,At 14:58 25/10/2012, you wrote:
(EW) 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.
Yes, indeed.
(EW) Yet there tends to be a problem here, that
of fiscal restraint because of government debt.
Yes, again. The populist demands of the
electorate on the one hand and the natural
tendency of the bureaucracy to grow and acquire
more power on the other means that Western
nation-states have got themselves into a
predicament. I cannot envisage any solution to
this except a long, slow, slimming down.
Keith
Ed
----- Original Message -----
From: <mailto:[email protected]>Keith Hudson
To:
<mailto:[email protected]>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
by DAVID LEONHARDT NY Times
Oct. 23, 2012
<http://tinyurl.com/9qaw2y5>http://tinyurl.com/9qaw2y5
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 nations biggest
challenge: breaking out of
<http://economix.blogs.nytimes.com/2012/07/23/a-closer-look-at-middle-class-decline/>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 countrys
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
<http://economix.blogs.nytimes.com/2012/08/20/the-14-potential-causes-of-the-income-slump/>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
<http://economix.blogs.nytimes.com/2012/08/21/globalization-and-the-income-slowdown/>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
<http://www.nytimes.com/2011/06/26/sunday-review/26leonhardt.html>is
education, probably the countrys most diffuse,
localized area of government policy. As skill
levels have become even more important for
prosperity, the United States
<http://www.google.com/hostednews/afp/article/ALeqM5juGFSx9LiPaur6eO1KJAypB2ImVQ>has
lost its once-large global lead in educational attainment.
Some of the disconnect between the economys
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
<http://web.mit.edu/flevy/www/>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
<http://www.nytimes.com/2005/11/27/books/review/27easterbrook.html?pagewanted=print>The
Moral Consequences of Economic Growth. The
political volatility and
<http://www.people-press.org/2012/06/04/partisan-polarization-surges-in-bush-obama-years/>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
<http://economix.blogs.nytimes.com/2012/10/19/immigration-and-american-jobs/>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
<http://www.nytimes.com/2006/04/16/business/yourmoney/16view.html>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
<http://economix.blogs.nytimes.com/2012/09/05/why-the-minimum-wage-doesnt-explain-stagnant-wages/>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
<http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200>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.
<http://www.cbo.gov/publication/43373>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
<http://economix.blogs.nytimes.com/2012/08/29/changing-views-of-globalizations-impact/>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
<http://www.bls.gov/news.release/empsit.t04.htm>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. Thats 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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