Executive Summary

A jobless recovery or jobless growth is a phrase used by economists, especially in the United States, to describe the recovery from a recession, where "recovery" is defined as growth in gross domestic product (GDP), which does not produce strong growth in employment, specifically a rapid drop in the unemployment rate to the level it was prior to recession. The first documented use of the term was in the New York Times in the 1930s.[1]



A jobless recovery is usually seen as a bad thing in a capitalist industrialized society. This is primarily because in such a society most people need jobs to earn the money they need to purchase goods and services from the marketplace. Also, secondarily, doing something useful and productive is usually connected to a healthy individual's self-esteem and his or her positive relationships to the larger community. An alternative view is that a jobless recovery could be a step towards a post-scarcity society full of abundance for all -- as a new stage of cultural development with increased leisure and volunteerism. That alternative view represents a trend that many technologists, futurists, and heterodox economists have predicted for decades. Marshall Brain recently gave a related talk, available here.



Some economists have suggested that increasingly better automation (including AI and robotics), better design, better materials, and better communications are together creating permanent structural unemployment as human labor is being replaced by machines (or, sometimes, voluntary efforts) and that social trends like environmentalism or voluntary simplicity may also reduce aggregate demand. But many mainstream economists argue that this is the Luddite fallacy,[2] and that the economy will correct itself in time through continually increasing demand for ever more new goods and services - under the theory of general equilibrium based on labor market clearing, that economies always return to equilibrium at full employment - and further suggest those goods and services will always require lots of paid human labor to produce or to guard against theft or misuse. Stagnant or declining real wages and decreasing employment in the USA for the past thirty years for many jobs supports one theory; rising wages and increasing employment in places like India and China over a similar time period supports the other. Issues like economic bubbles, offshoring, globalism, government interventions, inflation, and the changing quality of goods and services over that time period complicate the economic analysis.

Models of increasing abundance despite joblessness often assume limited demand, that automation and better design can replace most paid human labor (even if humans might do lots of unpaid activities), and that the wealth from innovation will be equally shared. Those assumptions clash with many mainstream economists' models of perpetual scarcity that generally assume infinite demand, the ultimate irreplaceability of most paid human labor, and that the wealth from innovations will be unequally distributed (primarily to the innovators). This clash is reflected in conflicted notions of what to do about this situation, given that many innovations succeed in the market because they are labor saving, yet paradoxically new jobs are often claimed to come primarily from innovation.[3] Since new innovations can stimulate demand for new goods and services, mainstream economist argue they can be good for increasing the number of jobs. But since new innovations can reduce the need for paid human labor, others argue innovation can be bad for jobs (even as it might be good for humanity as a whole). Who is right as regards job creation may ultimately depend on what exact innovations are being discussed or what timescale one is looking at.

There are a large number of possible cures that can be tried either to create jobs or to deal with the problems posed by widespread chronic unemployment, each with various different long term societal consequences (both good and bad). There are also other possible economic models like a gift economy, a resource-based economy, a basic income economy where paid employment is not required to obtain basic goods and services, or a Gandhian swadeshi ecovillage economy that emphasizes community and family over abstract exchange. Some heterodox economists suggest moving towards those as another possible approach for dealing with the problems posed by a jobless recovery and other related economic issues like social equity and sustainability.

There is a paradox that many people may be happier with more free time to spend with friends, families, and hobbies, if they still can acquire the basic goods and services they need somehow -- but this positive increase in satisfaction might appear as negative economic indicators like a shrinking GDP or a continually increasing unemployment rate. Also, not all jobs created by a recovery are equal in terms of their implications for overall societal well being (for example, more prison guard jobs may indicate some other social dysfunction is taking place).

In general, the US economy has for the 2000-2009 decade failed to create many new good jobs relative to population growth, and there is disagreement about what that trend means, whether it will continue, or what to do about it if it does continue. Some past predictions about the effect of automation on employment have failed to prove true, so predictions on future trends regarding employment based on automation are viewed with suspicion by default. Because any related predictions or suggestions rely on assumptions about human nature, embody political values, or entail speculating about the potential of future technology, there is much room for uncertainty and disagreement. This is an area that some think needs more research, experiment, and discussion to better understand how all the many connected issues interact and to determine the best way forward in the context of socially agreed upon values and priorities.[4]





Causes

Economists are still divided about the causes and cures of a jobless recovery: some argue that increased productivity through automation and robotics has allowed economic growth without reducing unemployment. Other economists suggest that jobless recoveries stem from structural change in the labor market, leading to unemployment as workers change jobs or industries.[5]

Historical context

Depressions (persistent GDP underperformance, even if GDP is growing) and jobless recoveries were common in the 19th century, such as in the Long Depression, dated at 1873-1896 in the United Kingdom; during the Great Depression unemployment remained high for years after GDP had returned to growing; and persistently high unemployment (10% or more for decades) has occurred in many countries over the 20th century - see depression and unemployment for discussion.

In 1936, in the middle of the Great Depression, amidst vast unemployment and desperation while warehouses were full of goods, John Maynard Keynes published his General Theory of Employment, Interest and Money which is largely credited with creating the terminology and shape of modern macroeconomics. It sought to bring about a revolution, commonly referred to as the "Keynesian Revolution", in the way economists thought - especially in relation to the proposition that a market economy tends naturally to restore itself to full employment after temporary shocks. While there were many competing ideas at the time, including a technocracy movement, a social credit movement, a communist movement, and a local-community-emphasizing swadeshi movement (important in India), Keynes' ideas became dominant in the USA. Actions based on Keynesian economics over the next two decades included both direct spending by the government on public works to increase employment (justified in part by a war effort) and manipulating interest rates through banking policy so businesses could expand and hire workers who would in turn demand more goods and services and create even more jobs. At the time, and since, Keynes' work was attacked by people on both the left and right of the political spectrum. However it was widely accepted by Western governments.

The Post-World War II economic expansion was characterized by historically low levels of unemployment and full employment in many countries, but following the end of the global expansion in the 1970s, unemployment increased in many countries.

Most US economic recoveries in the period 1945-1990 led to employment increases relatively rapidly. However, in the early 1990s recession, early 2000s recession, and late-2000s recession the employment recoveries have lagged increases in GDP.[1]

During the times since Keynes published his General Theory, there have been many further ideas in economics like Monetarism and New Keynesian economics. Neoliberal economics has moved in the direction of what some pejoratively call Free market fundamentalism as a return to some of the assumptions before Keynes, but which has become a dominant economic ideology in the USA. The advent of the global financial crisis in 2007 and widespread increasing unemployment has caused a resurgence in Keynesian thought.

It is not clear if this resurgence will be successful. While moving beyond the assumptions of his time, Keynes made several other assumptions that are explicit or implicit in his writing like:

people will not do good work unless they are paid to do it;

increasing rewards can only make work output better;

the best way to get stuff or services is to buy them;

the best way for people to get money is to earn it through working;

the quality of the actual "work" in terms of enjoyability can be ignored;

promoting community can be ignored in designing economic arrangements;

negative externalities to the environment could be ignored;

it is good or neutral that banks are the first to get newly created money;

supply should come before demand; and

innovation is not an important issue to consider in analyzing economies.

Different economists in the past like E.F. Schumacher, Milton Friedman, Ludwig von Mises, and more recently Paul Romer and Elinor Ostrom have questioned one or more of these assumptions, as have non-economists like Alfie Kohn, Bob Black, Murray Bookchin, Jane Jacobs, Rachel Carson, and Marshall Brain. Many issues of economics remain contentious because many assumptions underlying economic theories are essentially statements on human nature, embody political values, or entail speculating about the potential of future technology.

New areas of economic research have been emerging to consolidate ideas about ecological economics and the economics of technological change, emphasizing natural capital and intellectual capital. Many economists have contributed to these movements in different ways. For example, Robert Costanza suggested in 1997 that the global ecosystem could be valued at around US$33 trillion at the time, a breakthrough idea at the time, to recognize the dependence of the human-made economy on natural processes. According to Nobelist Robert Solow, about four-fifths of the growth in US output per worker was attributable to technical progress. And Eric von Hippel suggests that end-users, rather than manufacturers, are responsible for a large amount of new innovation. These all call into question fundamental assumptions of mainstream macroeconomics which may shape the nature and quantity of jobs in high-technology economies that are also concerned about environmental issues. So, it is not clear a simple return to Keynesian thinking will be able to deal with economic issues that have changed significantly in the almost a century that has passed since Keynes developed his main insights, as brilliant as they were at the time.



One difficulty with economics, compared to, say, physics, is that economics has limited experimental evidence from controlled experiments to back up theory; it is very expensive, time-consuming, or even unethical to experiment with alternative economics ideas, although computing is making some experimentation more feasible through simulation using agent based models, and many individuals and communities have been trying their own local experiments with alternatives. Many people seem to have a piece of the answer to the economic puzzle of the 21st century, including about jobs. As the pieces are put together, emerging from a response to the 2007 global financial crisis, we may well eventually see a new synthesis moving beyond Keynesian economics, in a way that will have the same profound effect in the 21st century as Keynes' work had in the 20th century, although reflecting the changes since then, perhaps reflecting a positive psychology change in emphasis from focusing on managing scarcity to focusing on creating abundance.

