Any theories? - Input Junkie
Scary Job Chart
Why would this recession be that much worse? World more entangled, so that what goes wrong in one place has larger effects? Automation eliminating jobs? Inaccurate chart? Other?Source
Link thanks to andrewducker
First James Nicoll thinks I'm Andrew Drucker, now you think I'm Andrew Ducket. You'd think my name was complicated or something :->
I think you're right about globalisation. My theory is that we're in a transition to a point where the world is a single market, and the jobs that vanished in the USA may not reappear there, the slack will be being taken up elsewhere in the world.
The people at the bottom end of the job scale in the US cannot compete globally unless the cost of employing them goes down, which means equalising pay globally, which is going to take decades and be quite painful for chunks of the population.
Sorry-- I've corrected the link to your lj.
The good news is that things are getting better in a lot of the third world, so wage equalization isn't going to be as bad as one might imagine.
It's still going to be very rough.
Absolutely. Wages in China and India have both risen dramatically, and although this produces imbalances inside those countries, it certainly seems to have pulled a lot of people out of poverty.
It's going to be an interesting 30 years...
I was going to sum it up as "entanglement". There were two factors in the collapse of 2008: a vast construction bubble (so a lot of people were employed at jobs in a bubble industry) and a gigantic, incomprehensibly inter-enmeshed financial industry completely caught up in housing finance or its derivatives.
When the bubble started to burst, the financial industry locked up, and with it lending. Lending is a vital part of any economic growth, but doubly or triply so when so much of the economy is tied up in *real estate deals*, which invariably require lots of financing.
So, no lending, no new construction --> massive, immediate unemployment and an economy in free-fall.
1929 isn't on that chart; that would be an interesting comparison.
The main reason I'd give is entanglement of government and business. It has grown steadily more burdensome over the years to run a small, independent business. Large corporations with government connections enjoy a comparative advantage, even if they're also burdened; they can get by with proportionately fewer lawyers. Startups have traditionally been a big part of any recovery; it's less attractive to launch one today, given the risks and burdens of regulation.
This is a hypothesis. Data on the rate of startups would give an indication of whether it's right or wrong.
Corporations have always been "greedy." That's what they do. The question is what kind of greedy actions they have an incentive to do: to embark on a long-term, sound plan, or to look good in the short term so they can then proclaim they're too big to fail.
The planetary economy is a chaotic system, with corporations and governments introducing strange attractors to try and balance the system out...all it means is that although it may balance at times, when it strays, it will radically stray. I wish more economists would talk to mathematicians who study chaos theory...
It's undoubtedly multifactorial. But one factor is that nobody with any means to do so is seriously tryign to increase employment. Policy makers in government have been convinced by the "financial sector" that "the economy" means share prices and (certain types of) corporate profits. Keeping an employed, healthy, and solvent workforce isn't even a subnote in the program.
The "good signs" that are consistently reported about the economy, actually. point to less jobs -- "increased productivity" is a eu[phemism for "fewer workers for the same work --" you may think this sounds good, after all, efficiency is good, right? But what it means in many industries is degraded working conditions, often to the point of degraded health or even increased mortality. The company saves money, but the workers subsidize that savings.
Another factor nobody seems to have mentioned is that military adventures don't affect the employment rate the way they did in the past.
The only good thing I can see in this situation is that maybe Americans will quit believing that war is good for the economy.
Not that we'd stop fighting them. Americans believe that war is good for the soul.
I'm not sure what Americans believe about war. The overtly pro-war (I mean pro-war in general, not any particular war) rhetoric went away after WWI, I think.
I'm inclined to think that defeating morally inferior foes in the Civil War and WWII makes Americans default to thinking that they're on the side of virtue in any war they get into, which is not quite the same thing as thinking that war is good for the soul.
There is a belief that being in the military is good for the soul.
Government inaction, or anti-action, at the start of the crisis? (and by start I mean all points before the Presidency changeover.)
Irrational exuberance *before* the point at which jobs went negative, such that we were actually "overemployed"? (whatever that means)
I'm very confused why this chart doesn't include 1929-33 on there. Last time I saw a graph like this, it did. Restricting your view to post-WWII seems like an artificial constraint, especially if you start by including the post-war slump that had its roots in the (war-induced) over-production of WWII.
Also, if you look at the beginning of the curves, all of them show a sharp drop at the beginning, except the current situation. We may be comparing apples and oranges.
Unfortunately, it's upside down relative to the one comparing recessions, but the initial slope is very steep. I don't know whether they're defining unemployment the same way.Edited at 2010-06-05 10:12 pm (UTC)
Some of it is offshoring. Some of it is the current HBR Koolaid that strategy is all about reducing labour cost. Many large corporations now believe that employing people is, in itself, bad. Quite a shift from the corporate competencies/sustainable competitive advantage model of ten years ago.
|Date:||June 7th, 2010 02:59 am (UTC)|| |
If you believe the chart, recessions are getting longer. But there is no pattern in depth of recessions - 2001 was pretty shallow. Thus theories about trends (eg, increasing regulation) have difficulty explain the depth.