Paul Krugman’s op-ed in the New York Times on May 10, 2012 addresses the issue of a structural unemployment problem.
“What does it mean to say that we have a structural unemployment problem? The usual version involves the claim that American workers are stuck in the wrong industries or with the wrong skills. A widely cited recent article by Raghuram Rajan of the University of Chicago asserts that the problem is the need to move workers out of the “bloated” housing, finance and government sectors.
“Actually, government employment per capita has been more or less flat for decades, but never mind — the main point is that contrary to what such stories suggest, job losses since the crisis began haven’t mainly been in industries that arguably got too big in the bubble years. Instead, the economy has bled jobs across the board, in just about every sector and every occupation, just as it did in the 1930s. Also, if the problem was that many workers have the wrong skills or are in the wrong place, you’d expect workers with the right skills in the right place to be getting big wage increases; in reality, there are very few winners in the work force.
“All of this strongly suggests that we’re suffering not from the teething pains of some kind of structural transition that must gradually run its course but rather from an overall lack of sufficient demand — the kind of lack that could and should be cured quickly with government programs designed to boost spending.”
Paul Krugman hits it on the nail when he states that the “economy has bled jobs across the board, in just about every sector and every occupation” and “that many workers have the wrong skills.” But he does not see this structural, rather instead as a lack of demand. The reality is that it is BOTH!
Structurally, Krugman is a one-factor economist––meaning the labor worker is the source of ALL productivity. The reality is that there are two contributory factors to the production and delivery of products and services––human (labor workers) and non-human (productive capital representing machines, superautomation, robotics, digital computerized operations, etc held in ownership by American business corporations and companies).
Structurally, the financial mechanisms in place require “past savings” for investment and as a result limit upward wealth accumulation to a minority and result in the concentration of ownership of productive capital in the top 1 percent of the population. Structurally, we can re-chart the present policies and programs that cause this unjust condition and put ourselves on a path to prosperity, opportunity, and economic justice by adopting policies and programs that consistently broaden the private, individual ownership of new productive capital asset formation as the economy grows. Such would empower ALL Americans to acquire new productive capital assets in our business corporations and pay for their acquisition out of the future earnings (future savings) of the investments. Such an approach would embrace technological innovation and invention, which as its core function is to improve efficiency of production and distribution of products and services and save labor in the process by shifting to non-human employment.
As the new economy begins to rev up with financial mechanism supported growth, “real” job creation will result and new opportunities for workers with old skills and new skills will occur and result in an effectively “full employment” economy, without the “welfare-effecutated” programs or as Krugman advocates “government programs designed to boost spending.” Real natural demand will be the result, which will further drive technological innovation and invention.
The key is to actuate policies that will dramatically impact the market economy and strengthen the middle class in a positive way, while expanding the base of private capital ownership and thus strengthening the way consumers make the money to purchase the products and services made possible by the new capital formation. The result will be to expand production and bring more wealth to the economy, which will provide not only growth in expanded ownership of productive capital but also in expanded employment opportunities as the economy revs up to meet expanded consumer demand. Furthermore, the more broadly real capital is acquired by individuals throughout our society with the earnings of capital, the more we will profitably employ unused capacity and promote economic growth. With greater earnings from capital worker investment, people will be able to support and pay for products resulting from “greener” technologies that today people cannot afford. Such policies are perfectly in tune with the natural incentive of business corporations to broaden ownership so that the market for their products will increase. Such policies will liberate the economy.
http://www.nytimes.com/2012/05/11/opinion/krugman-easy-useless-economics.html?smid=fb-share
