Economic growth used to be related to job growth. That has not been the case since 2000. The economy has grown but job growth has been weak. There are several factors contributed to weak job growth. We can create more output with fewer workers. We call that productivity and that is usually a good thing. Unfortunately, the benefits from productivity are no longer shared with the labor force. The gains from productivity have predominantly gone to those who don't spend it. They invest their money in exotic investment products which funnels more money into the money management sector. This increases inequality and it fosters financial instability. It also has a negative impact on aggregate demand and job growth.
The US has also been running trade deficits annually for many years. The trade deficits average around 5% of GDP. There is nothing wrong with global trade, but it has gotten out of control. Millions of jobs have been lost to globalization. Moreover, a large share of our imports consists of products made for US companies overseas and resold to US consumers. The decline in US manufacturing also means that we have fewer tradable products to sell in international markets.
At one time the US had a full-employment policy. The decline in US manufacturing has been accompanied by a decline in union membership. Unions no longer provide a political counterweight to the power of business. Both or our political parties are financially dependent upon support from business groups. Workers are no longer represented in US politics. Their votes are needed at election time but divisive social issues are successfully used to obscure economic issues. The electorate is also sold on the idea the best way to create jobs is to let businesses do whatever they want. Government interference in the "free market" is responsible for weak labor demand.
The article contains some thoughts on how to restore a full employment economy. They are interesting ideas but they will fall on deaf ears in Washington.
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