Productivity is way up but job losses continue, albeit at a slower rate. Microsoft scored some nice gains in stock prices yesterday on news that they were cutting another few thousand jobs, thus showing how much more efficient they are becoming. This can continue for a while, but eventually the private sector has to start generating jobs paying fairly high wages if the nation, as a whole, is to recover.
That brought to mind an image from a trip to China that we took a couple of years ago where we encountered a curious combination of high tech low tech. I was bowled over by the advanced technologies in evidence in most of the coastal cities, and even in the one interior city we visited. It was not a matter of China’s premier cities catching up to us. In some respects they are far more advanced. On the other hand, there was a lot of very low tech supporting the high tech. For instance, there were no E-Z Pass tollgates on the freeways, just dozens and dozens of manned tollbooths, through which traffic quickly flowed. Goods were hauled about on tiny little trucks, bikes and scooters. Workers by the dozens were employed doing work that could easily have been automated. One of our guides explained that with over a billion people and huge migrations into the coastal cities, they have to keep employment up by deliberately not automating where human labor can still be reasonably employed in useful work. It is not perfect. There is more than too much abuse of immigrant laborers.
It’s an even more touchy issue in democratic America undergirded by private enterprise. When the welfare reform laws went into effect a few years back, the City of New York employed able-bodied welfare recipients to sweep streets and parks only to be accused of enslaving the poor. I suppose something like that happened in most major cities. Just the same, it is in the private sector where an abundance of jobs must be created, and those jobs must be both economically useful and provide decent income. It may be that the nation’s overall standard of living will not be the same as the fool’s paradise we lived in during the last decade, but it could be a good one. Some of those jobs will be high tech, but how many could be low tech in support of the high tech? Could companies deliberately forego some aspects of automation and still remain profitable? It would require a change in Wall Street assumptions about profit maximization.
How likely is any of that? Not much at all. We will go forward with delight and eager anticipation looking for the next fool’s paradise, assuring ourselves that we will be smart enough to cash in before the next bubble bursts. And since I am smarter than you are, I will be richer, you will be poorer and so what!