The most important points are trends so long in the making that they are not noticed as such, but I'll point them out. The megatrends for which I see no solution currently are: 1. Technology replacing the need for humans. 2. Merger of India and China with the worlds economies, and the disparity in wages among nations. For eons, the pace of technology just made it easier for humans to live (or wage war), but did not replace humans. The wheel, controlling fire, use of bronze and iron, steam power, hydro power. In the 20th century, the trend got so fast, the world may be having a hard time keeping up. In agriculture in the early 1900's, one in five workers worked to grow the food for everyone else. If you added 100 people, you had to add 20 workers, or "the system did not scale well". Invent pesticides, fertilizer, hybrid crops that increase yield, and efficient cultivating and harvesting machinery, and today only 1 person is needed to supply the food needs for 100. Many of those ag workers left the farm and went to manufacturing jobs, like auto assembly lines in the 1920's - 1940's. By the 1970's, along come robots and start displacing assembly line workers. Enter the late 20th century, and we'd entered the age of the "service economy" and the "information age". I've worked in programming mainframe computers since 1973, so that is my specialty. I thought that programmers would be the "next big thing" in labor and provide jobs in place of agriculture and manufacturing and it has, but not as much as I thought. Every company used to write its own accounting system but now, they just buy a package from SAP or Oracle and it takes 10% of the staff to install and maintain a package. It was determined there was no competitive advantage to an accounting system. But, that eliminated the demand for many jobs. As far as the service sector, it can provide good jobs, but when the economy hits a rough patch such as now, we find that as opposed to agriculture jobs (food is not discretionary), service jobs are always discretionary (I could do it myself). Computer have added a great deal of efficiency to our system, as has the internet and widespread availability of all sorts of specialty information that you can find in minutes via search engines. All of this results in the need for fewer workers. It may increase the value of the most technically proficient, but it decreases the need for unskilled workers. Now, half the population is above average in intelligence, and half is below average. In a society where the demand for bulk physical labor is declining, what are the implications for those in the bottom half of the intelligence scale? I would say, not very good. For those concerned about the expansion of the welfare state, I don't see much alternative. Suppose there is not a job out there for everyone that wants one? Are you going to tell that person who can't get a job in spite of wanting one and being willing to work that he just has to starve to death? I don't think so. The situation with China and India just exacerbates the problem. 30 years ago, those were remote and closed off societies. China changed their economic system from state planned to more capitalistic and trade oriented. They educated their people abroad and had them bring those skills back to China. India has been educating their workforce as well. Advances in telephone technology, email, and containerized shipping have made those societies accessible in ways not seen 30 years ago. Those two nations possess 1/3 of the worlds population, and when an object of that size hits the rest of the worlds economy as it has over the last 20 years, we are going to feel the results. The average manufacturing wage in China was about $1 an hour vs. $18 in the US, until recently (before the automakers went bankrupt and their workers took big paycuts, we see the system rationalizing itself). All the tax policy and interest rate changes in the world will not change this situation. The situation will equalize for the masses over the next 20 years. Developed economies will need to learn to live more frugally, on average (top technologists and knowledge workers will thrive IMO). The developing nations standard of living will rise as their workers demand a bigger piece of the pie. Eventually an equilibrium will be reached. Bush had no clue what was going on, just believing the "market would take care of it, because it always has". Obama has an idea something is not right, he invited in a panel of experts from cross functions to discuss how to create jobs (a good idea), but from what I heard he got the same old tired tax incentive BS that worked on the 20th century problems. If you don't get the diagnosis of the root problem correct, then the solution you propose is aimed at the wrong problem (or its aimed at the symptom of the problem, not the real problem), it will not solve the real problem. I am not encouraged by what I see. But the assertion that the republicans or the democrats are the root of the problem, or that govt. spending or taxation or monetary policy are the solution, all those ideas a basically misguided, IMO. They have something to do with the situation, but none of those issues are the primary driver. There are no links to any articles, as these ideas are mine, formed over the last 25 years of watching the business markets.
Well done on your "thinking out loud". I am far from an economist and for that matter I am far from even a basic understanding of taxes but what I see is our labor has been outsourced twice. Once in technology and the other from exported cheaper wages. Technology is something I am coming full circle with and that is in part, driven by our outsourcing for labor both abroad and at home. Round my parts nearly ANY job that involves a substantial amount of physical labor is being handed out to foreigners. Berry picking or agriculture as a whole to ditch digging to roadkill pick up. Folks simply refuse to put much sweat equity into their lives unlike the beginning of our own industrialization. Personally, I blame currency. Good or bad it is the root of all evil. My kid has taught me this, indirectly but in his school they deal with the child's fall from grace. At the age of 9 they become newly grounded which is the actual beginning of life. They had to grow food, cook, make clothes, and build structures. About all of the same structure that existed before the industrial age. As they continue to grow they will make tools to service those basic needs yet remain completely grounded. The struggle with this learning system is the Wii and every other form of instant goal oriented satisfaction. This is where technology has brought us and now so far that it has come to the point where we invent it and turn right around and outsource the labor to complete the market. I fear that until China and others like them can re-evaluate their currency this trend will only continue. Right now what I see here at home is folks are profiting from what is simple and local. It is the internal thinking that has many more people shopping at farmers markets and getting to know their farmer. EBay has made the novice dumpster diver and expert at recycling what might be hideous yet, someones else's treasure. More and more "home brand" marketing has been successful for even the novice. All this may only be temporary until the economy bounces back then back to faster cars and phones with dial a date we shall geaux. How the economy bounces back is beyond me but I do know what used to be right about America is now the right for someone else. That will need to change.
the top 10% do the thinking and robots do the rest, then what are the bottom 90% to do?---serve the top 10%. they already do now, but its less direct. when the bottom 90% are all service employees itll seem a lot like feudal or plantation economies. if there is a decrease in the % of people that work, there will be a continued widening of the income gap. that will lead to revolution. but strong governments will keep this from happening by taxing the rich and employing the poor. the classic employment for the poor is military but i hope governments are smart and use all the manpower for research---medical and energy. of course major wars can throw wrenches into anything.
