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View Diary: Economics Works Backwards Now (192 comments)

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  •  Spot on (21+ / 0-)

    The problem we have is the one that was predicted as "the leisure society". We foresaw that we would be able to meet every conceivable desire and need with only a small percentage of the population producing anything and the rest only consuming.

    But the missing middle is how to transfer to the un-working, the necessary credits to purchase the goods and services produced by the working.

    There are two consequences to this, the first being that, once all the productive capacity and the returns from it are concentrated in the fewest possible hands, there will be no customers and the system will collapse. We are getting pretty near that now.

    The second is that we would need to change our view on what is productive work. At present the production, care and education of children is treated as a zero cost input to the economy, at least till they go to school. That may need to change. But there are so many other, real, useful and productive activities that we could and should be paying for in terms of environmental remediation, local food and energy production, affordable and efficient housing, universal public transport etc etc etc for which there is currently no money.

    Some, like me, are semi-retired people who work flat out on our properties, making them as productive as posisble and as cheap to live in as possible, all of that is productive work for which we are neither paid nor taxed and which does no0thing more than shrink the apparent economy. That needs to change.

    By shifting our understanding of what needs to be done, and then paying for it, we will put more people back to work. The other side is to reduce the hours that people work so that others can share their jobs, both producing and extracting value from the process and enabling them to become functioning parts of the economy.

    It will mean that the richest of us will have less money, but since those people already receive more than they can possibly need in many lifetimes, their extra cash is no more than a marker of their success. We need to find other ways of marking that success beyond mere electronic digits in a bank computer.

    Until inauguration day The USA is in the greatest danger it has ever experienced.

    by Deep Dark on Mon Sep 12, 2011 at 03:34:12 PM PDT

    •  I've been working on this exact problem (1+ / 0-)
      Recommended by:
      Calamity Jean

      for the last few days.  It is likely that, as demand returns, technical productivity improvements made during the last couple of years 'resizing' will require less labor to complete the same production.  The result will be a certain amount of structural unemployment that will likely need retraining in fields that we have yet to define.  Also, I figure that GDP growth rates are going to rise slowly.  Slower than the present economic models predict unless the Fed kicks inflation up to 3.5 to 4%.  Depending on many other factors, including some stability in Europe, we are likely to have 12,500,000 unemployed at the end of the year.  All of next year, I still think it could be around 9,000,000 give or take.

      What that means is we need to plan to have a safety net underneath these folks.  I don't have access right now to the jobs plan unemployment extensions or the CBO budget data, so I'm not sure if it's a problem or not.  I've got a call to make this morning.

      Nothwithstanding all that, this thread is right on point! I certainly hope someone in the White House is thinking like you all are.  There needs to be a plan to get them back to work, because many of them are not going to be satisfied with the safety net.

      The Republican economists must see this too, but their bosses don't appear to have a clue....or are just ignoring the issue like true neoclassicists.

      The Dude abides, now get off my lawn.

      by Boris49 on Tue Sep 13, 2011 at 03:11:30 AM PDT

      [ Parent ]

    •  A structural problem with Shareholder Value (4+ / 0-)

      Capitalism is what we're dealing with.

      Shareholder Value Capitalism (emerged in the 1970's) dictates that the economic benefit of increased productivity accrues to the shareholders.  Except for the dictates of this strain of capitalism, there's nothing that says that the workers could all simply work fewer hours for the same wages whenever productivity increases.  That was in fact the economic assumption until the 70's--see johnmorris' comment upthread.

      We must re-regulate capitalism.  It is killing itself.

      The model of funding businesses with stock rather than loans puts us on an unsustainable trajectory.  No business can consistently deliver double digit share price increases, but that is what the capital market demands.  To meet that demand, companies slash employment, offshore what labor remains, minimize R&D, and trade long term sustainability for the next quarter's number.  

      We kidnap. We torture. It's our policy. Embrace it or end it!

      by Mosquito Pilot on Tue Sep 13, 2011 at 04:18:07 AM PDT

      [ Parent ]

    •  We could also be spending our time with (3+ / 0-)

      social and cultural evolution.  We could be more intelligent, stronger and healthier.  That takes time out of the day.

    •  Would such a society ever work? (0+ / 0-)
      The problem we have is the one that was predicted as "the leisure society". We foresaw that we would be able to meet every conceivable desire and need with only a small percentage of the population producing anything and the rest only consuming.

      But the missing middle is how to transfer to the un-working, the necessary credits to purchase the goods and services produced by the working.

      It seems to me the working subsection would quickly realize they didn't need the purely consumptive class at all.  From there it's straight to Atlas Shrugged, once you don't need the labor of the masses.

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