What do we care more about – GDP growth or employment? Yes, I know it's not supposed to be an either-or proposition. If the economy grows then people get hired as a matter of course. Sometimes there's a lag or an explanation for why this time new hires are part time or offshore, but eventually it all falls into place.
Not any more.
In the last 13 years the number of jobs in the US has not grown. The economy however has grown quite a lot. Clearly it's not holding up its end of the deal.
There has been a long running debate among economists about how productivity growth will rise faster than our material needs. We can grow more food than we can eat. We can build more laptop computers than we will ever buy. What will all those unnecessary workers do?
Before I yield to this Malthusian negativity I need to see completely open and free markets. First we must provide unlimited international consumer goods to all Chinese workers and allow their wages and the Yuan to float, then we'll see how much excess labor there is on the planet.
In the meantime – here's a plan: let's never mention the word GDP again. I never want to hear about any policy intended to improve"growth". In fact I would be happy to see policies that boost employment even if they injure GDP. Economists will gasp in horror and run out of the room screaming inefficiency! inefficiency! Let them go – they're fired.
If the price of goods goes up at Walmart but the shoppers all have work and receive no food stamps or unemployment insurance then that's a win. If a gardener has a green card and never takes cash (only credit cards) then grass cutting will cost more – and my son might find a summer job. Some stuff will get more expensive but people will find work. Profits may go down and cheap imports should become scarce. It would all be part of our new, less consumer friendly world. The losers would be multinationals who outsource, parasitic Asian mercantilists and quite possibly the S&P 500.
Higher employment levels would increase government revenue and reduce support payments to the poor. We could even raise taxes on those middle class freeloaders who pay no income tax. Medicare and Social Security might stave off bankruptcy for a few years. Upward mobility would rise. Old people could find work they will badly need to help them pay for all those drugs we can't afford to buy them.
Can we even imagine an America where the consumer is NOT king?