JOSEPH SCHUMPETER knew that innovation brings some costs. The bank-teller makes way for the cash machine; e-mails push the postal service into decline. Technological advance benefits the economy as a whole by raising incomes and boosting productivity, but it harms the unfortunate few who have built careers in the destroyed industry. On January 16th President Barack Obama unveiled a proposal which seeks to even things out.
Mr Obama wants the government to provide workers with wage insurance. If a worker blamelessly loses her job and takes a new one which pays less—and less than $50,000 the government would make up half the shortfall for two years, up to a total of $10,000. An estimate from 2007 suggests this would cost $3 billion-4 billion a year. That means it could be financed with a tax, which supporters would describe as an insurance premium, of around $25 per year, per worker. The proposal is likely to remain theoretical for the foreseeable future; it has few takers among Republicans, who control Congress and therefore the budget. Yet as an example of how the American left is thinking about how to respond to globalisation and automation it is worth examining, not least because whomever the Democrats nominate as a presidential candidate in July is likely to borrow it.
The government already offers the same terms to workers over 50 who lose their jobs...Continue reading
Source: United States http://ift.tt/1JkOMQG
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