Posts Tagged ‘Unemployment’

The economic consequences of the lockdown (2)

May 8, 2020

Click to enlarge. Via Ian Welsh

.

Click to enlarge. Via Calculated Risk

Looking at these numbers, I can understand why some U.S. governors are eager to end the lockdown and get people back to work.  But the economic system isn’t something you can turn on and off like an appliance.  The impact of business losses, wage losses and job losses won’t be wiped out by a re-opening,

There weren’t any good choices in dealing with the coronavirus pandemic, even if you decide to consider nothing except dollars and cents.  Sick, dying and scared people are bad for business, whether you have a government-ordered lockdown or not.

Also, the U.S. economy was fragile to begin with.  We U.S. citizens never fully recovered from the previous recession.  We were due for another one anyway.

(more…)

Robots will not (necessarily) replace us

November 15, 2017

You Will Lose Your Job to a Robot—And Sooner Than You Think, argues Kevin Drum in Mother Jones.

His argument is simple.  Historically, computing power doubles every couple of years.   There is no reason to think this will stop anytime soon.   So at some point the capability of artificial intelligence will exceed the capability of human intelligence.  Machines will be able to do any kind of job, including physician, artist or chief executive officer, better than a human being can.

This will happen gradually, then, as AI doubles the last few times, suddenly.

When that happens, humanity will be divided into a vast majority who serve no economic function, and a tiny group of capitalists who own the means of production.   Rejection of automation is not an option, according to Drum.   It only means that your nation will be unable to compete with nations that embrace it.

The only question, according to Drum, is whether the wealthy capitalists will have enough vision to give the rest of us enough of an income to survive and to create a market for the products of automation.

I have long believed that automation is driven as much by administrators’ desire for command and control as it is by the drive for economic efficiency.   An automated customer service hotline does not provide better service, but it eliminates the need to deal with pesky and contentious human beings.

I also believe that, in the short run, the danger is not that computer algorithms will surpass human intelligence, but that people in authority will treat them as if they do.

Drum presents interesting information, new to me, about the amazing progress of machine intelligence in just the past few years.   But that’s not necessary to his argument.

His argument is based on continuation of exponential growth and (unstated) continuation of the current economic system, which works for the benefit of high-level executives and administrators and of holders of financial assets at the expense of the rest of us.

There’s no law of physics that says development of technology has to result in higher unemployment.  Under a different system of incentives and ownership, technology could be used to expand the capability of workers and to make work more pleasant and fulfilling.

To the extent that automation eliminated boring and routine jobs, it could free up people to work in human services—in schools, hospitals, nursing homes—and in the arts and sciences.

Technology does not make this impossible.   Our current economic structure does.   Our current economic structure was created by human decisions, and can be changed by human decisions.  Technological determinism blinds us to this reality.

Qualitative easing and the Obama recovery

March 25, 2016

SPX-10-yr-yield-and-fed-intervention

The Federal Reserve Board’s policy of qualitative easing has helped the stock market recover.  But Americans who work in the real economy are still struggling.

Qualitative easing is the Federal Reserve Board’s policy of creating new money to buy Treasury bonds in order to keep interest rates low.  The greater the demand for bonds, the lower the interest rates, and the interest rate on Treasury bonds is generally the benchmark on all Treasury bonds.

The Fed’s Operation Twist was a sale  of medium-term Treasury bonds and purchase of 10-year bonds.  The Federal Funds rate is the interest rate for overnight loans among banks so they can meet the Federal Reserve’s requirement for reserves.

The chart above shows how QE correlated with the ups and downs of the stock market.  But, as I indicated in a previous post, American corporations did not advantage of low interest rates to invest in their businesses.  Instead they have transferred the gains to stockholders in the form of stock buybacks.

An economic recovery has taken place.  Most Americans are better off than they were at the depths of the crash.  But as economic recoveries go, this one has been weak.

2.household-income-monthly-median-growth-since-2000

The chart shows how important is it to always adjust for inflation.  A dollar in the year 2000 is not the same thing as a dollar in the year 2016.

Although corporate executives did not take advantage of Qualitative Easing to invest in America, there was nothing besides politics holding back the federal government from investing in public works.  There is a lot of urgent work that needs to be done in maintaining and upgrading American’s physical infrastructure, such as upgrading public water systems to get the lead out.

With a lot of public work that needs to be done, a lot of people who need work and financing costs at historic lows, why not put the unemployed and under-employed to work doing what needs to be done?  Fiddling with interest rates and the money supply is not enough.

(more…)

Room at the bottom

August 12, 2015

imrs

Large numbers of Americans—especially those of us born into poor, black families—experience poverty at some point in our lives.  It is also true that large numbers—especially those of us born into affluent, white families—experience wealth at some point in our lives.

If somebody starts out in life poor and winds up making a middle-class income or at least a living wage, that is  not a bad thing.  It’s different if somebody starts out in life poor, attains a middle-class income or living wage and then is laid off at age 55 and never again gets a full-time job, no matter how hard they try.  I know people in both categories.

Similarly if people rise or fall in income due to their work ethic and competence, or lack of it, that is not a bad thing.  If they are economically insecure due to trends in the economic or corporate policies beyond their control, that is another thing.  Among the people I know, the latter is much more common than the former.

LINKS

The remarkably high odds you’ll be poor at some point in your life by Emily Badger and Christopher Ingraham for The Washington Post.  (Hat tip to Bill Harvey)

Three in Five Americans Have Experienced Poverty-Level Incomes by Nathan Collins for Pacific Standard.  (Hat tip to Bill Harvey)