Unemployment - the state of the future?

While the thoughts expressed by Ron Smith in his column in today's The Baltimore Sun is not new, his expression is concise and to the point.

"I mention that more work is being doen with few workers.  This is one big reason that increased joblessness is now thought by many economists (and futurists) to be structural, not cyclical.

The New York Times reports that companies are investing in equipment, not in workers, because workers are getting more expensive, while equipment (i.e. technology) is getting cheaper.

"Firms are responding to incentives," says economist Dean Maki, "and capital has gotten much cheaper relative to labor."

So what's to happen to all the surplus people as this situation worsens? I don't have the answer to that, and I'd bet a whole lot that our leaders are similarly clueless."   (Parentheses added.)

Mr. Smith's above conclusions follow his discussion of the expansion of the world's population and related issues of shortages of various sorts, all leading to the eventual catastrophes we often hear about.

But for the moment let's think just about unemployment.  On the international scale, the results of unemployment are leading to great unrest and discontent, especially of uneducated men who see little if any future prospects for prosperity, whatever that is on a relative level. (See Fred Pearce's book noted earlier in this blog.)  


Here in the US we are seeing increasing unemployment and certainly underemployment of our newly educated population. Yet, we read statements like the above, that corporations don't need people as per-employee output is constantly increasing.  To make things worse, our aging population including me often wants or needs to work and is refusing to "go gentle into that good night" per some Federal timetable.  They are still available and seeking employment, adding to the overflowing pool of job applicants.


It is apparent that Business' output, growth and prosperity is based upon the fulfillment of it's customer's needs. There is a closed loop of players -  Society's existence and Economy (1) needs money and growth which Business (2) provides based upon income earned from the Customers (3) it supplies.  Until most recently, the relationship, i.e. pay, between Business and Customers was enough to keep the loop merrily rolling along for the most part.


Now, Society, a.k.a State and Federal governments, are paying Customers increasingly more and more to help maintain this momentum.  But the loop is in jeopardy.  As the older population expands, and as unemployment increases this governmental support can only expand or the loop will be broken.  How far can it expand? (That's what the question is in Washington today.)

We have a Consumer Based Economy and we all know this. Soon, however, less customers, i.e. poorer workers, will so negatively affect business, that they too will have to participated in paying customers! Sales and coupons can only go so far. Eventually, when enough customers will stop purchasing because they are broke, business will recognize that they need to employ their Customers in order to sell to them and to therefore exist.  Then what?  Less or no benefits, part time hours for employees?  Will that actually help?   Where will the loop be then?  (Sometimes it is good to be old.)

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