Saturday, March 18, 2017

Note 92

As the productivity of production grows while the productivity of consumption remains stagnant, and working hours remain fixed, demand lags production, and deflation ensues.

So what we need as a society is a flexible work schedule. Unemployment is an ineffective adjustment mechanism that occurs due the fundamental inability of society to develop work processes and structures that work around employment frictions. That is the task that economists, management scientist and unions have failed to set themselves. Adapting the efficiencies promoted by the gig economy while preventing the downsides is a useful step forward that policymakers at present can pursue.

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