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<< Union Members Voted Against Arnie | Main | Burying the Bad News >> October 18, 2003Why the Jobless Recovery?A few high level views of what's behind the odd situation of continued "economic growth" (statistically measured) combined with continued high unemployment: From Morgan Stanley's Stephen Roach: I see it, what’s special is an increasingly powerful global labor arbitrage between domestic and foreign labor input that has given rise to a surge in offshore outsourcing. The result is a jobless recovery built on an increasingly tenuous foundation of “imported productivity.”...Or this from an interview with John Challenger, chief executive officer of Challenger, Gray & Christmas, Inc., an international outplacement firm in Chicago: A few months back, Challenger predicted that the job market would start bouncing back late this year.The message of these kinds of analyses is that the tech boom of the 90s was real; it's just that the jobs that fueled the deployment of the technology are less needed now that most companies bought their initial round of investments. And they are using that technology to eliminate older jobs that the technology made redundant, or using new communication technology to coordinate work overseas in ways that just would not have been possible before. All of this fuels more efficient production and nominal economic growth, but leaves Americans with fewer and often poorer paying jobs. Update: Louis Uchitelle argues the problem is just old-fashioned overcapacity: Not since the severe recession of the early 1980's has capacity use in manufacturing stayed so low for so long, government data show. Production as a percentage of total capacity fell precipitously in the aftermath of the last recession, which ended in 2001, and 23 months into the recovery, the upturn has still not come. On average, manufacturers are using less than 73 percent of their capacity. Posted by Nathan at October 18, 2003 02:09 PM Related posts:
Trackback PingsTrackBack URL for this entry: CommentsAn argument for socialism! As good or better than any I have seen so far! Posted by: Anon at October 18, 2003 05:22 PM Challenger's reference to Y2K seems to indicate that he is speaking specifically of computer technology as opposed to industrial automation. If so, then he cleary doesn't understand the role of computers in corporations. While new computer systems are regularly cost justified in terms of reducing expenses (i.e., labor costs ... they are more tangible), in twenty years of implementing such systems, I have never seen a single job eliminated by a new computer system. Quite the opposite in fact, especially on larger installations. Salaries tend to go up as jobs become more knowledge-based, and often staff is added simply to manage the new technology. This of course sounds like a contradiction (labor is more expensive so efficiency falls), but it is not. Where Challenger errs is in his implicit assumption that the pre-technology operation was already doing everything they needed and wanted to do, but this is hardly ever the case. Much that could have been done simply wasn't because of limited staff and high complexity. What technology does in these cases is to bring that complexity more in reach of lesser-skilled labor, and this provides a whole host of new opportunities to the corporation. Orders are filled faster. Complaints are more quickly resolved. New products and variations on old products are easier to introduce. Management never gets to see all those savings that were promised up front, but what they do get to see is something they like much better: profitable expansion. Of course, under this view, all that's left is Roach's view; that new jobs are being exported rather than created at home. While this makes for a better bottom line in the short run, it is quite unsustainable. Eventually, you run out of customers to buy your products. Posted by: Benedict@Large at October 18, 2003 08:24 PM Corporate america is creating hundreds of thousands of jobs, in India, Russia, and China. The conservative is ignoring this budding catastrophe in American employment(except for Lou Dobbs). Posted by: SteveC at October 19, 2003 10:20 PM is it possible that low-productivity jobs are being shipped overseas first, thus skewing american productivity numbers higher? Posted by: praktike at October 20, 2003 11:36 PM How come every state with socialist leanings(England, France, Germany) have higher unemployment, lower per capita GDP, and higher tax rates but lower per capita revenue than the US? The common example, Sweden, is a poor one - their debt rato is absolutely horrendous, far worse than the US. One of their own economists is quoted: "We've mortaged our future." This is about labor becoming global capital, able to between markets more readily. India and China, emerging economic powers, will continue to rise economically while the US will decline IF things remain as they are. The way the US will stay ahead of that curve is the same way we always have - continued innovation. It's no suprise that the two strongest economies in the world, Japan and the US, have the highest R&D budgets as a percentage of GDP (roughly 6-7%), while the European powers are somewhere around 1-2%. Socialism stifles innovation, guaranteeing economic decline. Posted by: Dominick at October 30, 2003 09:29 PM Domick-- you can ignore my posts on Sweden, but they do well for themselves. As for other countries like France and Germany, their median wages and benefits are HIGHER than in the United States on an hourly basis. This is a study from the mid-90s, but it shows that total pay and benefits for most European countries are higher than in the US. The only reason Americans make more is that they have to work longer hours and get fewer vacations-- hardly a testament to efficiency and reward. As for R&D, those numbers are pretty messed up, since they often miss the shopfloor innovation in favor of lab innovation. Posted by: Nathan at October 30, 2003 09:53 PM
ITS TIME FOR AMERICANS and the rest of Humanity to DEMOCRATICALY make decisions for all people, rather than for corporate bucks(profits!).. PEOPLE BEFORE PROFITS! The alternative to capitalism --> a socialist society where everything is democraticaly made FOR THE PEOPLE, AND BY THE PEOPLE... and an END TO CORPORATE GREED(ENRON, MICROSOFT, NEXTEL.. etc... ) Corporate America and its Cronies are KILLING our democracy! Public schools being PRIVITIZED so that corporations can make capital off of them, Healthcare for virtually NO one in the majority because its so freaking high!(Capitalism cares only for the FILTHY RICH and those who EXPLOIT THE masses). Enough said! I have said what I have to to those who are ENSLAVING the majority through CORPORATE OLIGARCHY. Posted by: Nadav Ben-Ami at November 7, 2003 11:50 PM
ITS TIME FOR AMERICANS and the rest of Humanity to DEMOCRATICALY make decisions for all people, rather than for corporate bucks(profits!).. PEOPLE BEFORE PROFITS! The alternative to capitalism --> a socialist society where everything is democraticaly made FOR THE PEOPLE, AND BY THE PEOPLE... and an END TO CORPORATE GREED(ENRON, MICROSOFT, NEXTEL.. etc... ) Corporate America and its Cronies are KILLING our democracy! Public schools being PRIVITIZED so that corporations can make capital off of them, Healthcare for virtually NO one in the majority because its so freaking high!(Capitalism cares only for the FILTHY RICH and those who EXPLOIT THE masses). Enough said! I have said what I have to to those who are ENSLAVING the majority through CORPORATE OLIGARCHY. Posted by: Nadav Ben-Ami at November 7, 2003 11:50 PM Even a philosopher gets upset with a toothache. Posted by: Quintal Anne at January 9, 2004 06:28 PM Suits and religions rupture if you force them on. Posted by: Samuel Alexandra at March 17, 2004 07:33 AM Don't give up, you are close. Posted by: Fischer Paul at May 19, 2004 04:38 PM Post a comment
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