Wednesday, September 12, 2012

The Hollowing Out of America

Click to enlarge.

The red trend line is disturbing on its own. The hollow part in yellow is just adding insult to injury.

July 8, 2012
The Hollowing Out

The issue of the disappearing middle is not new, but credible economists have added a more threatening twist to the argument: the possibility that a well-functioning, efficient modern market economy, driven by exponential growth in the rate of technological innovation, can simultaneously produce economic growth and eliminate millions of middle-class jobs.

Michael Spence, a professor at N.Y.U.’s Stern School of Business, and David Autor, an economist at M.I.T., have argued that this “hollowing out” process is a result of twin upheavals: globalization and the hyper-acceleration of technological progress.

Source Data:
St. Louis Fed: Custom Chart


Stagflationary Mark said...

Debt will not be a solution that will successfully fill the void.

Stagflationary Mark said...

Currency debasement will not successfully fill the void either.

Stagflationary Mark said...

It's a sad day when I'm toying with the idea of adding a "polynomial trend failure" label.

Troy said...

mfg vs health & education jobs.

Education creates human capital wealth (capable minds), while health both restores capital wealth (the ability to work) but more often just keeps old people from dying off:

Fidelity: Couples Need $240,000 for Retirement Health Costs

Finding the core philosophy of wealth -- that wealth is that which satisfies human wants and needs -- was a signal event for me as it clarifies so much.

Every economy is a balance of wealth creators vs. wealth consumers. Technically, I think it is perfectly possible for any population to produce more wealth than they consume, even the US.

What the problem then becomes is one of internal distribution. We haven't sorted out the primary balance question yet:

so talking about distribution is probably premature.

Scott said...

This hypothesis is consistent with the data as corporate profits are skyrocketing.

Scott said...

It's also consistent with my theory of Bernanke's Fallacy; which is that he thinks wage increases are always bad while asset price increases are always good.

Stagflationary Mark said...

Troy (& Scott),

What the problem then becomes is one of internal distribution.


November 16, 2009
Why Income Inequality Really Matters