Also, many current industries that employ large numbers of people (ranging from the health insurance industry, the compulsory schooling industry, the defense industry, the fossil fuel industry, conventional agriculture industry, the software industry, the newspaper and media industries, and some consumer products industries) are coming under pressure from various movements from both the left and the right of the political spectrum in ways that might reduce the need for much paid work in various ways. Such changes might either directly eliminate jobs or, by increasing jobs temporarily eliminate subsequent problems in other areas and the jobs that go with them (as reflected in projections of overall cost savings by such transitions); for example building new wind farms instead of new coal plants might reduce medical expenses from asthma or from mercury poisoning. A single-payer health care movement, a homeschooling and alternative education movement, a global peace movement, a renewable energy movement, an organic agriculture movement, a free software movement, a peer-to-peer movement, a small government movement, an environmental movement, and a voluntary simplicity movement, taken together as a global mindshift[6] of the collective imagination[7], have the potential to eliminate the need for many millions of paid jobs in the USA while providing enormous direct and indirect cost savings. This would make the unemployment situation much worse than it currently is, while paradoxically possibly improving our society and lowering taxes. Many of the current justifications for continuing social policies that may have problematical effects on the health of society, pose global security risks, or may waste prosperity in various ways is that they create vast numbers of paid jobs as a form of make-work.

As Keynes wrote in his book above about his own predecessors:

"The completeness of the [classical] victory is something of a curiosity and a mystery. It must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and consistent logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority."

Recent employment trends in the USA

It is illustrative to look at some actual numbers about the last half-century or so of employment in the USA and to consider where they could be heading. Here is a chart of employment and population numbers from the Current Population Survey aggregate data, which shows the United States long term employment creation by decade.[8] [9]

Decade Employment Growth (EG) Population Growth (PG) EG/PG Notes 1950's 7,215,000 11,516,000 62.65%

1960's 13,862,000 19,449,000 71.27%

1970's 21,224,000 30,811,000 68.88%

1980's 17,685,000 20,865,000 84.76%

1990's 16,998,000 21,667,000 78.45%

2000's 5,137,000 26,254,000 19.57% to Mar. 2009

Jobs are constantly being created and destroyed in a dynamic economy emphasizing competition like the USA currently has. As a statistical matter, the low number of net jobs created in the decade 2000-2009 is due to a low number of new jobs created, not due to an especially higher than usual number of jobs destroyed (net jobs is new jobs created minus old jobs destroyed). For example, over the time period in that chart, large numbers of manufacturing jobs disappeared, like in textile production, both from improved automation and from offshoring of production. Thus was a trend observed even in 1987 and it has accelerated dramatically since, with many US communities dependent on textile manufacturing experiencing "severe hardships".[10][11] But also during that time, a large number of service industry jobs have been created, such as in teaching, in prisons, in government, in hospitals, and in the computer industry, for an overall continued growth in employment. As new jobs are created, workers who lose their jobs can in theory move to new industries with the new jobs. However, not all jobs are created equal. While some new jobs in critical demand may pay extremely well for someone with the matching skills and interests, many of these new jobs often requiring different skills or proclivities than people are used to applying (welding steel versus helping people in nursing homes), are in other geographical locations (like the US automotive industry shifted South), do not pay as well (automotive worker versus home care aid), and do not have as good benefits (especially as companies try to contain rising health care costs while keeping total wages down). New jobs also tend to compete with offshored jobs and automation, and while "sticky wages" may keep wages up for existing jobs, new jobs often have lower wages, leading many people who lose their job to have to take jobs at a substantial pay cut. Rising health care cost for benefits themselves reflect this trend, with some of the newly created well paying jobs held by highly paid doctors and medical technologists involved in health care in the United States; these highly paid professionals then provide services that are becoming unaffordable by many people at new lower paid jobs, as part of an increasing rich/poor divide emerging from these trends.

Finding employment in paying jobs in the USA during a recession has been likened to "a cruel game of musical chairs".[12] But, unlike the child's version of musical chairs where chairs are only removed, in the adult employment version, chairs are both removed and added while the music plays. If less chairs are added than removed while the music is playing, unemployment increases (people without chairs then have to stand in unemployment lines or figure out some other way to survive without a chair at a job). But, since population is increasing in the USA, more chairs need to be added since more people are continually joining the game and someone would otherwise be left without a chair. Also unlike the children's version of musical chairs, where once you are out, you are out, those in unemployment lines usually still want to get back in the game every time the music starts, increasing the competition. A "discouraged" worker is perhaps the unemployment statistical equivalent of a loser in the children's game, as someone repeatedly unable to get a chair at a job. Some people like Alfie Kohn[13] think even just the children's version of musical chairs is cruel because it creates "losers", and people have created cooperative alternatives including cooperative board games, something also possible at the adult level such as with job sharing or other alternative economic approaches mentioned in sections below.

In the years 2008 and 2009, initial jobless claims in the USA moved up from the usual 350,000 or so initial jobless claims per week in previous years to more like 500,000 or so a week.[14][15] This reflected a situation where there was only one new job created for about every six unemployed workers (with competition for jobs putting downward pressure on wages and working conditions, same as during the Great Depression); although in some areas, like construction, the ratio was more like one job created for every twenty unemployed workers.[16] Sometimes the new jobs created are just to replace more experienced higher paid employees who are laid off to reduce expenses (while accepting a lower quality of service), like in the severely stressed US hotel industry.[17] This is sometimes depicted as like the "stalling" of some jobs creation engine.[18] This stalling metaphor reflects a political emphasis in a dynamic US economy on creating new jobs rather than preserving existing jobs. It can often be pointless to try to preserve some specific old jobs, as many specific jobs may gradually become obsolete from technological change, like replacing some bank tellers with ATMs. Other jobs may become unneeded from demographic trends, like an aging population purchasing less baby clothes and more hearing aids. This constant turnover in what jobs need to be done is part of the reason that the average person born in the later years of the US "baby boom" (1957 to 1964) held 10.8 jobs from age 18 to age 42, according to the Bureau of Labor Statistics of the U.S. Department of Labor.[19]

With further overall employment reduction in 2009 not reflected in the chart above (changes since March 2009), there ultimately was zero net job creation in the 2000-2009 decade in the USA. This is even worse than it seems, given US population growth during that time with no new jobs created for them, creating a shortage of about 18 million jobs relative to previous decades by one estimate by Paul Krugman if this ground was to be made up in five years.[20] To understand such a calculation from another perspective, looking at the chart above, about 17 million net new jobs were created in the 1990-1999 decade relative to population growth. Assuming continuing population growth at about the same rate, for the USA to return to the level of employment of 2000 relative to population, starting from a lost decade, overall about 34 million net new jobs would need to be created by the end of the 2010-2019 decade (new jobs beyond replacements for jobs that are normally lost). Extending Paul Krugman's calculation would only require about 29 million jobs be created during that decade. By whatever calculation, this vast "jobs deficit", completely unpredicted by almost all mainstream economists, is causing "leading economists and policymakers to fundamentally rethink the underpinnings of the nation's growth."[21]



Not every economist may agree with that, however. For example, Nobel laureate and Columbia University professor Edmund Phelps in 2009 rejected the notion of a jobless recovery as "scare talk" and "groundless", and made a typical mainstream claim that any significant recovery in terms of GDP growth would "pull employment right along with it" and what he was worried about was if the recovery did not go very far in terms of both output and employment.



Still, even with no net new jobs created during the 2000-2009 decade, the US GDP increased from about US$10 trillion a year in 2000 to about US$14 trillion a year in 2009 (according to the US Bureau of Economic Analysis). This increase in GDP came from several sources. Much came from increased productivity (more produced per worker through automation) and from improved design (with new designs being easier to make or use). Some came through technical issues with GDP calculation, since goods or services produced mostly abroad are still credited to the USA's GDP when they are resold locally with some value added (like when Walmart sells goods made in China with some markup to cover profit and the cost of operating distribution centers in the USA, so the markup contributes to the GDP). Some came from what Jane Jacobs termed "transactions of decline" like increased spending on prisons, wars, and care for those sickened from things like pollution or vitamin D deficiency, which is why GDP is a problematical indicator as to societal well-being.[22][23]

If the US GDP increased by about 40% during the 2000-2009 decade, much from workforce productivity increasing steadily every year, one can ask who benefited from the increase? The gains in productivity have not gone to most workers since real wages for most workers in the USA have been stagnant for the past three decades, and even dropped slightly in during that decade, in part as a result of economic policies reflecting neoliberalism.[24] This point is made in detail by Economics Professor Richard D. Wolff in a presentation on the economic meltdown called "Capitalism Hits The Fan".[25][26] The trends seem to indicate that the mainstream macroeconomic conventional wisdom about employment and wages naturally increasing in parallel with economic growth is fundamentally flawed as far as the USA is concerned, even if there was truth to it up to a few decades after WWII (while the USA had the only major intact economy and was able to export excess production on favorable terms, and before automation and better design and global competition had become increasingly widespread).

