Friday, November 11, 2016

Still the Main Issue: Employment Uncertainty

If nothing else, I consider it good news that rural America has gotten some notice with the presidential election results, in spite of confusion in this regard. If only our nation's elites had been more cognizant already, of the lack of productive economic complexity and free market activity in so much of our country, and what those "Sounds of Silence" might eventually lead to. Ah well, what's done is done. From Reuters:
Donald Trump's promise to revive small town America faces a tough challenge in an economy that for decades has been wired to direct income and opportunities toward urban hubs and the better educated. 
The manufacturing jobs Trump pledges to bring back have disappeared as much because of automation as the trade deals he promises to rewrite, and that process will only continue. A promised infrastructure revamp would boost middle wage jobs but only as long as the programs last...
Economists say that even if economic growth accelerates under Trump, it may not do much to counter the downward pressure on wages and middle income jobs from automation, technology and longstanding trends.  
Brookings Institution senior fellow Isabel Sawhill said researchers on inequality agree on one point: it is hard to move the needle. "Even when you distribute all of the dividends from growth in a progressive fashion you don't change things very much." Sawhill said. "You shift things at the margin."
Another recent Wall Street Journal article spoke of the vast disconnect between Donald Trump and Silicon Valley, for instance. After all, Silicon Valley relies on both immigration, and the trade with other nations which Trump disavows. Indeed, automation has proceeded to such a point, that some factories no longer need illumination for normal procedures on the factory floor. In other words, no people or lights necessary where things are being built, unless something goes wrong! This is one of today's most tangible forms of progress. Is the wish to turn back the clock on such developments, Luddite in nature?

Inverse weighs in on these concerns as well, with "Runaway factory automation is making human manufacturing obsolete":
Study after study was released in 2016 that offered a cold truth: No amount of legislation can push back automation. The World Economic Forum reported in January that approximately 5 million jobs will be lost to automation the next five years. (A 2013 Oxford University study found that 47 percent of jobs in the United States are at risk of computerization.)
Meanwhile, Trump's campaign focused heavily on a plan to use tariffs and new trade deals as a way to bring jobs back from China and Mexico. The trouble with this strategy is that places like China and Mexico are also losing jobs to automation in large numbers. In fact, a United Nations policy briefing released this week projects that China's automation will outpace the world in jobs by 2018 with North America coming in second.
What's behind the wishful thinking about reclaiming earlier manufacturing as it once existed? For one, this work allowed people to build tangible - and often - useful goods. But something else contributed to the respectability of those jobs as well, which is proving equally difficult to bring back: the access to healthcare which manufacturing work once provided. One reason that today's time based services work doesn't feel as solid or reliable by comparison, is that much of it lacks healthcare access.

Paradoxically: by the same token, dependence on low wage work makes it more difficult to hold on to work as a lifeline, when medical issues intervene. Medical issues can affect one's ability to maintain a job, especially when these struggles negatively affect public perception of one's personal efforts. While policy makers and business interests continue to struggle over a failed healthcare system in the U.S., others increasingly feel the need to step in and help the ones who are still being forgotten.

There's another consideration. Even though Obamacare has not worked out well, by no means would it be easy to replace. In particular, supply is not only limited, but the supply that does exist, would only be put under further pressure, in the closed economy that would result should the U.S. take an isolationist position in the world. In all of this, non tradable sector activity of any stripe isn't built for closed economies, such as protectionist views encourage. Ultimately, an isolationist approach would not only mean further losses in asset value, but also in the tradable sector formation which has provided such extensive support for knowledge use in recent centuries. This is a historical moment, when undue reaction to world circumstance would mean further wealth losses than are necessary - whether or not some might rationalize that these losses don't matter. They matter.

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