forbidding_archivist: The Terrible Trivium (Default)
[personal profile] forbidding_archivist
Hiring fewer people will increase unemployment. That statement may seem incredibly obvious, but it seems most people today can't grasp the concept.

Of course, the standard libertarian/conservative mantra is "The more a nations wealth consumed by the government, the less wealth is available to the people. Sometimes the government spend on good stuff for the economy (infrastructure) but other times it spends on stuff that is waste and therefore the economy becomes even worse."

But that isn't really how it works when you are running a 9% unemployment rate. Think about it this way. The government fires (or doesn't hire a replacement) for a worker at the social security office. You now have one more unemployed person.... A private sector job isn't magically created. Making matters worse the now unemployed person is now spending less. This means less demand for cars, tires, and other consumer products. So GM and Goodyear see their sales and profits decline. So GM and Goodyear layoff more workers.

Then throw automation in there. Why do we need less office workers? Because computers can take up more and more of the slack these days. You only need 3 people in an office to do what 10 did years ago. Why do we need less factory workers? Robots and factory automation. Where before we needed 10 guys to turn screws, we now need 1 to monitor the robots performing that job. So on and so forth.

Here's a question people haven't asked yet: What if that 9% of unemployed people just simply aren't necessary anymore?

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forbidding_archivist: The Terrible Trivium (Default)
The Forbidding Archivist

November 2011

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