With the rest of the world rising in productivity of goods and services like Hans Rosling documents,[27] it is hard to imagine where the USA will get 34 million new jobs over the 2010-2019 decade. With so many people around the globe ready to make goods and services for themselves or supply them to others through globalization, it seems unlikely the US could increase commercial exports significantly or increase demand significantly for consumer goods and services produced locally (even with hopes for millions of local new "green" jobs or in some other high-tech industries).

There is an ironic contradiction in that the economics driving the creation of many new jobs in the USA like in green energy or in medical research is based on the idea that such innovations save money in various ways by reducing labor in other sectors of the economy. For example, less oil needs to be pumped if homes are better insulated (with far more energy savings than the extra energy that goes into insulation or passive solar home construction). Or, less medical care overall is needed with advanced medical knowledge and new bio-tech treatments. Even just increasing scientific documentation through research on ancient and inexpensive ideas might eliminate the need for thousands of medical jobs, such as the possibility of reducing cancer[28] or autism[29] possibly resulting in part from vitamin D deficiency that can be prevented through free sunshine or inexpensive vitamin D3 supplements, or the possibility of curing diseases resulting from dietary excess through a whole foods diet of mostly whole grains, fruits, and vegetables along with periodic fasting and moderate exercise. Both of those inexpensive approaches towards health could possibly greatly reduce ongoing medical expenses in the USA as they increasingly again become part of the general US consciousness, like through the initiative of Michelle Obama creating an organic garden in the sunshine at the US White House in 2009,[30] or through her "Let's Move" campaign in 2010 to combat child obesity in the United States in a variety of ways including moderate exercise and dietary changes.[31] Even as it is unlikely the US population would be generally happier if they remained obese and sickly, one consequence of the US population being much healthier in the near future would be less jobs of various sorts treating widespread diseases of affluence like obesity, diabetes, and cancer. So, ironically, President Obama as of 2010 is desperately trying to create new jobs, while Michelle Obama is conscientiously and compassionately trying to get rid of many old jobs involved in caring for obese and sickly people.

Beyond that irony, some people like Ivan Illich in "Medical Nemesis" even go so far as to suggest medical professionals often unintentionally create illness through iatrogenesis and that society should move towards reducing that in various ways by better general understanding of personal health care (such as possible through the internet these days), which again would reduce medical jobs as better informed people took better care of themselves.

So, if productivity rises faster than demand, or if demand for expensive services just falls from innovation (even just public health education, like if more people were healthier and needed less professional assistance), the US may see either no new jobs, or even a decrease in jobs. But without a lot more new jobs, the standard of living will fall significantly for many US citizens who lose their jobs or who can't find one after graduation from school. Consider the fate of an average doctor fresh out of medical school in the United States with US$154,067 in loans (much of it due to money transferred to older doctors for training). What happens if he or she finds there are few new jobs in medical practice because most US citizens are suddenly very healthy (including old doctors who then keep practicing longer)? What happens to this new doctor if young kids are happier and healthier being outside gardening and playing in the sunshine due to "Let's Move" and other public health initiatives that help people break free of the "Pleasure Trap"[32] of fast food and the "Supernormal Stimuli" of mainstream TV and other indoor pleasures? For that indebted individual, such a healthy, happy, vibrant, and alive USA could be a personal disaster, unless, say, US social spending supported this new doctor in doing medical research for ever better national health, or US aid abroad supported this new doctor in practicing medicine in countries without many doctors yet. Yet, how could an idealist young doctor suggest having a healthier and happier US population was a bad thing? (This paradox will be explored in a subsequent section.)

Some people suggest this fall in standard of living for the jobless can be prevented if wealth related to a continually rising US GDP is redistributed differently than in the past, or if jobs are shared, or by some other means. (See the section below on automation and the problematical continuance of an "income-through-jobs link" in an era of rising unemployment, discussed in the Triple Revolution Memorandum sent to President Lyndon B Johnson in 1964). Others (like those believing in neoliberalism and laissez-faire economics) still maintain the system will fix itself through endlessly increasing consumption and that any action towards redistribution of wealth will just make things worse; for example, people who were healthier might want to buy more outdoor sports equipment or higher quality organic food that required more labor to produce, thus creating some more jobs. Which group will be right in the long term has been the subject of a long standing debate which has effected US social policies in various ways at different times.

Another key aspect of the historical trends for the USA is the imbalance that much of the recent job creation in the USA has also been in lower wage service industry jobs with limited to no benefits and little job security, and most of the jobs destroyed have been the higher paying jobs with good benefits like in automotive manufacturing. So, even when jobs have increased, they have not been of the same economic quality as in past decades, even as the work may often be less demanding in terms of physical strength (although that is not much of a plus if you take pride in some physical strength). These trends call into question the positive aspect of the Three-sector hypothesis, that shifts of an economy away from extraction and manufacturing to service industries are in general good for most workers. The numbers above also show that there has been a relative erosion in the USA in the need for domestic labor compared to population growth, and there is an open question about how many service jobs might potentially also be eliminated through automation and better design, just like extractive and manufacturing jobs before them were eliminated. Through continued innovation, many service jobs can become deskilled (for example, complex "rabbit tests" in labs were replaced by home pregnancy test kits), automated (robotic vision systems can check part quality), amplified (better tools allow more output per worker), designed out of existence (for example, old style telephone operators were replaced in part by direct dialing), or just no longer wanted (like limited demand for any service from changing consumer preferences and also a downward spiral of unemployment and declining wages). So, whether more net service jobs will show up soon in the USA is an open question, as is how well they will pay or what benefits they will have. With population growth there will be some equivalent growth in demand for goods and services since there are more people who need things, which normally would be accompanied by more jobs satisfying that demand; but even with such demand growth, one question is whether such new demand will outpace productivity improvements through innovation. For example, if the US GDP grew another 40% in the 2010-2019 decade through continued innovation without a need for new workers (as exponentially compounding productivity growth of 33% or so above population growth), that would more than offset any increased demand just from an increased population.

Some mainstream economic analysts suggest the US consumer may be permanently shifting to a lower level of consumption. For example, Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consulting and investment-banking firm, said:[33] "Suddenly consumers are focused on buying what they have to have as opposed to buying what they want to have... This is a permanent change for Americans, who will face a declining standard of living over the next 20 years..."

Yet not all Americans face much of an obvious decline. As Marshall Brain suggests (as do many others), wealth from automation and other capital investments is being concentrated upwards in US society.

To consider how unemployment numbers might look in the USA under different jobless recovery scenarios by the end of the 2010-2019 decade, consider the following very simplistic chart based on the above figures of 33% productivity growth for the previous decade, considered under the different scenarios of demand per capita, starting from 10% unemployment. This assumes that if there was no increase in demand, the number of jobs would eventually shrink by the amount of productivity increase. This chart does not consider many variables, including government intervention, but it roughly outlines the overall concerns related to economic collapse if the USA had another decade like the 2000-2009 one of productivity growth, but if people stunned by the downturn at the end of the decade (or alternatively pursuing a new ecological consciousness) decided not to increase their consumption by one third over the next decade.

Possible unemployment figures 33% decrease in demand no change in demand 33% increase in demand 0% productivity growth 43% 10% 0% 33% productivity growth 76% 43% 10%

If growth in demand happened, this 33% consumption increase could come from people buying bigger houses, bigger cars, and ever more supersized meals. Or it could come from people buying substantially higher quality products that are far more difficult to produce. Or it could come from people buying new products they don't currently buy, while still buying all the old ones. That is the scenario that most mainstream economists are hoping for to make the numbers work out, continually rising demand with endless growth. However, a general push for increased consumer spending in the USA, especially at the high income end, is at odds with new slogans like "Reduce, Reuse, Recycle" being popularized related to minimizing the waste hierarchy. Other alternatives to increase societal consumption through broader social spending (like on positive public infrastructure, research, and the arts, or, alternatively, on negative things like wars and prisons) are outlined in sections below, as are methods like a basic income to shift new consumption towards those in poverty due to income inequality in the United States, given that otherwise much of the GDP increase would likely go to those who already have passed diminishing returns for increased consumption.[34]

While a very cartoonish view of the situation, this simple chart illustrates why predictions about increased efficiency and predictions about consumer demand are so intertwined in predicting how long a jobless recovery would last or whether it would grow into a depression or even some sort of social upheaval. Such upheavals are not unprecedented; for example, the USA went through such a period during the Great Depression, with the creation of a strong middle class in only about a decade, according to Paul Krugman.

