The current issue of the American Economic Review contains an article in which the author claims that the 1930's was the most technologically progressive decade of the past century. This led me to muse on parallels between the 1930's and the present.

Today's labor market could be described in terms of progress and displacement. In some sectors, notably manufacturing, productivity is growing faster than demand, creating excess labor. Eventually, workers will find their way to other industries, in which demand is growing faster than productivity (in my article, I suggested home health care as an example). However, this process requires a number of adjustments -- wage changes, worker retraining, worker relocation, etc. -- that take a while to work out. Above all, we no longer have an irrationally exuberant stock market creating the impression that everyone can be productively employed doing business development for a dotcom. People have to find real jobs, which is more difficult.