The Hollowing Out Of The Middle Class

We are familiar with the problem of business cycles.  We know that in the trough of the cycle we have unemployment.  Experience suggests that the economy will recover and that we will attain full employment at the next peak.  This article suggests that our current unemployment problem is not typical.  Business investment has been growing and corporate profits are at an historical high.  GDP has also been growing but the employment to population ratio is at an historical low and it continues to fall.  It appears that the economy is capable of producing the goods and services that are demanded with fewer workers.  Some argue that growing productivity and the globalization of production have hollowed out the demand for labor.  Some jobs can only be done locally, and many of them can be done with low skilled and low paid workers.  Many of the jobs that provided a middle class living standard have either been reduced by increases in productivity, or they have been offshored.  On the other hand profits continue to rise, and those who own capital, or are required to produce or manage capital, have seen their incomes rise.

Keynes anticipated that rising productivity would solve the economic problem of scarcity.  He imagined that it would lead to the end of poverty, and that it would allow more people to enjoy leisure and engage in activities that enabled them to grow intellectually and to engage in cultural activities that were typical in his social class.  That would require an organization of society that has not occurred.  Economies are creatures of the broader social system.  We are responsible for the creature that we have, and we are empowered to shape it in ways that better serve our values.