What IS the economy? What parts are so strong?

[bump]

@md2000

This criticism ignores the replicators. Seriously, low unemployment drives technology.

I’d argue that the mere existence of payrolls drives technology; for many companies, that’s their single biggest fixed expense, so it’s something they have a vested interest in driving downward any way they can. Low unemployment just makes it worse because it applies upward pressure on wages.

Either way, the whole NAIRU thing is not perfect, but it’s an indicator of sorts- at some point, an insufficient supply of labor starts starving companies, and driving down productivity and profits. A certain low, but not too low unemployment rate indicates that the labor market isn’t starving anyone for labor.

[elfkin477]

@puddleglum

The two best measure of an economy’s performance are productivity and unemployment. Productivity shows how much workers can make and that is the point of an economy. Unemployment is important because productivity can be made to look better if the lowest productivity workers are prevented from getting jobs.

There’s that too, but productivity and wage increases got a divorce about 45 years ago. And there’s talk about there not being too much more productivity even possible at the moment due to stalls in technological advances and how much productivity per worker increased when they laid everyone off during the crash.

[Ruken]

@elfkin477

There’s that too, but productivity and wage increases got a divorce about 45 years ago.

EPI peddles this by using different measures of inflation for wages and productivity:
https://www.bls.gov/opub/btn/volume-6/mobile/understanding-the-labor-productivity-and-compensation-gap.htm

[puddleglum]

@Ruken

EPI peddles this by using different measures of inflation for wages and productivity:
https://www.bls.gov/opub/btn/volume-6/mobile/understanding-the-labor-productivity-and-compensation-gap.htm

They also exclude 20% of the workforce in the wages but include them in the productivity.

[Ruken]

@puddleglum

They also exclude 20% of the workforce in the wages but include them in the productivity.

Now now, we all know that supervisors don’t produce ;).

[md2000]

@elfkin477

There’s that too, but productivity and wage increases got a divorce about 45 years ago. And there’s talk about there not being too much more productivity even possible at the moment due to stalls in technological advances and how much productivity per worker increased when they laid everyone off during the crash.

I believe part of this is the law of diminishing returns. (or “low hanging fruit”) A task is automated, humans are displaced. You have a computer, and as a younger worker, actually know how to type; thus, secretaries disappear except for the very highest rungs where other tasks dominate - and even there support staff is much less. Switchboards are replaced by automation, no operators.

Go into McD’s today, and a bunch of $1000 smart screens replace several counter people taking orders slowly from confused customers that always seem to be ahead of you. Screens make the kitchen more efficient, no need to remember 10 orders at once. And so on…

There’s the subtle ones - money counting is severely reduced in any retail establishment due to credit and debit. Inventory delivery is automated; sales are tracked. less time wasted on simple tasks. Email reduces time wasted on the phone, or having meetings simply to pass on information. In construction, bigger and better heavy equipment and processes reduce hand labour.

And so on. the question is, OK, once this efficiency is achieved - then what? Tesla may be closer than McDonalds to fully automated production, but once the people are replaced/fully augmented by machines, how do you make a human even more productive?

The only real answer is full automation - black box factories with virtually no human intervention, perhaps. But other than the elite company owners getting their payday, that does not really produce wages for the working masses.