Regardless of productivity and regardless of any other measure, you must have jobs to keep the economy running. If I have doubts about whether I will have a job in the future, I will not borrow money and I will not spend money on things I do not need, like big screen televisions, a new car, etc.
The idea that people are an expense and that you can get rid of your employees and not have a domino effect on the entire economy is simply stupid.
If you give people a job, they will have the money to spend. If you give them job security, they will have confidence to spend the money. Otherwise, they will squirrel away the money and spend only what they have to.
There really is nothing simpler than this one economic concept. The entire economy is based on jobs. The very last thing you should do is cut jobs. Cut pay for everyone by percentage points when productivity wanes. Use incentives to boost productivity. However, cutting people is a recipe for your own destruction. Just ask Circuit City. Just ask John McCain. Just ask every other loser who have crashed and burned due to the terrible U.S. (and global) economy.
What’s happened is that huge corporations have seen boosts in productivity and decided… hey, we don’t need these people. Rather than redeploy or retool the organization, they just got rid of people… as if jobs grow on trees, as if worker bees who toil in cubicles suddenly can become whiz bang entrepreneurs, start their own business and make it big. Then, as they offshore still more jobs to places where labor laws are lax, they patted themselves on the back and gave themselves huge raises. The money floats up rather than trickles down. It’s inverse Reaganomics. Adding insult to injury, these same wealthy people got tax cuts, as if they needed them. So where is all the money going? Who has it? Why is the economy shrinking?
Greed at the top and ignoring the rule that people are the foundation of the economy and without jobs, people don’t have money to spend.