No, the economic problems of the future will not be about growth but about something more nettlesome: the ineluctable increase in the number of people with no marketable skills, and technology's role not as the antidote to social conflict, but as its instigator.

                                        -- Gregory Clark, "Tax & Spend, or Face the Consequences"

Last time, we began the discussion about Technological Unemployment and Underemployment. We saw that real wages and worker productivity began to diverge in the mid-1970s, allowing the surplus capital to gush upwards to a small, powerful economic elite. As families work harder and longer, the excess value that their labor provides is captured by corporate and financial classes that do not plow that money back into investments in the real economy, but rather sock it away in private bank accounts via bloated executive salaries and bonuses, or, even worse, park it in the exotic derivatives that have brought our financial system to a grinding halt. When we talk about the hyper-concentration of wealth in the hands of the few (the top 1% control more wealth than the bottom 90%), the mechanism that makes this possible is technological unemployment, the de-skilling of labor and its replacement with automation and technology.

But wait a minute, what about globalization, the collapse of labor unions, and the erosion of our educational system? Aren't those the real culprits here, and not technology? Well, yes and no. While important parts of the picture, these three variables are themselves actually just symptoms of the more-important technological undercurrents. After all, what drives globalization? It's the advanced computer and financial technologies that allow large corporations to control huge, sprawling supply chains with automated oversight. Sure, the cheap labor available in Asia and Mexico are crucial, but it is the new information technologies that allow for the maximum exploitation of global cost differentials.

And the collapse of labor unions? Sure, there are important legal and political policy decisions that have eroded the power of organized labor. And yes, the cheap labor from overseas provided leverage for management to force draconian concessions from unions. But the background variable that made this all possible was the radical de-skilling of work that comes with automation and computerization of tasks. The base power of labor unions is specialized skill, and once that skill get captured by machines, what's left of bargaining power? Certainly, lower-skilled sectors have had some success in organizing, but their modest gains are far outweighed by the general downward drift of wages in general. And the trajectory of automation is upwards, so that higher and higher levels of skilled occupations become threatened by technological factors. Yesterday, it was garment workers and assembly line personnel being replaced, today it is computer programmers. Very few people, I would wager, consider themselves too skilled to be replaced.

We're getting close to Keynes' notion that technological unemployment is about improved productivity "outrunning the pace at which we can find new uses for labor." But first a word about educational failure, because it is related. It is common to assail our educational system as failing to prepare our young ones for the high-tech demands of the future. To meet the challenges of capitalism's 'creative destruction,' whereby old sectors of work are swept away, education over the last few decades really needed to step up and attack the opportunities opened up by globalization and advanced information technology. It did not happen. Drop-out rates continue to swell, American children continue to trail the pack in math and science, and even successful high school graduates are hitting adulthood with an embarrassing lack of basic reading and thinking skills. We have become a nation of lazy dummies, unprepared for the glittering future economy of green industry, software engineering, and international law. We thus need to make an epic national push to educate our children (and adults) for the new realities. 

But again, we're reversing the order of things. With the rapid pace of technological advance, can any one national populace really keep pace, educating its citizens to track with changes in the spheres of science, technology, and business? It is the nature of corporate-controlled technological change to sweep around the globe and grab what is needed at any particular time, in human labor, financial markets, or natural resources, and then to swoop out when conditions change and make another area more attractive. So for a while the US was ascendant, then the Middle East for its oil, now China for its rapidly industrializing base population. But tomorrow, if conditions change, the locus of change will switch to somewhere else. In all cases, the populations of the home countries are fixed, whereas technology and money can swirl around to wherever they are needed, often in the blink of an eye (think electronic finance, which moves trillions of dollars around the world every day). Real people on the ground will never be able to educate, reeducate, and retrain themselves to keep pace with the accelerating changes in technology. Sure, there will always be winners, and there will always be successful sectors of the economy as a whole. But the ranks of the winners will continue to shrink, and the bubbling cauldron of the losers' rage will eventually jump the rim. As Gregory Clark puts it:

The battle will be over how to get the economy's winners to pay for an increasingly costly poor.... With the march of technology, the size of a future American underclass dependent on public support for part of its livelihood is hard to predict: 10 million, 20 million, 100 million? We could imagine cities where entire neighborhoods are populated by people on state support....So, how do we operate a society in which a large share of the population is socially needy but economically redundant? There is only one answer. You tax the winners -- those with the still uniquely human skills, and those owning capital and land -- to provide for the losers.