Magazine article The American Prospect

Good Work

Magazine article The American Prospect

Good Work

Article excerpt

More than two decades ago, the Nobel Prize--winning economist Wassily Leontief imagined a world where productivity was so high that machines would produce all physical goods. There would be just one manufacturing job: the human worker who flipped the switch. Leontief wondered, what would everyone else do for a living?

His answer was that the immense wealth generated by all that productivity would have to be redistributed so that other people would have useful employment providing services to complement all those physical goods. Otherwise, nobody could afford to buy the products.

Leontief's industrial dystopia has arrived a lot sooner than most economists forecast. There have been "automation" scares before. But in our own era there were adequate mechanisms of redistribution, so that increased productivity eventually produced other jobs at decent wages. As recently as the 1990s, rising productivity ended up producing rising employment and earnings.

Today, however, high productivity is blending with increased outsourcing so that job growth lags far behind gross domestic product growth. As Representative Barney Frank observed in a recent economic address, "We are at a point where the ability of the private sector in this country to create wealth is now outstrip ping its ability to create jobs." The reason? "A disproportionately large share of the increased wealth in this society is now going to the owners of capital," Frank explained.

Two paths are possible. We can just let the market allocate the fruits of all that productivity by leaving private wealth highly concentrated. The wealthy would then create personal service jobs by hiring legions of chauffeurs, caterers, nannies, housemaids, decorators, butlers, etc. In the retail sector, a few astronomically wealthy entrepreneurs would hire legions of low-wage sales clerks. This would soak up the unemployed, but rather in the manner of Upstairs Downstairs England.

Alternatively, we could tax some of that private wealth and use social investment to create decent jobs that would serve a much broader range of human needs--jobs in teaching, health care, child development, and other high-quality public services. Relatedly, we could use the power of government regulation and trade unionism to ensure that private service-sector jobs--at hotels, nursing homes, Wal-Marts, fast-food joints, and so on--pay a living wage. …

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