Futurists have been predicting these kind of trends resulting from automation for many decades, with titles such the "The Triple Revolution" memorandum (1964), Jeremy Rifkin's "The End of Work" (1995), or more recently, "Robotic Nation" by Marshall Brain, but so far, such futurists have always been wrong, and consumer demand has always risen as fast as productivity. In 2009, Martin Ford, a Silicon Valley computer engineer and entrepreneur, makes similar predictions in a book entitled "The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future" that claims it "illuminates the danger that lies ahead if we do not plan for the impact of rapidly advancing technology"

The quadrillion dollar question is, will such futurists ever be right? At what point will the value of most human labor decline substantially relative to automation, robotics, better design, and voluntary social networks? Or, at what point might the US consumer say, "enough is enough", or at what point might US citizens decide that there are diminishing returns to more consumption relative to more free time for other purposes? This endless consumption scenario was even satirized in a book called Midas World by Frederik Pohl, based on a story he wrote in 1953, where the "poor" people were the ones who had to consume vast quantities of goods and services to keep the economy going (at a rate which drove many people crazy), while the "rich" lived a life of quiet simplicity with time for hobbies, relationships, and contemplation of nature and spirituality.

So, from these historical trends, several questions arise. Will productivity continue to increase through automation and better design? Will there be enough demand for ever more goods and services to create full employment of people in more good service jobs if productivity does increase? How will the internet affect services jobs over the long term given people can learn more about doing things themselves through the internet? And if demand does not grow, or even shrinks, like if people do more services for themselves (for example, if cheap home medical testing options expanded[35]), then what should be done politically about a permanent structural jobs deficit? And is the USA jobs situation just an outlier, or will other industrialized nations with growing economies like China or India eventually see the same trends towards a jobless recovery as they go through business cycles? Subsequent sections will look at possible answers to these questions, accepting that ultimately what is done is more a political issue than an economic one and so entails questions about values and priorities.

Industrial consolidation

Some have argued that the recent lack of job creation in the United States is due to increased industrial consolidation and growth of monopoly or oligopoly power.[36] The argument is two-fold: firstly, small businesses create most American jobs, and secondly, small businesses have more difficulty starting and growing in the face of entrenched existing businesses (this relates to the infant industry argument, applied at the level of industries, rather than individual firms).

As a matter of policy, this is particularly attributed to Ronald Reagan, in whose presidency (1981-1989) anti-trust enforcement was sharply reduced and industrial consolidation increased. The intellectual background comes from the Chicago school of economics, which advocates laissez faire policies and little or no anti-trust policy, and these policies continued under George Bush, Bill Clinton, and George W. Bush.

Globalization

Free trade has also been suggested as a possible driver of structural changes contributing to a jobless recovery. In this view, during lean times companies in developed countries are more likely to move factories and lower-skill jobs offshore, given the higher pressure to cut costs and lower likelihood remaining employees will leave the company. This results in the need for the workforce to shift to different manufacturing and service jobs (often higher-skill), but it takes time for these new jobs to be created (sometimes requiring the creation of new companies or the scaling up of startups) and for workers to be retrained or credentialed. For this to work out well, there must be unlimited demand for new products and services to justify new businesses, most workers must be able to adapt to these new jobs, and the new jobs must pay as well or better as the old ones both in terms of money and in terms of how well they are enjoyed for their own sake (for example, a wine maker might prefer to make wine, not operate a nail salon, and vice-versa).

Offshoring has affected these jobs numbers above for the past decade in the USA. In theory, as national currencies and wages reach an equilibrium (like by a significantly increased valuation of the Chinese yuan and Indian rupee relative to the US dollar), offshoring by itself should not permanently effect employment (ignoring any temporary problems or deindustrialization). Still, offshoring is making the particular US jobs situation worse right now. According to Noam Chomsky, globalization also increases the labor pool in some nations by destroying the profitability of local production, increasing unemployment and driving down wages.



The offshoring situation may improve for the USA over the next decade or two from currency adjustments, the increased cost of shipping from rising oil prices, or from government policy changes relating to national security or protectionism. If so, the actual production of many goods and services may come back to the USA from abroad. If those jobs are not automated when they are brought back, then, assuming demand did not change, there would be a net increase in jobs in the USA and a decrease of jobs in other countries. However, it is possible that increasing automation and better design would allow jobs returning to the USA to be filled by robots and other automation, as current domestic firms begin to use idled capacity requiring little additional labor, or as they continue to figure out how to produce more with less human involvement and less energy and materials. For example, if toy production was brought back in a big way to the USA from China, it is unlikely that old labor intensive methods of toy manufacturing from decades ago in the USA would be returned to if using automation was cheaper, especially if toy designers now know how to make designs that require less assembly and materials.

Automation, productivity increases, and demand

In the 1960s, The Triple Revolution memorandum suggested that machines would continue to reduce the number of manual laborers needed, while increasing the skill needed to work, thereby producing greater unemployment. The group recommended a basic income and other solutions. More recently, Marshall Brain has suggested in his Robotic Nation essay[37] that a jobless recovery is due to automation and robots eliminating human jobs. He recommended in the long term (in which he theorizes most humans will be permanently unemployed) restructuring the economy by giving away money to all humans, again as a form of basic income.[38]

If futurist Marshall Brain is right, it is quite possible job growth in the 2010-2019 decade in the USA may be virtually non-existent or even negative, where even, say, some millions of new jobs created in green energy would be more than offset by job losses in other areas resulting from increasing productivity (if overall demand for more goods and services does not significantly increase during that time, an issue discussed further below).

These views stand in contrast to mainstream economic thought, which views productivity increases in general as a net benefit to workers in the economy. When creative destruction eliminates jobs in a certain sector due to innovation, the resulting available labor is put back to work in new jobs in a different sector. This may require education or re-training of workers. A jobless recovery may result in the short term due to the delays caused waiting for innovation and expansion in growth industries and retraining of workers. In the long term, this process is considered to raise real incomes or at least the standard of living for all workers, or alternatively leave more time for leisure through shorter work weeks.

However, this benefit from productivity assumes prosperity is generally shared, and that many workers are not left out of this prosperity for some reason like skills, talents, age, academic certifications, or other personal aspects. Averages may go up while many individuals lose out. The increasing rich/poor divide in the USA seems to reflect this. In general, better paying parts of the new economy requires higher levels of social skills, higher levels of abstract reasoning ability, higher levels of verbal fluency, higher levels of creativity, higher levels of competitiveness, higher levels of comfort with computer technology, and higher levels of parental investment that not everyone has. This helps explain why social mobility in the USA is at an all time low, even below that of Europe. Many jobs without such high skill requirements are potentially more easily automated.

For example, the workforce of the United States at the time of its founding was almost entirely employed in subsistence agriculture. After more than two centuries of technological advances, in 2007, only about 1% of the workforce was employed in "farming, forestry, and fishing". Instead of becoming unemployed, these workers moved into manufacturing jobs created by the Industrial Revolution. As manufacturing has moved to other countries due to globalization or increased productivity allowed domestic companies to produce more with less labor, instead of becoming unemployed, many workers have moved to the service sector, which accounted for 78.5% of the U.S. economy in 2008. The increase in productivity has made it possible for people with jobs to have access to a wide variety of consumer goods and services that would have been unavailable or extremely expensive if over 90% of the workforce was busy with agriculture, and has drastically reduced the percentage of worker income spent on food.

However, many people who would like to be farmers or manufacturers no longer have the chance to do that for a living, and have been forced to seek jobs in other areas they may like less. In general, someone who enjoys working by using their hands and mind together may be forced to do something else they don't like as much, to a possible large loss in job satisfaction, assuming they can stand, say, a bureaucratic job at all.[39]

Also, total working hours during the week have continued to shrink for many jobs throughout those changes (even as some jobs have been exceptions). One can ask how far this trend to declining hours will go, and if the remaining work hours will be spread evenly or whether some people will work a lot and some will work none at all. In general, people need food and manufactured goods much more than most services, and so this shift to a mostly service economy has also introduced a much greater volatility in the economy where desirable but optional services like restaurant meals, nail salon pedicures, or even high end investment banking services can be cut back on relatively easily; the current contraction in the economy surprised most economists for both its speed and depth, with industry after industry suffering a domino effect of cutbacks in jobs that fed upon itself.

But, even with a successful shift to mainly services, to maintain full employment, an economy has to create new jobs to replace the ones that have been automated, since competition and continual improvement is a key aspect of a free market economy. Marshall Brain and others like Hans Moravec and Ray Kurzweil suggest robots, AI, and other automation can more and more easily fill many of the new jobs that get created, a trend that will only accelerate as robotics and artificial intelligence continue to improve. Also, a rise in free works developed by professional amateurs also displaces paid work. An economy with rising productivity also has to have rising demand per capita to balance the increased production, but for many things like housing, energy use, or media consumption demand may be limited per capita or may grow more slowly than exponentially rising productivity (driven in part by Moore's law and falling prices for computers and automation). Easy access to entertainment and education through the internet and computers -- effectively for free after an initial fixed cost for computing equipment -- has also has reduced demand for other services, simply by occupying people's time that might otherwise be spent in other paid-for pursuits like traveling or bowling. The internet also reduces demand for goods and services by supplying information that might otherwise require hiring experts or buying products. The internet also helps people make more satisfying purchases at a lower cost through product reviews produced by global social networking, also potentially reducing overall demand.

