Unemployment Misery may be defined as the product of Burden and Composition.
By Daniel at 6 December, 2009, 11:23 pm
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The latter refers to the quality of jobs lost and the quality of replacement jobs.Unemployment misery is rising even more rapidly than burden.
In the current Great Reckoning high skills jobs in construction, manufacturing, logistics and even energy supply and in aspects of the agricultural economy are being lost in large numbers. This means vast human capital is lying fallow. Unlike, land, fallow human capital is not regenerated. It degenerates.
Moreover, when a worker accepts a replacement job that requires, inherently, less skill, the return on that worker’s accumulated human capital ( sticky knowledge, relationships, experience) plunges. As a consequence the ability of that worker to regain prior income levels and hence net worth starts to first decline slowly and then after two or three years, catastrophically. This is eventually manifested in a swelling lower class and a compressing middle class.
As the middle class compresses, so shrinks the intrinsic, long term capacity of the Nation to create wealth. This is occurring at precisely the time when both short and long term US liabilities are exploding: a collapse in true American net worth, being reflected every day in the global price of the dollar. Remember the dollar is backed solely by the long term capacity of American workers to produce wealth. It is not the full faith and credit of Congress but that of productive American workers( doing real jobs that create real value) that backs the dollar
No large economy can afford to treat with contempt skilled jobs in manufacturing, construction,logistics, energy and agriculture: these are the foundations on which a service and a financial economy are built.
An economy where most people expect to earn a living manipulating symbols or providing health , entertainment, administrative and retailing services to each other is a Vapor economy. It is an economy where an increasingly elaborate and hugely overpriced superstructure is being built on an increasingly fragile and fatigued infrastructure.
When the weary, neglected, bridge collapses, the fanciest investment banker in the most ostentatious limo cannot get across the raging torrent.
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