by the Sandwichman
In 1995, following several years of "jobless recovery", Jeremy Rifkin's The End of Work was published and became a short-lived sensation. There was nothing new in Rifkin's central thesis of intractable technological unemployment. But the timing of his book seemed impeccable. For a while. Then a funny thing happened. The fantastic American job-creating machine fired up and talk about the end of work receded.
That "job-creating machine" was a centralized policy response to stagnation, not some inherent dynamic feature of free-market capitalism. The following graph by Paul Krugman shows the timing and effect of the Greenspan bubble machine.
Absent a new bubble, the collapse of the house price bubble brings us back to the question of technological unemployment or "the end of work" as Rifkin put it. Apologists for capitalism will be rooting for a new bubble. But is a new bubble even feasible? I say no, at least not for a considerable period of time. Bubbles are a confidence game. That is, they rely on widespread confidence that they are not bubbles. Too much learning has occurred over the past year for a new bubble to be able to take hold. Maybe after several years of forgetting...