Psychologists have refined ideas like Maslow's hierarchy of needs that suggest increasing material abundance only increases happiness up to a point. Services may still be of interest, but more and more, the thing people want to do after meeting basic material needs is to meet needs for being social, for esteem, and for self-actualization, which can often be met at low cost through interacting with neighbors face-to-face or online, being recognized for gifts to the commons, and by being creative in some way. This suggests demand for most paid services is ultimately limited, except to the extent they support these things; so, for example, people might more and more be buying paints and canvas but not finished pictures.

The law of supply and demand suggests that if the potential labor supply is high (like from increasing unemployment in a recession or jobless recovery), and if the demand for labor goes lower from increased productivity coupled with limited overall desire for more goods and services, then wages will feel significant downward pressure, even for the jobs that remain. But, lower wages mean less purchasing power, which lowers demand further still, in a downward spiral. In the past, this downward spiral has been stopped in various ways by creating higher economic demand (like by low interest loans, increased advertising, and even exhortations to shop as a "patriotic duty".[40]). At best, all that has been managed with all this increased consumption is to hold the line on falling wages given increased productivity. But the productivity has been increasing exponentially. Our society has never before faced a deep recession with so much advanced automation to continue putting downward pressure on wages for so many jobs.

This decrease in demand has also been happening in the context of a general growing environmental consciousness that advocates voluntary simplicity and consuming less. There are other trends as well causing people to question key aspects of our economic system (like wars, fraud, bailouts, inequities, foreclosures, and even the fact of rising unemployment itself). Taken together, there is the potential from all these trends that our economy may even "implode" as it transitions to some new paradigm as predicted back in 1985 by Bob Black.[41]

So, if productivity rises faster than demand, then one would expect falling prices and increasing unemployment. Could we just stop increasing productivity somehow? But without continual innovation, including increasing automation to lower production costs, profits in a market-driven economy will fall to zero through competition, and the profit-driven market place would freeze up. So this problem of a permanent jobless recovery may be inherent to real economies at some stage (as opposed to theoretical ones with infinite demand), with a jobless recovery reflecting essentially a divide by zero error in mainstream economic thinking, with costs trending to zero as productivity greatly exceeds demand. Moving beyond this divide-by-zero error might require some sort of post-scarcity economy.

However, many mainstream economists might simply reply that the above is an example of the "lump of labor fallacy", and that limited demand is a not possible based on their views of human nature and so demand for human labor is indeed infinite. Professional economists are, for the most part, mathematicians of a sort. It might seem to make more sense to listen to psychologists, anthropologists, and sociologists than mathematicians about human nature, assuming human nature can be defined at all. Still, even if demand was potentially infinite like most economists suppose, and thus always growing faster than capacity, that lump of labor fallacy has nothing to say about robotics and automation once they exceed human abilities in the workplace at a lower cost. How to reconcile these two opposite positions remains contentious. But for mainstream economic predictions to be valid, two things have to be true: demand has to be effectively infinite, and robots and artificial intelligence must never equal the ability of most human workers for workplace tasks at a similar overall cost. We seem to already see evidence of both these assumptions by mainstream economists being wrong in restricted areas (like demand for housing has fallen off, and robots can paint cars better than people), but even then, the implications are not yet fully clear if these trends will generalize or how quickly they would do so.



Almost all mainstream economists failed to predict the current economic downturn; many people, including some professional economists, are now questioning in general the value of mainstream economic models for dealing with unusual situations past the boundaries of those models' assumptions.[42][43]

Or as was suggested in a New York Times entitled "They Did Their Homework (800 Years of It)":



"But in the wake of the recent crisis, a few economists -- like Professors Reinhart and Rogoff, and other like-minded colleagues like Barry Eichengreen and Alan Taylor -- have been encouraging others in their field to look beyond hermetically sealed theoretical models and into the historical record. "There is so much inbredness in this profession," says Ms. Reinhart. "They all read the same sources. They all use the same data sets. They all talk to the same people. There is endless extrapolation on extrapolation on extrapolation, and for years that is what has been rewarded." "



[ 44 ] :

Beyond revisiting the past, economists may need to look to future-oriented ongoing research as well, but this is not without other risks. Any predictions about the future are fraught with possibilities for mistaken assumptions or conclusions. The "Beyond Current Horizons" project had this to say in its 2009 final report

"Technological change is having a dramatic impact on the structure of employment as well as many other aspects of the way work is conducted. [The internet and computer technology] in particular has revolutionised the way business is done, created new markets and offered the possibilities for people to exert much more control over their working lives. It seems certain the pace of change will continue if not accelerate. However, it is important to recognise that just because something is technically possible does not mean that it will inevitably happen. As Baldry (2008) emphasises, outcomes are shaped by social and economic considerations and constraints. Simple extrapolations based on technological determinism, and based on the false idea of a fixed "lump of work", have resulted in many previous projections of the impact of technology on employment looking very silly... In the 1970s for example the doomsters predicted the collapse of employment and the paperless office would be the prime outcomes of the coming ICT revolution (see, for example, Jenkins and Sherman (1979)). Both were far wide of the mark. This does not mean to say that developments over the next decade or two will not have profound implications for employment and the world of work, but it does illustrate the dangers of simple extrapolation, taking no account of social and economic behaviour and the power of markets to adjust to new circumstances."

So, there remains uncertainty about what the future will hold, including how any potential benefits of ever more advanced technology will be distributed to all people somehow. Alternatively, we can consider how those benefits might be wasted like by creating artificial scarcity (such as through war or excessive bureaucracy) to make the facts of increasing abundance and limited demand fit economic theories based around scarcity and unlimited demand, and thus maintain full employment in a conventional way. Still, from a mainstream economics perspective, none of this alternative perspective is needed as the market will correct itself -- except when it does not, as admitted in 2008 by Alan Greenspan.[45] [46]

One can look at any list of robot videos to see the state of the art in robotics circa 2009.[47]



Taken together, the videos like in the referenced list show robots doing things like throwing and catching a cellphone, driving across rural countryside and in urban settings, doing domestic duties like laundry, walking around moving obstacles on the floor, cleaning floors, performing military duties, assisting in police duties, walking across rugged terrain, pruning grape vines, milking cows, cleaning barn floors, assisting with surgery, laying undersea cable, exploring Mars, building cars in factories, mowing a lawn, printing 3D parts, and even performing autopsies. That state of the art suggests Marshall Brain may be right about robotic trends, given even just the current robotic capabilities which are not yet in widespread use. A broad interpretation of Moore's law, along the lines of Raymond Kurzweil or Hans Moravec, in the context of continued economic and military competition, suggests that in ten to twenty years, robots will be capable of ever more amazing feats at ever lower costs. Apparently, even just the robots we currently have now could remake big parts of the employment landscape without much further improvements. But, the table above shows jobs are already not keeping up with population growth. If these trends continue, without some form of a basic income or other structural changes, our current economic system may completely collapse, as Marshall Brain predicts.

If those automation trends continue, the main jobless recovery issue would then become more and more what the Triple Revolution memorandum suggested was happening in 1964, but which has been slower to play out than they expected:



The fundamental problem posed by the cybernation revolution in the U.S. is that it invalidates the general mechanism so far employed to undergird people's rights as consumers. Up to this time economic resources have been distributed on the basis of contributions to production, with machines and men competing for employment on somewhat equal terms. In the developing cybernated system, potentially unlimited output can be achieved by systems of machines which will require little cooperation from human beings. As machines take over production from men, they absorb an increasing proportion of resources while the men who are displaced become dependent on minimal and unrelated government measures -- unemployment insurance, social security, welfare payments. These measures are less and less able to disguise a historic paradox: That a substantial proportion of the population is subsisting on minimal incomes, often below the poverty line, at a time when sufficient productive potential is available to supply the needs of everyone in the U.S. The existence of this paradox is denied or ignored by conventional economic analysis. The general economic approach argues that potential demand, which if filled would raise the number of jobs and provide incomes to those holding them, is underestimated. Most contemporary economic analysis states that all of the available labor force and industrial capacity is required to meet the needs of consumers and industry and to provide adequate public services: schools, parks, roads, homes, decent cities, and clean water and air. It is further argued that demand could be increased, by a variety of standard techniques, to any desired extent by providing money and machines to improve the conditions of the billions of impoverished people elsewhere in the world, who need food and shelter, clothes and machinery and everything else the industrial nations take for granted. There is no question that cybernation does increase the potential for the provision of funds to neglected public sectors. Nor is there any question that cybernation would make possible the abolition of poverty at home and abroad. But the industrial system does not possess any adequate mechanisms to permit these potentials to become realities. The industrial system was designed to produce an ever-increasing quantity of goods as efficiently as possible, and it was assumed that the distribution of the power to purchase these goods would occur almost automatically. The continuance of the income-through-jobs link as the only major mechanism for distributing effective demand -- for granting the right to consume -- now acts as the main brake on the almost unlimited capacity of a cybernated productive system.

