{"id":352,"date":"2010-02-13T09:00:00","date_gmt":"2010-02-13T14:00:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=352"},"modified":"2018-08-21T09:12:17","modified_gmt":"2018-08-21T13:12:17","slug":"an-article-in-the-wsj","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/02\/13\/an-article-in-the-wsj\/","title":{"rendered":"An article in the WSJ"},"content":{"rendered":"

The Wall Street Journal ran a story yesterday of import.\u00a0 It is entitled, “Economists Expect Shifting Work Force.”\u00a0 In it, the article states\u00a0that the consensus amongst economists is that fully 25% of the 8.4 million jobs lost so far in the recession will never return.<\/span><\/p>\n

Analysis:<\/strong> While this article represents estimates by economists as opposed to cold, hard data, it is nonetheless worthy of comment as it highlights the nature of capitalism.\u00a0 Joseph Schumpeter once wrote about capitalism in terms that are actually very descriptive.\u00a0 Namely, he said that capitalism was all about creative-destruction.\u00a0 Capitalism creates things anew and gets rid of that which doesn’t work.\u00a0 That is, after all, the nature of capitalism: competition.\u00a0 Competition in the business world leads to outcomes that are similar\u00a0 to the natural world and its “natural selection.”\u00a0 But capitalism is very different because the pace of change is so much faster than in the natural world.<\/span><\/p>\n

In fact, one of the measures of health of capitalism is the degree off rapidity to which its businesses respond to change.\u00a0 From the beginning off the blog I said that another Great Depression was impossible.\u00a0 My reasoning was that businesses and governments have both better techniques for dealing with economic slowdowns than in the GD and they have much better access to information.\u00a0 Its this latter point that the WSJ article supports.\u00a0 With information in hand about inefficiency, businesses responded to the economic crisis very quickly.\u00a0 No doubt the rapid response also made the recession happen faster, too.\u00a0 However, my counter-intuitive point is that the economy not replacing 25% of the jobs lost is a good thing.<\/span><\/p>\n

This is because those jobs represented the parts of capitalism that were no longer leading to economic growth, or that were nearing no longer contributing to economic growth.\u00a0 Not only that, but for the economy to re-emerge from this recession in\u00a0a healthy way, it will have to have created new, better jobs.\u00a0 Unfortunately, its my guess that this process will take a long time.\u00a0 Yes, the economy will definitively emerge from recession (as opposed to\u00a0just the fourth\u00a0quarter’s massive inventory rebuild), probably in the late 2010.\u00a0 However, for there to be new innovation and new industry created takes time.\u00a0 The U.S. economic growth of the Bush years was largely debt-fueled and for the most part didn’t represent real<\/em> economic growth – just a gigantic free-money\/shop-til-you-drop fest.\u00a0 So now businesses really have to innovate.\u00a0 That is tough work.<\/span><\/p>\n

Importance grade:<\/strong> N\/A; economists’ estimates are not real data; but the WSJ story did highlight an important point.<\/span><\/p>\n

I hope that each of you has a great day and weekend!<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The Wall Street Journal ran a story yesterday of import.\u00a0 It is entitled, “Economists Expect Shifting Work Force.”\u00a0 In it, the article states\u00a0that the consensus amongst economists is that fully 25% of the 8.4 million jobs lost so far in the recession will never return. Analysis: While this article represents estimates by economists as opposed […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-352","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/352","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=352"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/352\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=352"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=352"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=352"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}