Technological Unemployment: The Real Reason This Elephant Ch

Post Reply New Topic

John Ralston Saul, also on the honorable Luddites list:

I think the problem is this technologically induced growth stagnation isn't readily visible. My theory is that it is becomes hidden under the growth of private debt and asset bubbles. Government monetary policy targets full employment by encouraging the growth of private debt. You just have to think about it. If purchasing power (which largely dictates total GDP growth in countries like the US that no longer produce a trade surplus) is no longer growing through wage growth, the money being fed in to the system must be coming from somewhere else. The answer is people are spending themselves into debt buying lots of useless junk and this is helping to inflate the service sector and keep employment high.

The problem comes when the owner class which takes most of the income and loans it out expects to have their cake and eat it too. This is exactly what they do. They benefit when wage earners go into debt to spend more than their income provides, then they expect their debtors to be able to pay up at some point. As soon as they realize this isn't going to happen (because there has been no rise in actual wages), there is a major crisis. The owning class then blames the underclass for "spending beyond their means" even though this spending ironically benefited them! It's f*****g absurd.

Sorry if I'm digressing too far. My point is the economy seems to avert crisis by making lots of BS jobs that are ultimately founded on a private debt bubble. I think technological unemployment is real, but that it is simply "hidden" from our eyes by government and capital working in collusion to forge a path of least resistance. It's ultimately not a sustainable system though.

I don't think this is unique just to the US either. Even in a developing country like Turkey there is an astonishing amount of credit card debt.

I think you're saying almost exactly what Mark Blyth was on the topic, in a bit more detail though.

I started to understand economies running on frivolous purchasing and production as an actual economic theory rather than a byproduct when I came across this:

Steve Keen has created a computer model that simulates the relationship between debt and GDP. I don't really understand the details (it's very complicated and may have some flaws vis a vis being an exact replica of a real economy), but it is based on an economic theory developed by the economist Hyman Minsky.

I think there is a deeper connection to the problem of technological unemployment. It's actually more general than just the idea of robots replacing jobs. At the root is the fact that firms will always seek to increase profit by cutting costs. I a global sense, when everyone cuts costs, people are ultimately paid less. Old neoclassical theories thought this wasn't a problem because prices would be forced to fall and everything would balance out. The truth is in real economies, price deflation always seems to be coupled with unemployment. In reality, the thing that counteracts the naive assumption that prices will always be falling is the existence of lending and finance. Finance is supposed to pump profits back into circulation by lending/investment. The problem is the incentive to lend/invest goes away when the economy is not growing sufficiently. Thus there is no steady-state solution. There must be an expectation that GDP is always going up or the incentive to loan/invest dries up. I see this as a fundamental problem with capitalism.

Some disagreements with UBI from Stefan Molyneux:

you're never too uneducated to work for the government,
and surveillance don't want a brain at the workplace neither, some extra weight's ok though

It seems like a crucial layer of complexity, considering how many massive economic changes have resulted from plummeting costs of international trade.

Gains from trade are sufficient to raise all boats. The math is simple and clear. To me, the key question here is: why don't they?

Lol, is that what Stefan is? That's a bizarre outlook for him to have and admittedly I haven't listened to him a whole lot so if he's said anything in favor of AnCap I haven't peeled back that layer.

I guess I just posted that in the interest of trying to be at least somewhat balanced and not spending the whole thread one-sidedly promoting UBI. He did give an important critique about sustainability, ie. when you multiply $12K by a couple hundred million or more you end up in a fair amount of trouble. To that end I don't know what we can do aside from just trying to drive down the prices of basic living costs such as housing, food, water, utilities, etc. for the lowest earners to see if we can get to a place where even part-time minimum wage jobs wouldn't have people out on the street or needing most of what keeps them off of the street to come out of the government's pocket.

I think that last point is one of the biggest critiques I'd give our current economy - ie. the cost of basic entry, the ability to pay all of your bills, is something a lot of people just can't do and there aren't any scale-down options available to offer that possibility.