23 10 2013
It’s all about jobs
October 23, 2013
[Continuing discussion on themes from The Software Society: Cultural and Economic Impact (2013), by William Meisel]
The latest employment numbers support my concern in The Software Society that the economy was generating too few jobs because companies were automating away jobs at a faster rate than individuals or the economy could adapt. In a new book, The Age of Oversupply: Overcoming the Greatest Challenge to the Global Economy, Daniel Alpert also notes the mismatch between jobs and people seeking them, but he emphasizes another source of the problem: There are simply too many workers available worldwide. Alpert notes that the developing countries suddenly increased the supply of workers by a huge number when they changed government policies that had previously prevented those workers from entering the global workforce. This “oversupply” of workers occurred suddenly by historical standards; in the past, growth in the workforce was largely limited by population growth. Further, there is less insulation today between nations in adjusting to such a workforce expansion, as we have seen as US manufacturing jobs were exported.
Both trends, automation and the sudden increase in the workforce, compound to create a distortion that can’t be addressed easily by the classical economic forces that balance supply and demand. The imbalance is so large, Alpert notes, that the process of trying to make economies work, particularly in the developed world, while economies adjust will create enough disruption that the current “great recession” may continue or worsen. Further, the equilibrium point where supply of jobs meets demand—if we finally reach that point—may be at wages that don’t support a standard of living acceptable in the developed world (and perhaps even the developing world as expectations rise). Many individuals, particularly younger people, are feeling the impact now, Alpert says, and social unrest may be one of the results.
The mismatch between jobs and job seekers is not easily addressed, and Alpert spares no mercy in castigating most economists, politicians, and business groups for not being willing to recognize the problem and even starting to address it. He argues persuasively that just letting things take their course and avoiding government involvement in addressing the problem simply won’t work. He also argues that choosing austerity as a policy would be disastrous in the current situation.
I suggested an approach to addressing the problem in The Software Society through the tax system, and Alpert also suggests specific policies, such as governments increasing investment in infrastructure, that might help right the economy. But, with almost no recognition of the core economic problem by politicians and major opinion creators, no one is even seriously debating possible solutions.
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