Everywhere I look, firms are going out of business...
going to happen now? Most people probably accept the economically
illiterate view that the empty store fronts will stay empty forever.
They don't understand creative destruction, the free market's phoenix-like ability to re-invent itself. Something's going to be done with all these idle resources once we get out of this recession. The question is: What?
In his review of "The Great Stagnation," Sumner offers a plausible answer:
Tyler also argued that we faced a great recalculation problem, with
lots of jobs opening up that need high tech skills, but way too many
poorly educated workers. Yet the facts he presents seemed to point in
the opposite direction. He mentions that the new high tech firms like
Facebook can get the job done with an extremely low number of workers.
This webtopia that Tyler foresees won't require many workers at all.
In that case, what should all our surplus workers do? How will they
find jobs? Not in agriculture, 2 million farmers can feed the whole
country. Not in manufacturing, we are falling below 10% in that
sector. And most people don't want three washing machines and four
cars. Where would they put them all? Here's what I think most people
1. A bigger and nicer house, with granite counter-tops.
2. More restaurant meals.
3. More fun vacations.
That means we need more construction workers, and granite miners
(quarriers?) We need more cooks and waiters. We need more hotel
receptionists and maids. More people to work on Carnival cruise
ships. I think our workforce is skilled enough to fill those jobs.
My main doubt: All this suggests that the private return to education will take a big dive in coming decades. Would Sumner bet on that?