xssve
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ORIGINAL: Musicmystery
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ORIGINAL: xssve
Doesnt' have to ease it, just doesn't have to enable it - every time the the Fed raises the interest rate, it throws thousands of people out of work - deliberately - in order to head off demand pull inflation - it means that there are more people competing for fewer jobs, and wages will fall or remain stagnant.
Reagan didn't end the inflationary spiral, Paul Volker did by cutting off the money supply, it worked, and it's a useful tool for handling runaway inflation, but it's employed as a fine tuning mechanism against inflation at the expense of wage and job growth, plain and simple, talking about the evils of automation is a red herring: more automation is what small businesses need to compete, there is no reason that any small business cannot use the same computerized inventory management and accounting systems that Wal Mart uses to make them more competitive, other than the stranglehold on enterprise software by MS, etc., that puts that software out of reach for most small businesses, it amounts to a barrier to entry.
OK, I see where you're going with the Fed and labor market, but while point taken, it's not "pure and simple." You're 45, and haven't seen stagflation. Wages aren't helpful when inflation devalues them at double digit rates. And inflation isn't like locusts...it doesn't just happen by itself; the conditions that caused it need counteracting. The Fed does with monetary policy quickly what Congress may or not do slowly with fiscal policy. More jobs at devalued wages creates exactly that two-tiered economy you mentioned earlier. In fact, this experience is what taught me that to be financially secure, I needed to move from laborer to capitalist, and gradually, I did.
I agree that any small business can use the same computer automation; I disagree that they are shut out. They both can and do. I can rattle off a long list of area businesses using technology to run successful business that formerly would have sunk under labor costs. Bad for labor? Those same laborers can start a successful business more easily than every before. My seniors do exactly that--design and propose a viable new business, and some of them have used their own proposals in real life, while the rest impressed the hell out of employers and got jobs right out of school.
The conditions that caused stagflation, which I do remember quite well, were the Kennedy tax cuts, which led to increases in demand without corresponding increases in productivity, which led to supply side theory, which Laffer (and others) came up with when the Laffer curve predictions turned out to be completely erroneous, which is why there was low inflation throughout the Eighties in spite of wage growth and near full employment, Greenspan's interest rate manipulation just triggered the tech sell off prematurely, which would have happened eventually anyway.
Supply side tax cuts did little to increase production either however, although they did accomplish the goal of greatly thinning out middle management which was considered to be at the heart of stagnant productivity, and in a roundabout way, via junk bonds, did finance the PC and internet revolution which did lead at last to productivity increases.
However, there is no shortage of liquid capital anymore, the rationale of supply side theory, in which monetarist policy plays a central role of keeping wages, and thus demand, under control, has outlived it's usefulness, it worked only too well, commodification has been the trend in manufacturing, too few people chasing too many goods, and the thin margins have shut the door to all but large corporations that can afford the capital investments in modern mass production equipment and technology, and driven outsourcing to further cut variable costs by seeking out the cheapest and least regulated labor markets.
Conditions of plentiful supply and weak demand however, are not much better for manufacturers, and in that situation, the market is going to tend towards cabals, monopolies and rent seeking, as established corporations scramble to protect their threatened profit centers - and guess what?
If all the money being poured into lobbying were being spent on capital improvements, like lean manufacturing and cradle to cradle, there would be no recession, the trade deficit would start looking a little more balanced, and fewer corporate subsidies combined with economic growth would erode the deficit from both ends - politics, in this instance is crowding out economic growth, leading to increasing dis-economy, and that trend is going to continue as long as the right thinks it can keep getting something for nothing, i.e., bigger dividends with fewer taxes and more wage cuts.
All this choking the chicken is strangling the goose baby.
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RE: Should "job killing" technologies be banned? - 
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