One may ask why the Triple Revolution memorandum was off in its predictions by several decades.[48] There are a several possible interacting explanations:

Amara's law, suggest by Roy Amara and elaborated on by Ray Kurzweil in his Law of Accelerating Returns [ 49 ] , suggests "We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run". So, while the people writing the memorandum saw the trends in automation, they did not realize that they were exponential, slow at the start, and the faster at the end.

, suggests "We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run". So, while the people writing the memorandum saw the trends in automation, they did not realize that they were exponential, slow at the start, and the faster at the end. Increasing demand (up to a point). Demand for goods and services has increased in the USA. As Professor Juliet Schor points out in her 1993 book, "The Overworked American: The Unexpected Decline of Leisure", due to rising productivity per hour worked, Americans could (in 1993) have been working only four hour days to achieve a 1940s lifestyle (and only two or three hour days by 2009), but instead they were working ten hour days to have more stuff (bigger houses, more cars, more electronics, and so on). This was both because they wanted it and, unlike in Europe, there were not taxes and regulations to shift wealth from individual pursuits to community pursuits (like support for arts or mass transit or a social safety net) to prevent a social trap related to conspicuous consumption. As suggested above, this trend may have finally run its course for many healthy people in the USA, perhaps even beyond diminishing returns, to the point of negative returns (like big houses with big lawns create social distance that diminishes community). Suniya S. Luthar has written about this in "The Culture of Affluence: Psychological Costs of Material Wealth" [ 50 ] [ 51 ] .

. While the USA had a lot of material abundance in the 1960s and later, the rest of the world did not. Increased global growth has provided many export opportunities in the USA, although that growth trend for the USA has reached its end, given the USA is now importing a lot of stuff and otherwise offshoring jobs now that the global economy has reached parity in many areas. However, continued global growth up to current US levels of consumption will still increase demand for jobs for a time in other countries, until those countries as well hit a law of diminishing returns. Hans Rosling has "Gap Minder" projections for the rest of the world reaching current US levels of consumption in a few decades, and shows how many have already surpassed 1960s levels of US consumption.

The USA has engaged in numerous wars abroad since the 1960s (the general Cold War with the USSR, and also wars in Vietnam, Iraq, Afghanistan, and also numerous smaller interventions), each of which have served to burn up US abundance (as well as abundance in the other countries). While the Triple Revolution memorandum suggested wars were getting too horrible to fight given nuclear weapons, it seems that countries have, so far, found ways to fight non-nuclear wars at a continuing low level of intensity enough to remove a lot of prosperity and create military jobs. How long that trend to contained wars continues is hard to predict; the Bulletin of Atomic Scientists still keeps up their Doomsday Clock, currently at six minutes to midnight, compared to 12 minutes to midnight when the memorandum was written.

Incarceration in the United States has increased enormously, to rates far higher than any other industrialized nation, thus creating a lot of jobs and taking many people off the unemployment roles (at a great social cost); some of this has been driven by the drug war; some is linked to increasing social dysfunction from economic inequality.

Increasing mental health issues like depression and autism, and increasing physical health issues like obesity and diabetes and cancer, all possibly linked to poor nutrition, stress, lack of exercise, lack of sunlight and other factors in an industrialized USA (including industrial pollution), have meant many new jobs have been created in the health care field. So, for example, coal plants don't just create jobs for coal miners, construction workers, and plant operators, they also create jobs for doctors treating the results of low-level mercury pollution poisoning people and from smog cutting down sunlight. Television not only creates jobs for media producers, but also for health care workers to treat obesity resulting from sedentary watching behavior (including not enough sunlight and vitamin D) or purchasing unhealthy products that are advertised.

An aging Baby Boomer population in the USA has increased the need for other services.

Some unions and other groups (including some radical environmentalists) have fought against all forms of automation and other forms of advanced technology, rather than focusing on directing where the fruits of automation go or guiding what sorts of innovations are worked towards.

The much slower pace of the civil rights movement in spreading to other areas of society than expected.

The movement of women into the work force increasing formal economic jobs greatly as the volunteer sector of the economy diminished and other social dysfunctions (like teen pregnancies) increased given less time by individuals for community participation (essentially, many women abandoned their unrecognized but essential social roles, but men did not take up the slack).

Increased schooling expectations (for example jobs that once done by people without even a high school diploma like child care now may require a graduate degree as a qualification) have led to an increased number of jobs in teaching as well as kept young people out of the labor market. Professor David Goodstein in his "The Big Crunch" essay suggests an exponential growth trend in academia also continued into the 1970s, but has ended now, leading to an oversupply of people with PhDs and other advanced degrees relative to the needs of academia. This has led to some of the inflation of academic requirements for various jobs given the oversupply of people with degrees, which in turn has led to even more schooling to get a degree, as a form of academic certification arms race.





Aspects of how all these negative activities can create jobs were parodied in a scene with the character Zorg breaking a glass in the movie The Fifth Element[52].



However, to build an alternative to the worldview of Zorg built around the Parable of the broken window, a mythology of scarcity, and a desire for control through hoarding and hiring and firing, may require thinking differently about economics than mainstream Keynesian economics or even Neoliberalism, given all these other trends toward abundance (especially given the potential for things like automation, robotics, artificial intelligence, better materials, better design, and volunteerism to replace most paid human labor).

Taken together, these and other factors help explain why the Triple Revolution memorandum was ahead of its time in predicting the falling employment trend we only now in the table above, appearing decades later than predicted. It has taken decades because many of the trends in the predictions have only recently accelerated in the past decade or two in an exponential way (like improved robotics and improved internet-mediated communications). And it is taking decades for the trends holding back the predictions (like increasing incarceration or increasing health problems) to play out (and many of these negative trends, from increased incarceration, increased pollution, lack of vitamin D, obesity, and so on, are now being actively addressed by society, and so presumably will not continue to grow much, although new issues may arise). So, the reasoning behind the Triple Revolution memorandum about structural unemployment such as reflected in a jobless recovery may now be more relevant that ever, even if some of its specific suggestions for social reform and infrastructure reform may now be out of date.





Possible Cures

Here is a list of possible ways to deal with joblessness.[53] Some "cures" emerge mostly on their own; some require political action to start or to prevent. This list is intended to be complete in order to help in understanding the interaction between social changes and job creation; not all possibilities are desirable by most societies. The ones in the first half of the list (like wage subsidies, a shorter work week, or a basic income) in general would usually be considered more positive and adaptive responses than the ones in the second half of the list (like war, escapism, and luddism), although actual preferences or ordering of desirability and acceptability may vary depending on political beliefs and feelings about things like government intervention and taxation. Many of the items in the second half of the list have profit-making aspects for some individuals within the current economic system, although usually directly at the cost of others in society (like crime). Not all items on this list are compatible with each other. Not all might be considered moral or would be legal under international law or existing trade agreements. Some of these "cures" create new jobs (like public works), others make it easier to survive without a job (like frugality), others eliminate the unemployed individuals from the official statistics in various ways (like prisons), others in some way destroy abundance which has a side effect of creating jobs to build it back up (war), and some allow someone unemployed to take a job that someone else was doing but who no longer can do the job anymore for various reasons (like mandatory retirement). Some of the "cures" that help individuals survive without a job may actually increase the unemployment rate as they reduce demand for items in the market place produced by paid employment, contributing to overall increased joblessness even as the individual may be helped locally. Because these items may interact in unexpected ways, and people have many different feelings about them as different groups may benefit or be harmed in different ways, and many vested interests are involved, it is challenging for any economist, political scientist, politician or private citizen to make sense of all these issues or to pick a best way forward, even though people are trying in various ways to do that.[4] New approaches in social science involving computer simulation and agent-based modelling may also help in understanding the way these issues interact to gain insight into them.[54]





Do nothing

The default is always to do nothing. One can hope that the job market corrects itself somehow. In the meantime, one can stand back and watch while individuals without jobs fend for themselves in some way, like live off their savings, grow gardens for food, become homeless, move in with relatives who still have jobs, rely on local charities, or do something else they can on the rest of this list. Some have suggested that doing nothing is often justified by blaming the victim. Victim blaming is a powerful human psychological bias that protects people from painful or disquieting facts by shifting the blame for those events onto the people suffering from them, thus alleviating guilt. Often downturns in the economy are accompanied with seemingly inexplicable rises in right-wing political parties, even among those whose jobs are in danger and would not rationally benefit from laissez-faire policies. There are powerful psychological motivations for this: leaders who accuse the impoverished or jobless of moral laxity, laziness, or incompetence can ease the feelings of doubt and helplessness in the populace that has not been relatively impoverished. The English Poor Laws denied charity to the 'unworthy poor'.[55][56] Infamously, in 1981 the Secretary of State for Employment Norman Tebbit, told the unemployed of England's Early 1980s recession to "Get on their bikes." This may have been a misquote, but was widely accepted as characteristic of the government's policy at the time. The Thatcher government was seen to be blaming the millions of industrial unemployed for living in the rapidly de-industrializing north of England, and criticizing them for not migrating en-mass south to London. This was a far-fetched and unworkable solution, but it was a vote winning attitude among people living in the financial-service based London economy; they were relatively unaffected by the de-industrialization of the north, see North-South divide (England). [1] Victim blaming creates a sense of moral superiority and invulnerability among those who have not yet suffered in the economic downturn, and prevents action to halt further job losses. As Harry S. Truman said, "It's a recession when your neighbor loses his job; it's a depression when you lose yours."

