On June 6, 2013, Mark Gongloff writed in The Huffington Post:
Austerity isn’t just hurting the U.S. economy right now — the damage is going to last for many years.
A new study by the Center for American Progress, a left-leaning think tank, estimates that today’s austerity measures are going to leave the U.S. economy with 2 million fewer jobs and $433 billion less in economic growth by 2019.
“We are forgoing investments in new technology and in the technical skills and productivity of the U.S. workforce that drives economic growth,” CAP economist Adam Hersh wrote in the report. “In other words, as a result of fiscal contraction and the acceptance of a protracted economic recovery, the potential for the U.S. economy to grow is shrinking.”
Another recent think-tank study, by the Brookings Institution, found that austerity had already cost the U.S. economy more than 2 million jobs since the recession. The CAP study suggests those jobs are not coming back for at least six years, if ever.
The reason for this is that the anemic recovery has left too much of the economy’s valuable resources idle: People and factories aren’t working, when they could have been. As you can see from the chart below, which was produced by Hersh and the CAP, the U.S. factory sector has still not gotten fully back up to speed since the recession. And the job market is in even worse shape, with millions of workers sitting out of the labor market, their skills deteriorating by the day. (Story continues below gloomy chart.)
As you can see in the chart, less than 58 percent of the U.S. working-age population is either working or looking for work, the lowest level of labor-market participation since the early 1980s. Some of this is due to Baby Boomers retiring, but most of it is due to a sluggish economy, studies by the San Francisco Federal Reserve and others have shown.
As Hersh writes in his study, idle workers will slowly lose their skills, and companies will be slower to invest in new productivity-enhancing technologies. This may be one reason for the troubling slowdown in U.S. productivity in recent years. Ultimately, this will lead to lower long-term growth and fewer jobs.
As long as economists focus on JOBS CREATION rather than OWNERSHIP CREATION the United States economy will be depressed and weak. Jobs are not the FUTURE. What is the FUTURE is the increasingly productiveness of the non-human factor of production––productive capital assets in the the from of human-intelligent machines, super-automation, robotics, digital computerized operations, etc.
The role of physical productive capital is to do ever more of the work, which produces income. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. 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. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The impact is to destroy jobs and devalue the worth of labor’s input.
People invent tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological invention. Productive capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary.
Productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. If both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive.
In a democratic growth economy that recognized both factors of production––human and non-human, the ownership of productive capital would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, also benefiting the traditionally disenfranchised poor and working and middle class. Thus, productive capital income would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote economic growth. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy. It also would cause REAL job creation during the period of time it will take to build a FUTURE economy that can support general affluence for EVERY American.
The answers to how to achieve this FUTURE are to be found in the proposed Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm, and the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797
