Winners and Losers

This post is about the shift in an economic paradigm. An example is the emergence of the computer. The computer age has been around in a meaningful way since the 1950’s. The new technology-based workforce added millions of new jobs to the economy – jobs for engineers, programmers, software developers, data base designers – and those that were in the first wave of lost jobs were armies of bookkeepers, administrative assistants and typists. When a new economic model bursts on the scene, there is a great wave of new opportunity, large cash flow and an upward change in lifestyle – except for the losers.

On a recent cable news program, a career communications entrepreneur responded to the question about new technologies displacing workers by saying that the new technologies will add 2.6 million new jobs to the workforce, blithely avoiding the point of the question. He failed to mention that a significant portion of the workforce loses their jobs in a major change of the economic paradigm and will not have a place in the new economy.

Several years ago on Bill Moyers’ PBS interview program, three noted economists, liberal and conservative, supply side and demand side, all agreed that on average, fifteen percent of the workforce will not have jobs in a new economy. The attitude of the economists was heartless. Jobs disappear, they agreed, it is part of the process. Empathy for jobless families was absent; that is just how it is.

We first learn about this winner and loser phenomenon in Economics 101. The typical example is the disappearance of jobs related to a horse transportation economy when automobiles displaced the horses: no need for all those buggy whip workers. No need for so many carriage makers, farriers, and harness makers.

At a presentation for incoming freshmen at the University of Iowa, the speaker was an economics professor. He said that economics is really a continuous series of decisions to balance supply and demand. The example he gave for balancing supply and demand was the availability of organ donors versus the greater number of those who need organs. “Who gets the organ and who doesn’t?” he asked. The principles of economics seek the best model for the economy. In this case, it is a set of policies used by medical professionals to make the decision. In other words, there always will be winners; there always will be losers.

Listening to news broadcasts and interviews of experts, we already are evolving into a new economy. First, there is the globalization of the marketplace; second, Internet technology will change what the word “work” means.

There will be fewer winners than losers. The economics professor provided a realistic metaphor using donor organ supply and demand.

Someone once said that democracy elects the safest candidate rather than the appropriate candidate. Given the silliness of our Federal, State and Local governments, the electorate definitely is safe from unexpected change. The private sector has many inadequacies but it is always for change. That is where the big money is.

The United States is similar to the sailor that has one foot on shore and one foot on the drifting boat: calamity is bound to happen. There are so many loopholes and welfare for the rich and so much incompetence dealing with discretionary programs that the Federal government has fallen into a useless pit lined with greed and ignorance. The open question is how to apply economic fairness as change occurs ever more rapidly. But that’s another posting.