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View Diary: Massive Churn in Job Market: It's not Job Skills (13 comments)

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  •  We need to look at the bigger picture (2+ / 0-)
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    jfdunphy, PrahaPartizan
    But almost everyone agrees, both liberals and conservatives alike, that the lack of manufacturing is the root cause for high unemployment in the U.S.
    We need to realize first that persistently high unemployment is not just a problem in the US. It's a global problem. It's estimated there are 200 million unemployed people in the world, and it's a number that continues to grow. Why should that be if the world is not producing less over time?

    Global GDP has gone from $42 trillion in 1999 to $78 trillion in 2011. Except for the 2008 downturn, GDP growth has been positive. The world produces and consumes more goods and service than ever.

    When we view it that way, the conclusion is inevitable. It's not any skill gap. It's not immigration, financialization, or outsourcing. It's that we're able to produce increasingly more goods and services with fewer and fewer people. How have we been able to do that?

    In a word, technology. Technology has allowed us to push productivity beyond the point of demand, to the point where we have surplus productivity. That is what unemployed people represent. They are productivity that cannot be absorbed or put to use at any price.

    It's true that individual countries could lower their unemployment rates by restricting low-skill immigration or reversing their outsourcing, but that would be at the expense of other countries, and worse, it would not be a permanent fix. It would simply kick the can down the street because technology continues its inexorable advance and would eventually catch up.

    The solution requires us to first acknowledge the effects of technology. We can't stop the progress of technology, nor would we want to, but we must manage its effects. Developing countries have less to worry about for now because they have the lowest labor costs, so they'll be the last to lose jobs.

    Developed countries, however, will have to rethink the "work for a living" paradigm because that increasingly will become impossible. At this point, people begin to mutter nervously about "redistribution," yet without getting the fruits of their economies into the hands of their people, developed countries will find themselves without consumers, and without consumers, the capitalist machinery comes to a shuddering halt.

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