Another justification for doing nothing assumes that markets display spontaneous order, as argued by Friedrich von Hayek. However, "spontaneous order" is a theoretical assumption that draws on quasi-mystical arguments based on "self emerging complexities" or "nature correcting itself". Libertarians argue that markets are complex systems and if left to their own will naturally self-correct. In reality, complex systems -- like organisms -- frequently fail to self-correct: death being the most obvious example, but other examples are dehydration, excessive fever, infection, and cancer. The second law of thermodynamics proves that all complex systems will collapse into disorder without constant external input, and by-definition can never be self-correcting in isolation, see Entropy. In practice, these justifications may be examples of anthropomorphism: attributing consciousness to objects, or groups of objects, that cannot possess them. Science historian Robert Nadeau develops a related theme in his book "The Wealth of Nature: How Mainstream Economics Failed the Environment".[57] He suggests Adam Smith's "invisible hand" metaphor for forces associated with the operation of the "natural laws of economics" was predicated on assumptions from eighteenth-century metaphysics and that the creators of neoclassical economics incorporated this view of the "lawful" mechanisms of free-market systems into a mathematical formalism borrowed wholesale (and inappropriately) from mid-nineteenth-century physics. Harvard Professor of Divinity Harvey Cox writes in "The Market as God" (The Atlantic, March 1999) [58] that the "Do Nothing" philosophy is connected to a rising tide of theological thinking in economics; he suggests the new "economist-theologians" have created an economic theology "comparable in scope if not in profundity to that of Thomas Aquinas or Karl Barth" which suggests that human interventions in the economy are ineffectual since the free market takes on the divine properties of omniscience, omnipotence, omnipresence, and omnibenevolence; he cites Alan Greenspan's testimony to the US Congress in 1998 against regulation of financial markets after the 1997 Asian Financial Crisis as an example of a true believer increasing in faith after adversity. Alan Greenspan's comments a decade later show a shift in his faith somewhat, referenced above as "Alan Greenspan Destroys Deregulation in 16 Seconds".[45] [46]

The Do-Nothing or Laissez-faire solution was blamed, in part, for the Great Depression. Most economists believe that doing nothing, caused a vicious circle; where the millions who lost their jobs were unable to sustain their consumer spending, and the loss of those consumers in turn causing a loss of revenue for businesses and leading to further job losses. After years of collapse, John Maynard Keynes formed a consensus that the government would have to step in to break the downward cycle. That interpretation has been under attack since the 1980s. A new generation of Laissez-faire theorists emerged and doing nothing again became fashionable under the Washington Consensus. They are credited with ending the stagflation crisis of the 1970s. However, there have been subsequent crises Argentine economic crisis (1999-2002), 1997 Asian Financial Crisis, Financial crisis of 2007-2010, and the free market "Shock Therapy" employed disastrously in Russia in 1991, see the Economic history of the Russian Federation, and again, even more disastrously, in post-invasion Iraq, see Economy of Iraq. The do nothing policy (or extreme deregulation policy) has neither predicted nor averted these crises, in fact it is alleged to have either caused them as in Russia and Iraq or exacerbated them as in Argentina. This has driven the 2008-2009 Keynesian resurgence, it is too early (at the beginning of the second decade of the 21st century) to know if these policies will again have the successful outcome they produced in the 1950s. But the Keynesians argue that doing nothing will certainly result in a double dip recession. And people like Marshall Brain, Jeremy Rifkin, Alvin Toffler or others argue we need much broader changes in our society to deal with ongoing technological changes that are slowly but inexorably changing the fundamentals of global economics, which may be interlinked with a "global mindshift".



Temporary support to the newly jobless

Temporary payments from the government like unemployment insurance and retraining funds can help people for a time, as can severance pay from the employer. When an economy is growing, these may be enough for routine unemployment. In a major recession with long term structural unemployment, such benefits may be rapidly exhausted before new work is found, at which point other options may need to be considered by the individual or society. Note that the self-employed usually do not receive such benefits. Neither do those in the informal sector of the economy if they lose their "off the books" work.

Family and friends

Family members or friends with jobs will often help relatives or friends who have lost a job by letting them move in and feeding them. One can just say that is the social safety net. In the past that worked for many, and it is an increasing trend for the current Great Recession.[59][60][61]

Charities and private donations

Local charities funded by private donations, like soup kitchens, food pantries, and homeless shelters can feed and house jobless people, assuming they have sufficient donations. National and global charities can help fund local initiatives or help create innovations to feed and house the jobless more cheaply or in a more pleasant way.

Government public works

Government public works can be initiated like in the 1930s during the Great Depression using public dollars to rebuild infrastructure and otherwise employ people in fields that have some public component like the arts, research, or medicine. Given the free culture movement, the government could pay writers, musicians, and programmers to create new free and open source digital works. These public dollars could come from a variety of sources such as taxes, printing the money (which can be non-inflationary if it matches the increase in money supply needs in the economy), borrowing the money, expecting fees for public services produced, and/or from selling or leasing government assets like land or broadcast spectrum.

Government subsidies to the private sector

Government subsidies to the private sector for new job creation can be started. For example, a state can supply a direct wage subsidy for new hires or allow a tax credit for new jobs created.

Buddhist economics

There could be the adoption of "Buddhist Economics" social policy as suggested by E.F. Schumacher. This would be where full employment of everyone who needs a job with a job suited to their talents, interests, and personal growth is a stated societal goal. Other economic goals like minimizing labor costs would then be subordinate to it. Countries with more centrally planned economies like the old USSR had aspects of this as a stated goal, as a right to a job, but they may have lacked other aspects of Schumacher's idea about the quality of the jobs or other values.

Natural resource economics

Natural resource economics is a transdisciplinary field of academic research within economics that aims to address the connections and interdependence between human economies and natural ecosystems. Its focus is how to operate an economy within the ecological constraints of earth's natural resources, usually with a concern about social equity. The relation of natural resource economics to increasing employment is discussed in more detail in the separate section below on a resource based economy. Essentially, the creation of good jobs (or otherwise preserving individual health) can be weighed in numerical equations along with other resource-related factors (like preserving the health of a watershed) in making broad economic plans including, if needed, regulation, taxation, subsidization, and redistribution of resources. A broad interpretation of this field includes efforts to move beyond money entirely as the main way to decided what is worth doing, and instead base decisions on current physical possibilities and the effect of those decisions on future physical possibilities.

Economic research

Since mainstream economists failed in both predicting and preventing the Great Recession and a subsequent jobless recovery, it might make sense for governments, businesses, charities, and individuals to fund and participate in extensive new research into improving the science of economics in a variety of ways, incorporating ideas from other areas like anthropology, cybernetics, biology, sociology, psychology, mechanical engineering, comedy, and religion. This research could involve physical experiments, action research, computer simulations, and theoretical work. For example, new experimental sustainable cities could be built in different areas, each to be organized around a different economic approach somehow, each as a Special Economic Zone. Different states could experiment with different economic models related to taxation and social benefits to see which ones worked well. Many new computer simulations could be developed to explore alternative economics themes to gain new insights into the implications of economic assumptions, values, and techniques. People from unusual backgrounds could be recruited into mainstream economics programs for new perspectives. For example, a person with field experience in anthropology could study mainstream economics to promote interdisciplinary cooperation and cross-fertilization, or a Mime artist could be asked to give a one hour lecture on mainstream economic theory. Given that humor is linked to creativity, current professional comedians could be trained in mainstream and alternative economics and invited to spend a year on faculty at top-ranked economics departments; historically, the role of court jester has been an important one in places where free speech and dissent are otherwise not allowed; physicist Jeff Schmidt suggests in his book Disciplined Minds that academia is often such a place, as does Noam Chomsky[62].

Humor

Beyond improving creativity and an ability to see situations from multiple perspectives, humor has also been linked to decreasing stress, living longer, increasing social connectivity, and increasing optimism (which may lead to more demand for goods and services). In difficult times, there is a demand for motivational speakers, and people with what may be seen as worthless economics degrees could learn to give motivational stand-up comedy sketches as Brett Leake retrained to do, a comedian with muscular dystrophy who joked on the Tonight Show about his disability being "a degree in Economics".[63] Also, CEOs prefer to hire people with a good sense of humor.[64] During the Great Depression, screwball comedies became an important way to uplift the public mood and spirit.[65] As President John F. Kennedy said: "There are three things which are real: God, human folly, and laughter. The first two are beyond our comprehension. So we must do what we can with the third."

