lack of social progress, said Benjamin
Friedman, an economic historian and the author of "The Moral Consequences of
Economic Growth." The political volatility and partisan rancor of the last
several years seem to fit the pattern.
The recent stagnation has also led, economists say, to confusion and even
scapegoating about the real sources of the problem. The causes that can seem
obvious, and that often shape the political debate, are not necessarily the
correct ones.
Take immigration, especially illegal immigration. Whatever other problems
it may cause, evidence suggests that it has not played a significant role in
the income slump.
It may have caused a slight decline in the wages of native-born workers
without a high school diploma (and maybe not even that). But most illegal
immigrants lack the skills to compete with the bulk of native workers,
according to research by Giovanni Peri, Chad Sparber and others. Notably,
incomes in some states with large immigrant populations, like California, have
risen faster than in states with relatively few immigrants, like Ohio.
The minimum wage, similarly, appears to play only a minor role in the
income slump. It has risen faster than inflation since 2000, even as overall
pay at the bottom of the income distribution has not. And the size of the
federal government also looks like a dog that is not barking: Washington
collected taxes equal to 15.4 percent of gross domestic product last year, down
from 20.6 percent in 2000.
A second group of much-cited forces have indeed played a role in
middle-class stagnation and inequality, many economists argue, just not as big
a role as automation, globalization or education.
Health care costs have grown sharply over the last decade, leaving
employers with less cash to use on salaries. Labor unions have shrunk; all else
equal, unionized workers earn more, often at the expense of corporate profits.
Tax rates have fallen more for the affluent than for anyone else, directly
increasing the take-home pay of top earners and indirectly giving them more
incentive to earn large amounts.
But many of these factors are particular to the United States, while
globalization and automation are obviously universal forces.
One of the more striking recent developments in economics has been
economists' growing acceptance of the idea that globalization has held down pay
for a large swath of workers. The public has long accepted the idea, but
economists resisted it, pointing to the long-term benefits of trade. "That is
starting to change only in the face of very strong evidence over the past
decade," said Edward Alden of the Council on Foreign Relations.
In particular, job growth and wage growth have been weaker in sectors
exposed to global competition especially from China than in sectors that
are more insulated.
Automation creates similar patterns. Workers whose labor can be replaced by
computers, be they in factories or stores, have paid a particularly steep
price. The American manufacturing sector produces much more than it did in
1979, despite employing almost 40 percent fewer workers.
Workers with less advanced skills have also suffered disproportionately.
The pay gap between college graduates and everyone else is near a record.
Despite the long economic slump and the well-chronicled struggles of some
college graduates their unemployment rate is just 4.1 percent.
What is the solution to this thicket of economic forces?
That question is the one that Mr. Obama and Mr. Romney are trying to
convince voters that they can best answer. They both accept that the government
and the market have a role, but they put a different emphasis on those roles.
It is hard to see how either globalization or automation can be stopped.
The proposed solutions instead tend to involve managing them.
If the economy can be made to grow fast enough, incomes can still rise
across the board, as they did when the unemployment rate fell below 5 percent
in the 1990s and briefly below 4 percent in 2000. If educational attainment
rises, more people will be able to get jobs that benefit from technology and
global trade, rather than suffer from it. And if inequality continues to soar,
the government could choose to use the tax code to ameliorate it a solution
that Democrats favor and Republicans say will hurt economic growth.
Maybe the biggest reason for optimism is that there is still a strong
argument that both globalization and automation help the economy in the long
run. This argument remains popular with economists: Trade allows countries to
specialize in what they do best, while technology creates opportunities to
extend and improve life that never before existed.
Previous periods of rapid economic change also created problems that seemed
to be permanent but were not. Neither the cotton gin nor the steam engine nor
the automobile created mass unemployment.
"When technology reduces the need for certain kinds of labor, we know that
some inventive people will one day come along and find a way to use that
freed-up labor making things that other people want to buy," said Mr. Friedman,
the economic historian. "That's what in the long run made the Luddites wrong."
He added, "How long does it take the Luddites to be wrong a few years, a
decade, a couple of decades?"
Perhaps just as important, what happens to the workers who happen to be
living during a time when the Luddite argument has some truth to it?
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