this post was submitted on 27 May 2024
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"The economy is doing fine."
I saw this a few years ago and it has stuck with me.
"The economy isn't talking about me and you, it's referring to corporations and executives and shareholders and such."
The economy could be doing amazing and we have 50% unemployment.
The economy could also be doing terrible and we have 0% unemployment.
The economy could also be doing amazing and the workers don't make enough to survive.
It isn't measuring what many people seem to think it is. It isn't a measure of "how well the average person is doing" at all.
Exactly. I feel like Andrew Yang gets a bad rep, but it's not like he didn't say stuff that everyone should know. I liked his idea of expanding the "American Scorecard" as he called it. Basically we currently use GDP, and stock prices to determine how well we're doing as a country. That's insane. Sure, the economy is up, but you know what else is up? Homelessness, unemployment, suicide, divorce, drug addiction, and many others. But we don't include those metrics to grade our performance. Just once I'd like the President to do a PowerPoint at the State of the Union Address. With a bunch of slides and graphs and charts.
Some of this is a bit soft. Like, the 50% / 0% employment split says something about business's ability to command labor. If we had an amazing economy with 50% unemployment, this would imply a large population that businesses either didn't want or couldn't access. And the former says something very different than the latter.
In that same vein, the ability to grow the economy is heavily predicated on how individual workers within the economy operate. A bunch of precarious workers with tentative access to capital, poor education, and dismal living conditions don't generate the kind of surplus value found in countries with ready access to new capital, high end education, and comfortable low-stress environments.
From a raw numbers perspective, you can try and transition your economy to an entirely financialized scorecard. But then you just end up with two engineers optimizing the rate at which a dollar can be traded back and forth.
Although, this might already technically describe the London economy.
Either way, you're divorcing the means by which we measure new value in the economy from the actual measures of economic utility through layer after layer of abstraction. Yes, this can fool people while economic utility is increasing (or even while its increasing for a subset of the right kind of people). But eventually - at the 50% unemployment and large migrant caravans of jobless vagrants trawling across the country - you run into some very basic domestic policy problems that outshine the focus on GDP Go Up.
The worry for me is the "didn't want" part. Automation is increasing throughput. The ultra wealthy are netting most of the value instead of humanity as a whole. Workers are getting laid off to keep profits increasing. Greed blocks mass access to surplus while the available job pool shrinks. Culture warfare is used as a distraction to vilify those who aren't staying afloat as immoral leaches.
I doubt we could get to 50% without something like UBI. The unemployed would either die off due to lack of resources or a revolution happens to extract the horded wealth by force for another cycle of history. Doesn't mean employers won't try to min/max how much they can take.
We've been in a state of diminishing returns for nearly a century. But all this new technology has created a rising demand for specialized high-education labor. The pivot to China during the 90s and then India over the last decade has been an effort by capital to defer the cost of a professional workforce. But this has given birth to rivalrous superpowers who western elites don't have a firm administrative dominance over.
Absolutely, but there are limits. Decades of cultural warfare without a cathartic conflict builds tensions and degrades institutional trust. We saw the end stage of that game in 1860 and then again in the 1930s. One function of imperialism is to outsource the irate surplus male population abroad, but we're appearing to give up on that as the cost of foreign occupation outstrips any material benefits.
So now we've got a problem of social control that's only really being kept in check by low national employment rates. If businesses start failing en mass and you end up with a large wave of unemployed, disaffected youth... well... look to 2008, 2014, and 2021 to see what happens next.
I agree. But even at 8-10%, you're talking about tens of millions of unemployed people. And we can hit that number very quickly. The COVID crisis took us from 3.5% unemployment in February of 2020 to 14.3% in April. The automation of our economy is increasingly financial, and that means giving businesses the ability to rapid reduce staff at a moment's notice. When we're in a downturn, that can mean hemorrhaging jobs very quickly.
But the consequences of mass layoffs aren't invisible. Shortly after these mass firings, we experienced a wave of "supply chain failures", which prompted a big inflationary wave.