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In the midst of the Second Great Depression

July 13, 2012 Leave a comment Go to comments

from David Ruccio

source

I would have written “chart of the day, year, and probably decade” if it included data for stagnant real wages. Then, it would be the single most important chart of the Second Great Depression.

As it stands, it indicates that

since the Great Recession officially ended in June of 2009 GDP, equipment investment, and total corporate profits have rebounded, and are all now at their all-time highs (non-financial profits are near their historic high). The employment ratio, meanwhile, has only shrunk and is now at its lowest level since the early 1980s when women had not yet entered the workforce in significant numbers.

So current labor force woes are not because the economy isn’t growing, and they’re not because companies aren’t making money or spending money on equipment. They’re because these trends have become increasingly decoupled from hiring — from needing more human workers.

Our task is to explain these trends, not as the simple result of the “computer age” (as Andrew McAfee sees it) but as the consequence of the way capitalism is currently being reorganized—culturally, politically, and economically (including technology)—in the midst of the Second Great Depression.

 
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  1. Michael Baxter
    July 13, 2012 at 12:23 pm | #1
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    But is it not possible that the “computer age” is what’s causing cultural, political, and economic changes. And if we widen the term to say “technological age” I would go a step further, and say this is almost certainly the main driver of the changes we are seeing across the globe, including the rise of China, globalisation, growing inequality, unemployment, imbalances, and…well the list goes on. Michael Baxter

  2. William Neil
    July 13, 2012 at 2:53 pm | #2
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    Fair enough. I have commented favorably upon Thomas Edsall’s recent article at the NY Times, featuring McAfee and his co-author, and I said I was happy to see automation put forth as a factor in explaining the jobs crisis. Dean Baker then shredded the Edsall article at ourfuture.org, adding in other factors, including trade policies,which are hurting employment. (And how about the one no one is talking about: the TPP, the Trans-Pacific Partnership?)

    Dean’s points were fair, but like so many professional economists, they underestimate the downward pressure automation, especially the computer age, has had in displacing human labor. I think you are entirely right to place it in the context you have here; it has always been one factor in the inputs and costs of the way businesses are run, weighting it precisely is much more difficult. I do think that the computer and miniaturization of electronics, all that is implied in the term cybernetics, now have potential applications across a greater range of work than ever before. How, when and where the automation tools are applied, though, are entirely in the hands of management. I’ve read an article by Wm Nordhaus of Yale, from 2005, defending the premise that productivity changes (including automation) are not the primary cause of job losses in manufacturing. Yet when you read his exceptions and qualifiers, the premise ends up looking far less sweeping. And he has an unintentially devastating tale to tell: John L. Lewis, the great leader of the mine workers, bought the mine owners line that technological changes in mining would not cause job losses. Nordhaus comments that Lewis was right to do so, although in mining the changes dramatically reduced the number of jobs while output kept climbing! Nordhaus commented that Lewis was right as far as the overall economy went, just wrong for his own industry! (and for agriculture too…maybe we should through in steel, textile and electrical appliances as well…)

    Readers who want to consider an even more dramatic stand against “creative destruction” and the pace of technological change might enjoy Wendell Berry’s Jefferson Lecture from April of 2012 given in DC. The title was “It all Turns Upon Affection,” which must have startled the insider DC audience at the Kennedy center. I offer my own take on deindustrialization, automation and Berry’s talk in the small book, essay “The Costs of Creative Destruction: Wendell Berry vs. Gene Sperling,” easily found online by just Googling the title.

  3. ezra abrams
    July 13, 2012 at 3:55 pm | #3
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    quote
    I would have written “chart of the day, year, and probably decade” if it included data for stagnant real wages.

    but instead, being a lazy blogger, I thought I’d just take someone elses work, add a few words of my own, and hope that nobody notices that this same sort of graphhas been flying around the internet for months if not years

    I must say tho that the source did a good job in giving his sources, although the sources use of black background white text webpagtes is sorta …stupid

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