Almost everyone - economists, citizens, voters, most here, and politicians of all stripes - FAIL to understand that the economy is changing and that society including government needs to change as a result.
I see people blaming technology for unemployment. They are right that technology by making us more efficient means fewer need to be employed to produce products, whether the products are industrial or agricultural fewer people are needed. Whether we like this fact of life, technology will continue to improve. Fewer and fewer people will be needed to do anything, with the exception of providing love and affection for other people. Even this may change.
Robert Reich captures what is happening in the beginning of The Future of Manufacturing, GM, and American Workers (Part I) where he writes:
For now, though, some background. First and most broadly, it doesn't make sense for America to try to maintain or enlarge manufacturing as a portion of the economy. Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad--something I don't recommend--we'd still be losing manufacturing jobs. That's mainly because of technology.
When we think of manufacturing jobs, we tend to imagine old-time assembly lines populated by millions of blue-collar workers who had well-paying jobs with good benefits. But that picture no longer describes most manufacturing. I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots. In a few years this factory won't have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots.
Robots are here because of information technology. Whether we like it or not information technology is changing everything, manufacturing, reporting, teaching, pornography, gambling, stock trading, agriculture, flying, terrorism, politics, human relationships, crime, law enforcement, law, banking, shopping, medicine, voting, the military, and on and on. I cannot think of a field where information technology is not having an impact.
So what do we do? Part of the answer is in Whose Side Is the White House On? where James K. Galbraith said:
First, it seems to me that we as progressives need to make an honorable defense of the great legacies of the New Deal and Great Society — programs and institutions that brought America out of the Great Depression and bought us through the Second World War, brought us to our period of greatest prosperity, and the greatest advances in social justice. Social Security, Medicare, housing finance — the front-line right now is the foreclosure crisis, the crisis, I should say, of foreclosure fraud — the progressive tax code, anti-poverty policy, public investment, public safety, and human and civil rights. We are going to lose these battles– get used to it. But we need to make an honorable fight, to state clearly what our principles are and to lay down a record which is trustworthy for the future.
Beyond this, bold proposals are what we should be advancing now; even when they lose, they have their value. We can talk about job programs; we can talk about an infrastructure bank; we can talk about Juliet Schor’s idea of a four-day work week; we can talk about my idea of expanding Social Security and creating an early retirement option so that people who are older and unemployed or anxious to get out of the labor force can leave on comfortable terms, and so create job openings for younger people who, as we’ve heard today, are facing very long periods of extremely aggravating and frustrating unemployment; we can talk about establishing a systematic program of general revenue sharing to support state and local governments, we can talk about the financial restructuring we so desperately need and that we’ll have to have if we are going to have a country which has a viable private credit system and in which large financial power is not constantly dictating the terms of every political maneuver.
I think we need to do all of the above and more. More importantly we need everybody to see and understand The Information Technology Revolution. The revolution is as much a fact of life as the industrial revolution was. As Bob Dylan said, "The Times They Are A-Changin"