Optimism and thanksgiving

Optimistic people tend to start more businesses, hire more staff, borrow more money, and purchase more goods and services. Beyond through humor, optimism can be increased by positive media like science fiction that envisions a happy future, political speeches that encourage people, prototype demonstration projects like EPCOT Center or the Venus Project, positive psychology, and positive spirituality that focuses on thankfulness and abundance. An attitude of regular thankfulness encourages optimism. Ideas from other more optimistic and thankful cultures can be explored; for example, as Native American author Jamie Sans writes:[66]

The Field of Plenty is always full of abundance. The gratitude we show as Children of Earth allows the ideas within the Field of Plenty to manifest on the Good Red Road so we may enjoy these fruits in a physical manner. When the cornucopia was brought to the Pilgrims, the Iroquois People sought to assist these Boat People in destroying their fear of scarcity. The Native understanding is that there is always enough for everyone when abundance is shared and when gratitude is given back to the Original Source. The trick was to explain the concept of the Field of Plenty with few mutually understood words or signs. The misunderstanding that sprang from this lack of common language robbed those who came to Turtle Island of a beautiful teaching. Our "land of the free, home of the brave" has fallen into taking much more than is given back in gratitude by its citizens. Turtle Island has provided for the needs of millions who came from lands that were ruled by the greedy. In our present state of abundance, many of our inhabitants have forgotten that Thanksgiving is a daily way of living, not a holiday that comes once a year.

A deeply optimistic belief in abundance and thanksgiving may have many implications for structuring a society, as anthropologist Marshall Sahlins suggested in his theory of the original affluent society, which echoes Jamie Sans' point from an academic perspective. Author James P. Hogan also echoes this point from a sci-fi perspective in his novel Voyage from Yesteryear, where a post-scarcity society based around a gift economy emerges in part due to beliefs about abundant energy resulting from advanced theoretical physics and abundant material goods and services resulting from advanced automation.

Basic income

A "basic income" is the idea that everyone in a society would get enough to live on every month as a check from the government without any requirements to prove financial need. The Alaska Permanent Fund is an example of a partial basic income for residents of Alaska. See the section below on Implementing a basic income. In summary, it would take about one half the US GDP to give everyone US$1500 a month (plus health care) to live from, and the other half of the GDP would motivate some people to provide the goods and services everyone would buy. If automation increased and less jobs were available, people would still have their basic income, and taxes could be adjusted to ensure the benefits of automation were being widely distributed. A basic income may also address other social issues related to power imbalances between men, women, and children.



Local subsistence

Individuals, families, and communities can work towards improved local subsistence like with 3D printing and organic gardening. Essentially, individuals can produce for their own needs outside the marketplace. Government and charities might help with this, like by supporting the development of more educational materials about organic gardening, or supporting research into flexible local manufacturing on a home-scale (like an improved RepRap).

Gift economy

Individuals and organizations could shift more of their production and consumption to a peer-to-peer gift economy. Wikipedia itself and Debian GNU/Linux are examples of this, where many peers do what they can to create a digital commons where all can draw from as they need. In the physical world, groups like Freecycle and others organize people through the internet to give away physical items they no longer need. Farmers may give away unsellable crops that would otherwise spoil to local food pantries or neighbors. In the service world, people can supply pro-bono services in relation to law or dentistry to those in need (this is easier to do when the services have no material costs) when they might otherwise have no paying clients. See the section below on Achieving a gift economy for more details on how this might work if implemented on a large scale. A gift economy may also have other benefits, like making things like war less likely.

Shorter work week

Government can mandate a shorter work week. This has been tried in France with mandated shorter working time. This may increase costs on business to manage and train more workers. It may increase productivity with better rested and happier employees, or it may decrease productivity as people who might want to work more legally cannot. Job sharing is a related idea, and sometimes unemployment insurance programs may help support this for a time at higher levels of pay instead of a company laying off some workers who then go on unemployment (and have their jobs skills erode) and keeping some other workers on as full-time.[67] Some experts credit Germany's job-sharing practice called "kurzarbeit" (which literally means short work) and related government subsidies for helping maintain lower unemployment figures and preventing the loss of full-time auto-manufacturing jobs.[68]

Mandatory retirement

The government can enforce mandatory retirement at ever earlier ages.[69] This would probably need to be combined with some form of retirement package or basic income so the retiree could survive, or else they might become homeless after their savings were exhausted. Alternatively, government could encourage early retirement by lowering the age for retirement benefits, essentially expanding a basic income to a larger portion of the population in hopes they will stop working at paid labor.[70]

Making work fun

A society can collectively rethink work to be more fun so most of it is done as play, as suggested by Bob Black in his essay "The Abolition of Work", Theodore Sturgeon in his fictional writings like the story "The Skills of Xanadu", or Charles Fourier in his various writings. There have been attempts to use video games as a decentralized problem-solving tool, such as the case of Foldit. Changing the nature of work may then lead to other social transformations on this list.

Creating communitarian villages

Related to the above, people can create Charles Fourier's PhalanstÃ¨re buildings or other settings for intentional living with a different model of work. These could be either fun-based or some other model of communal sharing of work like a balanced job complex or something else. An emerging area or related ideas has been called communitarianism (as distinct from communisim). Building better local communities has been tried in various ways throughout the years to greater and lesser success. Historically, many monasteries and convents are examples, as are Israeli Kibbutzim; newer ideas are connected to ecovillages and co-housing. See the section below on towards a new localism emphasizing community for more examples. Such communities can either create jobs locally in informal ways (often connected to subsistence production) or they help people survive without jobs through goods and services that flow more through a social network than through direct exchange. During the last Great Depression, many city dwellers returned for a time to the smaller rural communities, families, and social networks from where they came.

Alternative currencies and barter

Communities can create alternative currencies like the Ithaca Hour. They can create other types of Local Exchange Trading Systems (LETS). They can promote or tolerate other informal forms of exchange like barter which help people without money still get their needs met if they have some good or service to offer directly in exchange. Alternative currencies and LETS systems can help create jobs in a few ways. Local currencies increase the overall money supply in a community, which can have similar local effects to increasing the national currency supply in terms of job creation through making possible increased exchange of goods and services by willing parties who simply lack currency to complete transactions and can't work out direct barter arrangements. Another benefit of increased currency supply is it makes possible increased borrowing from the LETS group to make purchases that would otherwise be deferred (and so directly creates demand). Borrowing LETS currencies to help start businesses may in turn create more local jobs. Another way local currencies create jobs is that they act as a form of local protectionism for local jobs at local merchants (since currency can generally be only spent locally). Local currency systems in the LETS tradition may also be somewhat more forgiving of debts (essentially making a quasi-bankruptcy easier if a person owing LETS currency units leaves the area); while not everyone agrees with this sentiment, LETS proponent James Taris suggests about LETS obligations, "... these are really only favours anyway ... members helping other members in a time of need. ..." (and suggests a debit limit be set).[71] LETS systems may also employ local people directly in their administration. Like all currencies, local currencies can potentially have issues with inflation, deflation, debt bubbles, or counterfeiting. On a state level, California in 2009 began to issue what some call the equivalent of an alternative currency in the form of IOUs; however this was not done as a part of a LETS system and did not encounter immediate widespread local acceptance.[72] During the Great Depression, hundreds of communities circulated their own temporary currencies.[73] Benjamin Franklin has been claimed to have said that the prime cause of the American Revolution was the British outlawing the ability of the American colonies to print their own alternative currencies which thus caused a depression.[74]

Rationing

A government can institute more formal rationing not necessarily connected to money. One good example is the rationing in the United Kingdom of food during WWII where overall UK citizens became healthier during the war. One bad example of rationing was in North Korea more recently where in the 1995-1998 North Korean famine millions of North Korean citizens starved despite having ration coupons.

Frugality

Individuals and organizations can increase their frugality along the lines of "Use it Up, Wear it Out, Make it Do, or Do Without!" (a slogan from an old WWII poster). However, even if this helps people deal with having less money, it may further increase joblessness in other sectors of the economy whose goods and services are no longer purchased.

New frontiers

The opening of a new frontiers can create jobs dealing with new resources and new processes on the frontier. In the past, frontiers have been newly discovered vacant lands (or ones coquered through war). In the present, there remain new frontiers in cyberspace, nanotech, psychological innerspace, spirituality or perhaps something else. In the future there may be new seasteads in the ocean as The Sea Frontier and new habitats in outer space as The High Frontier. The government could encourage the creation of these new frontiers in various ways.

Reducing the minimum wage

A government could lower or eliminate the mandate minimum wage to encourage employment. A minimum wage would no longer be needed to assure a living wage if there was a basic income that already supplied a guaranteed minimum income, as above. Without a basic income, reducing or removing the minimum wage may just lead to a race to the bottom in wages and working conditions as workers fight over fewer and fewer remaining jobs if the alternative economic explanations like by Marshall Brain are correct.

Increased social benefits

A government can introduce social benefits like health insurance in countries where they are otherwise provided by as fringe benefits of employment. Right now, there is 