The 2012 Election

Let me say this again.  Whichever party party has control after the 2012 elections, there is little doubt that the voters will be of the opinion that it should be seen as a mandate to do something about jobs.  However, in that regard the election is a lose-lose proposition.

If the Republicans are in control, they will attempt supply-side stimulus.  Remember AT&T's forklifts that drive themselves?  If the business is encouraged to invest in capital equipment, they will buy those forklifts and lay off their drivers.  Here is what is very, very important.  The driverless forklifts are just one example of an enormous amount of productivity enhancing technology that is out there.  The more supply-side stimulus, the higher the GDP growth and the greater the job loss.

If the Democrats are in control, the emphasis is on demand-side stimulus.  Rather than tax breaks and investment incentives driving the purchase of driverless forklifts, et. al it will be greater demand.  People will buy more stuff which leads to additional profit and simultaneously creates the need for larger capacity.  Old capacity will be retired.  New capacity will be created.  Productivity will be increased. There will be increased GDP growth, but again greater job loss.

The fact is, you cannot stimulate the economy and thereby increase GDP, without encouraging modernization, which destroys jobs.  As I say, Information Age problems do not yield to Industrial Age problems.  The solution is not to be found there.

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