Where’s the endpoint?
The Financial Times well documents the decayed state of the world system today in an article subtitled “Fears persist the jobs crisis cannot be fixed”. Here’s a few excerpts:
the middle-skilled jobs that once formed the ballast of the world’s wealthiest middle class are disappearing. They are being supplanted by relatively low-skilled (and low-paid) jobs that cannot be replaced either by new technology or by offshoring – such as home nursing and landscape gardening. Jobs are also being created for the highly skilled, notably in science, engineering and management. For the remainder of the workforce, including college graduates, it is both increasingly hard to find a secure job and tougher for those who do find jobs to be paid in line with inflation.
“I know companies that employ senior engineers whose only job is to find ways to reduce the headcount,” says Carl Camden, chief executive of Kelly Services, a booming staffing agency based in Michigan. “The name of the game everywhere is to reduce permanent headcount and we are still only at the early stages of this trend.”
Of the five occupations forecast by the Bureau of Labor Statistics to be the fastest growing between now and 2018, none requires a degree. These are registered nurses, “home health aides”, customer service representatives, food preparation workers and “personal home care aides”.
…whatever jobs the US is able to create are in the least efficient sectors – the types that neither computers nor China have yet found a way of eliminating. That trend is starting to lap at the feet of more highly educated American workers. And, as the shift continues, higher-paying jobs are also increasingly at risk…
One doesn’t need much of an imagination to see where this is headed. Unless interrupted by popular protest, massive government intervention, fascism, or war, this seems to be our path:
1) Wages decline due to ever advancing technology and outsourcing to low labor cost areas.
2) Unemployment increases. The term under-employment has declining meaning as ever more become “under-employed”.
3) Profit levels can’t be sustained due to declining purchasing power and declining profitable investment opportunities. Prices and profits fall.
4) Stock market values decline and interest rates hover around zero.
5) Real estate values decline.
6) Banks are increasingly unstable due to rising defaults.
7) Government deficits increase due to declining tax base and rising social expenditures. [Rising deficits are seen as a danger within the existing paradigm and pressures to reduce benefits increase.]*
8) Loop back to 1)
This resembles a black hole collapse. Where’s the endpoint? What finally stops the collapse? For “first world” countries, it would seem only when living standards equalize with the “third world” and when “middle class” incomes equalize with the “working class”. A classless society would then face its owners. Of course it won’t get this far and the question of what will stop it is indeterminate. Our current rulers though, are systemically incapable of stopping the collapse and are little more than spectators. As Peter Orszag, speaking for the establishment, tells us at the conclusion of the article: “It is not clear what, if anything, could (transform the situation for the middle class).” Nothing within the logic of capitalism.
* 12/15 I added this today to help clarify my point.