by the Sandwichman
Say economic growth after the BIG BAILOUT is slow for several years (a modest proposition). Inevitably the unemployment rate will mount. People may attribute the increased unemployment to the aftermath of the financial crisis. Post hoc ergo propter hoc. But, rather than being the CAUSE of unemployment, it would be more accurate to view the financial distress as simply the withdrawal of a palliative.
Economic orthodoxy insists that "technology creates more jobs than it destroys" -- a view that by the end of 1932 even Fortune magazine dismissed as unsatisfactory. In an article titled "Obsolete Men", the Fortune editors recalled the mechanistic explanation that the reduced cost from the use of labor-saving devices led to lower prices, increased demand and new employment to meet the greater demand. Where demand for any particular good was inelastic, workers displaced from one industry would find employment elsewhere.
Fortune concluded that it was accelerated economic growth, not lower market prices, that counteracted the job-killing potential of labor-saving technology. But, as an article in today's Globe and Mail puts it, "... U.S. growth has always been fueled by easy access to debt."