For years I’ve been writing about my belief that at some point technological progress will impact the economy enough to make us question our assumptions about growth, wealth re-distribution, and welfare. And finally, based on a recent smattering of articles, it’s no longer a topic found only in Sci-Fi novels.
- Andrew McAfee – The Great Decoupling of the US Economy
The talk at this point is mainly about admitting there is a problem. The final paragraphs of these essays generally state things like “this brings up some uncomfortable questions”. The assumption is that capital bias will lead to the continued decline of median wages which necessarily leads to the decline of the median standard of living. My beef is twofold. First, in a Democracy, you would expect the people to quickly realize that they have less money and vote for increased wealth redistribution (note, this is an apolitical statement). Second, in the graph below, notice how GDP has continued to increase while median household income has stagnated? The assumption by some is that we can’t afford the Keynesian prescription of spending our way out of the “jobless recession”. That is true only if your assumptions about Government revenue map to tax rates on median income. Until about 1983 that was a good assumption.
The seemingly obvious solution is to re-link tax revenues to GDP, which continues its inexorable rise. If this can be done any questions about deficits seem almost pointless.
Here is one more graph which pretty clearly shows that something is increasing the duration of
unemployment over the past three recessions, interesting that there is no similar trend before 1983 given the chart above. Also, note that in every recession since 1981 duration of unemployment has grown. That might be a complete coincidence but it sure looks a lot like something changed in the early ’80s which is also roughly the same time that computers were introduced into the workforce en masse.
And finally, my ankle has been gnawed by the big data bug. I’m currently using R to run statistical analysis on some fairly large data sets and I’m think that I might be able to make my points better with some animated charts… Maybe I’ll do it in my 2013 post, assuming the robots haven’t taken over…
Note – Some of my related posts are many years old and don’t reflect my current take on economics and/or politics.