“What is a danger is that we stay stuck in a new normal where unemployment rates stay high, people who have jobs see their incomes go up, businesses make big profits. But they’re learned to do more with less, and so they don’t hire.” — Barack Obama
This has been one of my chief concerns with improvements in technology and efficiency over the last few years. It is probably basic economics, but if you have a group of 10 people, each of whom is responsible for producing something for those 10 people, then they have a small balanced economy.
Say you have someone whose job is to provide and maintain housing, and someone whose job is to provide food, and someone who oversees medical needs. You can introduce currency to allow them to pay each other in a standard manner, but if they each have a job then it is a fair system.
Now, introduce another 10 people. That means there are now 2 people who can perform each job, but an extra 10 people that require the service provided. It remains balanced and in ratio.
Introduce more people, and in theory the ratios will stay in check. Until two things happen. Firstly, too many people get educated to do one job, which leaves a gap in areas with untrained workers and creates a surplus in workers for other areas. This means people have to settle for a job they don’t want, or aren’t trained for. Secondly, and this is the bigger problem, is that technology is discovered or new methods of doing work are implemented which now allow the job that was done by 5 people to be done by just 2. What are the other 3 people going to do? Unless they can find a niche business opportunity (and let’s face it, how many of those survive for any period of time?) then they are doomed to unemployment, which is what I fear is our problem today.
And so I cannot help but agree with our President. Those who have jobs will likely keep them, those who own companies will probably succeed. Those who are on the street with no opportunities on the horizon will likely be left there.