Economic Possibilities for My (Not Keynes’) Grandchildren

Abstract

In the year 2030, my oldest daughter will be 29, and my youngest daughter will be 26; it will be their economy and markets, not mine. Today, it is the youth, not a middle aged man like myself, who will be most affected by accelerating technology that leads to economic growth without a corresponding benefit to the worker. In January of 2015, the U.S. unemployment rate was announced at 5.6 %, with 2014 being the best year of job creation since 1999. However, underemployment is still almost double unemployment at 11.2 %, while the participation rate in the labor force was a 37 year low of 62.7 %, and real wages actually declined by 5 cents an hour. This is a clear picture of what has been discussed in this book: economic growth is happening without the labor force due to accelerating technology and its use. French economist Thomas Picketty correctly notes the statistics in his book Capital in the Twenty First Century, that both the wealth gap and income inequality have been steadily rising since the 1970s, but it is not due to the natural tendencies of a free market system, as he implies; rather, it is due to an imbalance, or unnecessary frictions in the existing supply chain system (Piketty and Goldhammer 2014).