On March 2, 2013, an article in The Economist addresses the impact on job loses due to tectonic shifts in the technologies of production.
It is certainly possible that technological progress will soon switch to augmenting the productivity and wages of less-skilled workers. But it’s also possible, and maybe more probable, that it will not. And while there are many different kinds of “skill” out there, it seems reasonable to argue that workers in the top quartile or top half for educational attainment are also likely to be in the top half for other, non-cognitive skills that might be favoured in the future. So what might happen to workers in the bottom half of the skill spectrum?
[The possibility exists that ] economic growth is constrained by the fitness of the workforce, and there are severe distributional issues. In this world, less skilled workers face intense competition from hordes of other less skilled workers and from ever more capable and less costly robots. Wages of the unskilled stagnate or tumble as a result. It’s possible, of course, that wage rates for even skilled workers might disappoint, while the return to capital rises ever higher. Whatever happens at the top, the bottom finds itself struggling to capture any of the benefits of productivity growth.
That creates a very difficult situation, because it so happens that modern economies continue to use wages as the primary means by which purchasing power is distributed. Really fast productivity growth might lead to tumbling costs for many different kinds of consumer goods, information, and possibly even health care. But people will still need incomes. Households will still need food and a roof over their heads, and society might even decide that they deserve more than that: that relative penury for huge segments of the population is bad for social stability, or even unjust.
This is all true, but The Economist concludes wrongly:
If society wishes to avoid such an outcome, the only real option is redistribution and a lot of it.
“Technological unemployment” is a reality now facing the United States and other countries that will accelerate and result in the destruction and devaluation of jobs, and lagging wages for less-skilled workers, sufficient to eliminate personal incentive. A conventional solution to this economic decline is to substantially upgrade education, but the reality is that, as The Economist points out:
Not everyone can be educated to Google-engineer level.
The economy cannot grow without simultaneously connecting poeple with income to consume what the economy is capable of producing. What conventional economists are oblivious to is that in a modern, technological era it is the ownership of productive capital wealth, not the labor of people that is the primary creator of affluence.
Hence, it is access to ownership of productive capital wealth, not to jobs, wherein the national economic policy guidelines for the 21st century ought to lie. As ownership of productive capital wealth becomes widely diffused, political power ought also to be widely diffused.
Businesses employ both productive capital and people, but full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to produce efficiently and profitably. Because of the ever-accelerating shift to productive capital to lower business operational costs, jobs are constantly being eroded. The other aspect impacting job security––the overwhelming source of income for the majority of Americans––is global competition and the sourcing of low-cost “slave” labor. As a result, American businesses seeking to compete in global markets and within the United States market, which is driven by low pricing demand, have out-sourced manufacturing to other countries whose labor costs are significantly lower and whose tax extraction rates and environmental regulations are respectively far less costly and stringent. Such out-sourcing is motivated by the market demand to produce their products and services more efficiently and more profitably.
This combination of free market forces means that private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever-increasing role, compounded by far less costly out-sourcing of production.
As a result, there are fewer and fewer “customers with money” to purchase the products and services that can be more efficiently produced with productive capital. Economic growth will always be stalled when there are high levels of economic inequality because there will be an imbalance between production and consumption.
Why is this happening?
The reason is simple. A relative few people OWN the preponderance of the nation’s productive capital wealth and are positioned to OWN the FUTURE productive wealth, from which they earn dividend income and valuable capital gains asset growth. This is why there is widening economic inequality resulting in class conflict between the so-called 1 percent “successful” ownership class and the 99 percent, who are capital-less or under-capitalized, and whose ONLY source of income is a job or taxpayer supported government welfare derived from tax extraction and national debt. This Income inequality is exponentially crippling the United States from realizing its creative and social and just economic potential.
Thus, there is the imbalance between production and consumption. A few wealthy people are thereby able to rig the “system” to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital ownership.
For a nation to overcome widening income inequality, the obvious, logical solution is for people to OWN THE “MACHINES” and non-human means of production that result from technology. Broadening productive capital ownership should be the priority course of action for the FUTURE.
This balanced Just Third Way approach to building a FUTURE economy that supports affluence for EVERY American is presently not in the national discussion. It appears that the President of the United States, the elected Congressional representatives and Senators, academia, and the media are oblivious to this principled solution that has the ingredients to power economic growth at double-digit GNP rates.
This goal requires investment in FUTURE income-producing productive capital assets while simultaneously broadening private, individual ownership of the resulting expansion of existing large corporations and future corporations. Not only is employee ownership the norm to be sought wherever there are workers but beyond employee ownership the norm should be to create an OWNERSHIP CULTURE whereby EVERY American can benefit financially by owning a SUPER IRA-TYPE Capital Homestead Account (CHA) portfolio of income-producing, full-voting, full-dividend payout securities in America’s expanding corporations and those newly created to produce the future products and services needed and wanted by society.
The Just Third Way is a balanced approach, which encompasses the realization that the troubling economic and social trends (global capitalism, free-trade doctrine, tectonic shifts in the technologies of production and the steady off-loading of American manufacturing and jobs) caused by continued concentrated ownership of productive capital wealth will threaten the stability of contemporary liberal democracies and dethrone democratic ideology, as it is now understood. Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status.
Essentially, we need political leadership to raise the consciousness of the America people and introduce a National Right To Capital Ownership Bill that restores the American dream of property ownership as a primary source of personal wealth.
This is the solution to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
