Stimulus policies can’t increase employment/jobs because the world has changed and is less and, in some cases, not at all, responsive to government borrowing to finance increases in agregate demand. As Al Gore explains (The Future, pp. 26-27), the economy is global in scope and characterized by offshoring and by computerized, often interconnected, robotics (“robosourcing”). In this economy, there is “a simultaneous weakening of demand and surplus of production”. Stimulus policies become “less effective” as the economy becomes more productive “with far fewer jobs”, and these developments foster “declining incomes, and thus declining consumption and demand”.
A New York Times article, Recovery in U.S. Lifting Profits, Not Adding Jobs (2/4/13), makes similar points. Corporations don’t need to hire because they can, via offshoring and robosourcing increase productivity and, not incidentially, profits. For example, United Technologies has employed about the same number of people (a little over 200,000) for the past seven years and, at the same time, “annual revenues have soared to $57.7 billion in 2012 from $42.7 billion in 2005”. Actually, United Technologies will eliminate 3,000 from its payroll this year, “on top of 4,000 let go in 2012”.
National stimulus policies are, increasingly, ineffective in a global, offshoring, robosourcing economy. Effectiveness in the global economy requires global economic policies. Global economic policy networks (issue networks) are required to make, implement, and evaluate these policies. (In a future post, I’ll identify sources about issue networks.)
Paul Krugman continues to beat the Keynes-stimulus drum (New York Review of Books, 6/6/13, pp. 67-73) even though he’s a Nobel Prize winner–in economics, no less–indicating that those stuck in a prior age (or “epoch”, to use Marx’s word), no matter how smart, are incapable of understanding the current one. To understand our present situation we must not begin with the past; with Keynes and the Great Depression. Rather, we must begin with the present; with globalization and the Internet.