Productivity Only Causes Persistent Unemployment If Policymakers Fail To Provide Adequate Demand

Representative Jesse Jackson, Jr gave a speech on Friday that nobody noticed until Catharine Smith wrote it up for the Huffington Post on Sunday evening. The gist is that the iPad and related technologies are increasing productivity in the publishing industry and this is costing jobs:

Why do you need to go to Borders anymore? Why do you need to go to Barnes and Noble? Just buy an iPad and download your book, download your newspaper, download your magazine,” the Congressman said.

He also cited Chicago State University’s initiative to replace textbooks with iPads for freshman students. Jackson stated that the goal of the University was to create a “textbookless campus within four years.”

“What becomes of publishing companies and publishing company jobs?” Jackson asked the House. “What becomes of bookstores and librarians and all of the jobs associated with paper? Well, in the not-too-distant future, such jobs simply won’t exist.”

People have been mocking this sort of argument since at least Bastiat’s thing about the candlemaker’s petition but Jackson is, of course, correct. My mother once possessed a lot of highly specialized human capital related to pre-digital page design; the kind of cutting and pasting that was done with very sharp knives and rubber cement. The rise of Quark XPress and Adobe PageMaker really did put people out of work, just as electrical lights put candlemakers out of work, and ebook publishing will decrease employment in book retailing. But the point is that when you take the long view it’s not as if steadily increasing productivity leads to steadily declining employment—what it leads to is higher average output and rising living standards. But it only accomplishes that if the policymakers charged with macroeconomic stabilization use fiscal and monetary policy to ensure that there’s a level of aggregate demand that’s commensurate with our productive capacity. The fact that we have over 9 percent of the workforce unemployed indicates that they’re failing. But this is the fault of the US Congress and the Federal Reserve Open Market Committee (and the European Central Bank, and Angela Merkel, and the Bank of Japan, etc.) not Steve Jobs.