Quote:
Originally Posted by knowledgeiskey
I was reading an marcoeconomics book, and the author, who is obviously an economist, said that economists mostly agree that structural unemployment is a good thing. In essence, structural unemployment means that technological advancement reduces scarcity, which ultimately increases society's living standards.
Agree?
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No, I don't. That's an incredibly obtuse statement by an economist, who doesn't even understand Economic development.
Historically, economies start as Zero Level Economies. This basic subsistence agriculture. You need every swinging dick out in the field participating in some form of food processing. Women and children
are working, too. So are the elderly
.
Your unemployment rate is effectively 0% in a ZERO Level Economy.
So, what causes unemployment?
Technology.
The lowly stick. The lowly rock. The marriage of the stick and the rock into tools that increase productivity, reducing the need for Labor --- don't forget that Labor is Capital.
In a ZERO Level Economy, this is not an issue, because excess Labor Capital is folded back into food production -- your daily caloric intake is moving from famine conditions to near-famine conditions to base-line to stable. That alone will increase Labor Capital over time, since people will live longer, and live healthier.
As you move through the stages or phase of a ZERO Level Economy, all of your excess Labor is folded back into food production. You're growing a variety of food crops to enhance life-style and living standards, hunting, fishing, trapping, and things related to that, such as using animal hides.
When you near the end of development in your ZERO Level Economy, Surplus Labor starts to pile up real fast.
What do you do with it?
That will depend upon the structural organization of society, culture, geology, geography, hydrology, topography, climate and other factors.
Understanding that is key to understanding why the world developed the way it did.
Some places on Earth are very hostile to development. There isn't one stinking navigable river in the whole of South American, sub-Saharan African and most of Southwest and Southeast Asia.
In order to engage in trade, you need a surplus of something, anything, and a method of transporting it safely and efficiently.
I can put my wheat on a flat-boat in Donau, Germany, sail to Passau on the other side of Germany, then through Austria, skirt Slovakia and the Magyar Republic, go to Novi Sad in the land of the Vojvodina, then to the land of Serbs in Beograde, through the Iron Gates to Craiova and Vindin and then out to the Black Sea -- I'll pass though literally hundreds of cultures and societies. You cannot do that in South American or sub-Saharan Africa or parts of Asia.
Taking my tarot or beet root to a neighboring community to trade for tarot or beet root isn't going to be very satisfying or developmental.
The way around Surplus Labor Capital in a ZERO Level Economy is by moving into the 1st Level Economy which is natural resource processing. However, to do that requires knowledge and education, and the ability to trade, plus all of the critical factors I mentioned earlier have to be in your favor.
In Europe, there were coal seams 3 foot thick sticking out of the side of hills. You have nothing comparable in South America, sub-Saharan Africa or Asia.
That 8-inch band of red stuff in the side of the hill? That's iron ore.
Iron is of no value if you don't have coal, or cannot produce surplus trade-goods to obtain coal.
Tin, copper, lead, silver and gold, you can smelt those with bitumens -- pools of tar -- heavy oils -- that sit on the surface in the Middle East and North Africa -- you don't have that in South America, sub-Saharan Africa or Asia.
Very obviously, many cultures in South America, sub-Saharan Africa or Asia were arrested in their ZERO Level Economy. Surplus Labor standing around usually ends up as a fighting force or raiding party....which shifts cultures and society to war-lord and warfare status.
Just showing why and how the world developed the way it did.
If the critical factors are in you favor, then you can take the Surplus Labor Capital from your ZERO Level Economy and advance into your 1st Level Economy.
From that point forward, it is technology that will create Surplus Labor Capital.
In order to absorb this Surplus Labor, you must advance to the next stage/phase of your current Economy Level
or advance to the next Level.
Your ability to do that, is dependent on the critical factors I mentioned.
The Surplus Labor Capital from your 1st Level Economy is absorbed by your move into the 2nd Level Economy; Surplus Labor Capital from your 2nd Level Economy is absorbed by your move into the 3rd Level Economy; and so on.
You are now in your 4th Level Economy, you have advanced through each phase/stage, and now
the only way to absorb your Surplus Labor Capital is to move into the 5th Level Economy.
Except you cannot do that.
Your entire education system from Kindergarten to post-Doc work is FUBAR.
If you implemented a massive reform program tomorrow, then it will be 20 years before you are ready to move into the 5th Level Economy, assuming that other States haven't beat you to it. Fortunately, there isn't a lot of competition right now....just China, Russia, the EU as a whole (but not as independent States) and other Asian States such as Japan and Korea.
Since Liberals will block any attempt at meaningful education reforms, 10 years from now if someones asks, "
When will the US move into the 5th Level Economy and absorb some of its damaging Surplus Labor?" the answer is:
A day + 20 years.
There is no way out of this. You could hinder or punish technology in an attempt to devolve to a lesser state of technology use, but that would be traumatic and result in a faster decline in Standard of Living than what you're already experiencing now, and will continue to experience over the next 30-40 years -- or longer.
Also, the claim that technology reduces scarcity is baseless and without merit. Technology has increased oil use, not decreased it, making oil scarcer, not more plentiful, and in spite of new recovery technologies, discoveries still result in a net loss of oil resources, not a net gain.
Another example would be medical technology, which has created scarce resources driving up the cost of those resources and the cost of medical technology, so his argument is circular.
Perhaps you could argue that short-term Structural Unemployment is beneficial if and only if you are ready to advance phases/stages or economic levels, but not over the long-term when economic development is stagnant.
Macro-Economically....
Mircea
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