5 Ways to Lessen Inequality as Demand for Labor Decreases Worldwide

Aashish Mehta  http://www.huffingtonpost.com/aashish-mehta/5-ways-lesson-inequality_b_6215708.html

"Wages, incomes and wealth in most countries have become more unequally distributed in recent decades. Most of us understand that this is politically dangerous. There is much less unanimity regarding how national governments should go about addressing this. I argue here that one key source of growing inequality is a softening of the demand for labor and that this changes policy debates significantly.

(...) To better understand how to deal with softening demand for people, we must understand its causes and structure. In which economies and sectors has labor demand gone soft?

(...) Given these structural roots to inequality, what types of policies make sense? Solutions will have to be context-appropriate. However, to be effective and politically sustainable, they will require the support of those they benefit directly, and of those who fund them or think they might. In other words, they will need to be compromise solutions that appeal to left and right alike by achieving the most redistribution for the least bureaucracy and inefficiency. In that spirit, here are five ideas that might be useful for combating inequality in a world of softening labor demand.

1. Shift the tax burden off labor.

2. Design policies that can augment incomes when many people don't have stable jobs.

3. Redirect efforts to protect working conditions and wages at non-tradable sectors.

4. Make competition policy more robust.

5. Think about education policy differently.

None of these policy suggestions are novel, and all have downsides. Recognizing that inequality has structural roots in low-labor demand does not necessarily change the menu of policy options to consider. It alters the tradeoffs between these options. Clearly, these tradeoffs are changing."

The future of jobs

The onrushing wave

Previous technological innovation has always delivered more long-run employment, not less. But things can change

"IN 1930, when the world was “suffering…from a bad attack of economic pessimism”, John Maynard Keynes wrote a broadly optimistic essay, “Economic Possibilities for our Grandchildren”. It imagined a middle way between revolution and stagnation that would leave the said grandchildren a great deal richer than their grandparents. But the path was not without dangers.

One of the worries Keynes admitted was a “new disease”: “technological unemployment…due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.” His readers might not have heard of the problem, he suggested—but they were certain to hear a lot more about it in the years to come.

(...) Everyone should be able to benefit from productivity gains—in that, Keynes was united with his successors. His worry about technological unemployment was mainly a worry about a “temporary phase of maladjustment” as society and the economy adjusted to ever greater levels of productivity. So it could well prove. However, society may find itself sorely tested if, as seems possible, growth and innovation deliver handsome gains to the skilled, while the rest cling to dwindling employment opportunities at stagnant wages."

http://www.economist.com/news/briefing/21594264-previous-technological-innovation-has-always-delivered-more-long-run-employment-not-less?fsrc=scn/fb/te/pe/ed/

The human capital controversy

why is “human capital” such a disastrous turn of phrase? There are two reasons. First, it obfuscates the crucial difference between labor and capital by terminologically conflating the two. Labor now seems to be just a subspecies of capital. Second and more important, it leads to a perception — and sometimes to the argument used by insufficiently careful economists — that all individuals, whether owners of real capital or not, are basically capitalists. Even if you have human capital and I have financial capital, we are fundamentally the same. Entirely lost is the key distinction that for you to get an income from your human capital, you have to work. For me to get an income from my financial capital, I do not.

As I see it, all these new forms of capital, like human capital, are ways of expanding Smith’s wealth of nations; they all seen as contributing to the production of more “stuff”—more use-values, the “immense accumulation of commodities.” But the expanding universe of capital also serves to hide the extent to which all that stuff, which is in reality socially produced, is then privately appropriated—leading to a growing gap between a tiny minority at the top and everyone else. In other words, it’s a pattern of private capitalist appropriation that creates a more and more unequal distribution of income and wealth.

The capital controversy will remain with us, then, as long as we refuse to solve the problem of capital.

https://rwer.wordpress.com/2015/02/22/the-human-capital-controversy/

Failing on Two Fronts: The U.S. Labor Market Since 2000

"In a new CEPR report out today, I argue that the US labor market is failing on two fronts. The first failure is the decades-long stagnation of real wages at the middle and the bottom of the wage scale –even as earnings at the top have grown rapidly. The second failure, only apparent since the early 2000s, is the sharp deterioration in job creation. "

TFF: might also be that the share of jobs in individual occupations is decreasing; plus, it is decreasing more in low income individuals than in high income individuals, meaning rich individuals depend more (and each time more) on wages/jobs for satisfaction of their needs (physical, social, individual, spiritual, etc.) then poor individuals - in part because if poor individuals have denied access to jobs, people find other solutions. With the generalization of technology and easier access to information/knowledge/people the logistics are easier and transition communities are growing like mushrooms. Internet revolution is still playing cards and showing its effects and changing people and society's way of living. Technology is accelerating change. People will depend less and less on jobs. I believe there will always be room and need for markets/jobs/money. The weight of markets in society have been growing since centuries ago. I'd say jobs reached 90% weight in people's wealth in USA. And maybe it is declining, giving room to other types of social organization/society, non-market, or at least non-labour-market ones.