On Thu, Oct 2, 2008 at 8:40 AM, Eugene Coyle <[EMAIL PROTECTED]> wrote:
> Productivity gains kill jobs. The conventional wisdom is that "new technology creates more jobs than it destroys." That was also the standard view of economists and businessmen up to the 1930s depression. It was based on two "certainties": first, that the lower prices that resulted from increased productivity would stimulate increased demand and thus keep employment full and second, that where demand for a particular good was inelastic with respect to price, the freed purchasing power and labor would migrate into the creation of new commodities. In December 1932, however, Fortune magazine published a feature titled "Obsolete Men" that acknowledged the reality of technological unemployment in manufacturing and declared, "from the purely productive point of view, a part of the human race is already obsolete and a farther part obsolescent." Eventually a new conventional wisdom emerged that replaced the price-based rationale for new job creation. The new argument was that continued economic growth, not technology itself would replace the jobs kills by productivity gains. The unspoken assumption was that it was government's responsibility to somehow ensure that economic growth continued. To be sure, under SOME circumstances, government has the ability to restore the conditions for economic growth where those have broken down. But to assume that government policies can indefinitely and in all circumstances "stimulate growth" is simply to separate the abstract notion of economic growth from the concrete realities of production, consumption, natural resources and planetary and human welfare. >From the 1930s to today, governments have indeed taken the economic growth imperative as their mandate. And a funny thing has happened to the argument about technological unemployment. People have forgotten that the old market price arguments against TU were discarded long ago and that, in fact, that dismissal was key to the new business consensus around economic growth. Thus the conventional wisdom gets to have its mythical cake and eat it too. A crucial difference between the depression of the 1930s and today's economic crisis is that the current crisis follows in the wake of a long 75-year period in which government stimulus packages have been a key factor in maintaining economic growth. We are where we are today in part because of the successes of those policies in the past but those policies have changed the terrain upon which they were enacted. Those policies have become part of the problem. The problem can't be solved simply by pursuing more of the same policies. -- Sandwichman _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
