Commodity labor is losing its relative value and pricing ability in more advanced economies as capital has replaced such labor in many industries or labor segments. Robotics has replaced assembly line labor, information technology has replaced administrative and record keeping functions, computer graphics has even lowered the value of most motion picture actors. Then we have off shoring and more sophisticated labor planning and staffing to add to the mix. These trends started to accelerate in the 1990s which cause many workers to borrow against the future to maintain living standards assisted by low interest rates and inflated asset values (especially for housing). This could not be sustained, thus the 2008 financial downturn of which we are very slowly building our way out. It will take another five to ten years to reach equilibrium, in my view.



Meanwhile, economic planners should be retrofitting the economy for improved infrastructure, quality of life and other endeavors.



As far as interest rates, I have maintained that the Federal Government should offer liquid savings instruments to individuals tied to a social security number (to prevent gaming). The minimum interest rate should be set at two percent and the bonds may be cashed in at any time without penalty. The interest paid must be withdrawn from the account. The certificates should be tax free. This would put funds into the hands of income starved middle class savers. The only major DIRECT beneficiaries of low interest rates are governments (and rent seekers) and high income individuals who can borrow at low rates. This has contributed to income distortion which politicians so ably lament but do little to allay.