In my last post, “Can U.S. Economic Growth Be Speeded Up?” I pointed out that:
- GDP growth has averaged just 2% since the end of the Great Recession in May 2009.
- The Federal Reserve has taken unprecedented steps to keep interest rates low in the meantime but these efforts aren’t boosting GDP and, in addition, have quite harmful side effects.
- Wages are growing and consumers are spending money but business investment is shrinking and productivity growth is slowing.
- This means that the problem is supply side rather than demand side, contrary to what many economists are saying.
At least part of the problem is a lack of skilled workers. Two articles in today’s Wall Street Journal, here and here point out that:
- America is now home to a vast army of jobless men, seven million of them age 25 to 54, who are no longer even looking for work. This is 15.6% of the traditional prime of working life.
- Openings for manufacturing jobs this year have averaged 353,000 per month up from 311,000 per month in 2015 and 121,000 per month in 2009.
- According to the Manufacturing Institute, 8 in 10 manufacturing executives say that the growing skills gap will affect their ability to keep up with customer demand.
- As shown in the above chart, at the present time there are only an average of two unemployed manufacturing workers for each job opening, way down from the level in 2010.
Conclusion. Speeding up economic growth requires new business investment in order to increase worker productivity. But a lack of skilled and trained workers will greatly hamper this effort. The solution here is better vocational and career training in high schools and at community colleges.
It Does Not Add Up 
Jack,
I shall begin with questions. Is business investment expanding more abroad than within the U.S.?
Also, how much investment is going into the use of robots to eliminate jobs in the work force? On the matter of our economy, I have not read where you have addressed the matter of greed and exorbitant profits. Should there be a ceiling?
Doug
The U.S. economy is in better shape than Europe’s but that is not saying much because Europe is hurting. But that is no reason why the U.S. economy can’t grow faster. Faster growth is a social good because it creates more jobs and better jobs.
Yes, robots will replace human jobs but we should not try to deter progress. We should provide better education and training to prepare more people for higher forms of employment.
Exorbitant profits will encourage more competition in a healthy free-market economy. We should focus on making sure that the market is truly free by avoiding all forms of crony capitalism and overregulation.
Jack,
I am not sure how you define profit, let alone ‘exorbitant’ profit. Where is the morality in capitalism? At best, I hear caveat emptor. Also, I have no way to measure whether robots is progress or not. Progress for whom? For instance, I think the receiving of recorded messages are reactionary not forward enhancing, for certain. when we really want a human voice in the moment. I find certain robotic practices silly, if not dehumanizing. I see reduction in time and energy for humans as viable if there is some use of the extra time in life enhancing for self or others. I don’t find that to be the case with so much ‘screen time’ for youngsters. Also, I don’t see where entertainment leads us in matters of self-enhancement and also social beneficial.
Your response left me with more questions and doubts than any comfort.
Doug
These are fundamental and difficult questions which you raise. My basic response is that the morality of private enterprise (which I think is a more accurate and positive term than capitalism) is that it works amazing well to raise living standards over time.
Humans, not only in the Western world but worldwide as well, are incredibly better off in the year 2000 than in the year 1900, and likewise much better off in the year 1900 than in the year 1800. I have great confidence that we, humans, will be even much better off in the year 2100 than today. And part of the reason will be technology and the robots which undoubtedly will be pervasive in our life in the future.
For background on my point of view, read the book, “The Rational Optimist,” by Matt Ridley. This book will be my text when I take my turn in the discussion group we’ll be starting in October.