Nothing in the article even approached the real reason that the economy hasn’t recovered from the euphemistically named “Great Recession.” The fact is that there have been profound changes in the global economy that have made it nearly impossible in conventional terms to “recover” from an economic downturn using the same-old-same-old — two in particular.
|Simón Bolívar, the Great Liberator|
Not surprisingly, when the government debt went into default, there was a global (or at least European and American) financial panic. The value of stocks tumbled. All the experts were baffled. Previously, except for things like the Mississippi Scheme or the South Sea Bubble, financial panics had been the result of war or natural disaster.
The experts decided it was the unregulated issuance of government debt in the form of bills of credit that caused the problem. Just keep government debt in bounds, and everything would be all right.
Unfortunately, it was the issuance of government debt itself that was the problem, not how little or how much. When a government issues debt, it creates demand for production that already has claims against it. Consequently prices rise (inflation), and supply and demand go out of whack. Things are either booming or busting.
Two, there is the problem of advancing technology and the displacement of labor from production. As technology advances, more people are forced out of jobs. They have no income, and consumer demand (which drives the economy) drops, causing a slowdown.
|These are not the 'droids you own.|
In the twenty-first century, technology is advancing at such a rapid rate that there is no way to create enough new jobs to make up for those that are lost: the productiveness of the new capital instruments is so great that creating jobs actually reduces “productivity” by adding more labor hours into the equation, essentially featherbedding. The added labor doesn’t actually add anything, not even an increase in production. It just adds more labor hours into the calculation to drive the numbers down.
Obviously, the answer is not to keep on adding more and more labor hours to increase productivity. Rather, the answer is to turn more people into capital owners so that consumption can keep up with production.
One plan for this is the Capital Homestead Act, which anyone interested in bringing an end not only to this “Non-Recovery,” but future downturns should take a look at.