Are We There Yet?

In his 1970 book 'Future Shock,' visionary author Alvin Toffler made two points. Both have proven to be valid.

The first was that technological change engenders societal change. The second was that the rate of technological change is exponential, rather than linear. Having read the book nearly 40 years ago, these two points seem self-evident to me. I have the advantage of perspective.

The evidence of the validity of these points can be seen throughout human history. Fire, wheels, gunpowder, moveable type, all were pivotal developments. All brought about substantial societal change. It has been said that had it not been for the printing press, for example, neither the American nor the French revolutions would have taken place. You get the picture.

An understanding of the dismal economic condition we find our Western world in today requires an appreciation of the factors described by Toffler. But there's more. We need to understand the role and nature of the Company.

The relationship between the Company and the government has always been symbiotic. And that made sense. The Company built a factory in the town. The Company hired workers in the town. The workers paid taxes. The Company sold products, made profits, and paid taxes. Everybody made out.

It has always been understood, too, that what's good for the Company is good for the town. When the Company profited, new jobs were created, promotions went around, and raises were awarded. Again, everybody made out. Understandably, the government made laws to favor the conduct of business.

The theories of John Maynard Keynes, a prominent economist of the 30s, tell us that the flow of money is circular, and that recessions occur when someone in the chain stops passing it along. Based on his theories the US Federal Reserve System undertook to reverse the Great Depression by increasing the supply of money. It worked fairly well, although people who lived through that time said afterward, “It took a war to get us out of it.” By the 50s and 60s, most capitalist governments had adopted Keynesian policy. President Obama is using these same policies today to get our economy back on its feet.

So far, it doesn't seem to be working. The banking industry has recovered, as has the insurance industry, and lavish bonuses are again the order of the day. The stock market is showing signs of life, and even the real estate market has a pulse. Yet there are six applicants for every job, professionals can't find work at half their normal wage, and even kids are finding that the burger-flipping jobs have been taken by adults.

If you are working now you may be thinking, “What's this guy talking about? Things aren't that bad!” Remember that even during the thirties, your odds of staying employed were still three to one. This was not sufficient to avoid an economic disaster. Some say, “A recession is when my neighbor is out of work. A depression is when I am out of work.”

Some people are beginning to think something is wrong. The political cartoonists Danziger and Oliphant see it. Many respondents to the New York Times 'Post a Comment' feature see it. Friends I speak with see it. I see it, and although I'm no economist, I think I know what's wrong. I even have ideas about what to do about it. I just don't know who to tell. I write this essay in the hopes of telling you.

Here's what's wrong. The technological revolution has invalidated the basic premises of our economic policies and our tax laws. The Company still needs a building, and workers, but they don't need them in our town anymore. They don't need them in our country anymore. When the jobs come back, they won't come back here. They may come back in India, but not in Indiana. The circular flow of money visualized by Keynes has been broken. The money leaves the Western world, and goes to Asia, and it doesn't come back. All the deficit spending in the world will not make up for this. Roll over, Keynes, and give Roosevelt the news.

As I mentioned, I have an idea what can be done about this. I'm going to save that for another essay. I think there's already enough to swallow in this one.

Are We There Yet, Part II