Thursday, September 8, 2011

The latest threat to the economy: productivity

Its rare that I'll read an article and agree with every word but this morning I found one:

There's plenty of blame to go around for why the middle class has been struggling but the author isn't out to promote a particular agenda. He simply identifies the critical problems we're facing: health care and education. We are able to provide everything else with stunning efficiency, but health care and education remain slow, expensive and for millions of people - ineffective.

Also while reading this article I became more convinced of my view that the current crisis is really just a part of a decade plus long crisis with labor. The work force hasn't become educated fast enough to adapt to new technology. As a result the people who have adapted have seen their wages rise rapidly (due to insufficient labor supply) while people who haven't adapted have seen their wages fall (insufficient demand for their labor). No doubt the industrial revolution saw similar displacements but once the work force caught up economic growth skyrocketed.

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