There will eventually come a Day where the Efficient Markets Hypothesis will be throughly discussed, then discarded. The major problem with it comes in the fact that bubbles are created with periodic frequency, bringing real Inflation into the economy, then Monetary policy is utilized to ensure that the Inflation is not vented from the system as the bubble is dissipated. Strangers to the Street cannot understand the dangers of an economy based upon the glories of past bubbles. No one really understands this hazard, where burst bubbles have greater reach and depth, due to use of older, established pathways of Retreat. Refusal to allow the Money Supply to shrink insists that the next bubble will be more expensive, and more destructive upon bursting. Economists have always concentrated upon the establishment of the next bubble, rather upon the creation of a sound economy. It will be their eventual Downfall!
I liked this Post from Mish, but he doesn’t delve into the most important aspect of the Robot layoffs. They are very expensive equipment, with huge amounts of Capital invested within their construction. Humans, on the other hand, can be created much cheaper, and their Training can be accomplished at much less Cost; though there is still the factor of rated Production failure; humans produce less with a much higher Mistake level. There is no real competition that humans can prove superior, except in the areas of lower Initial Cost, and in ease of retooling for alternate production. This is where humans may beat their counterpart machines; they being capable of Upgrade or Downgrade, switch of industrial sector, and even provision of insufficient fuel to maintain current economic function. The role of the Machine will eventually fail, because the degree of specialization will travel only so far on the Cost-savings scale.
Leave it to Paul Krugman to come up with a disjointed Thought, then twist it around to serve his purpose; he is almost as bad as I. He speaks eloquently of the lost Millions with their lost Jobs. I myself like to call the current Recession the mandatory Retirement of the Baby Boomer Generation. Paul waxes robust on the creeping nature of climate change, but fails to mention that no reconstruction of the economy could actually have an Impact upon the environment within a Score of years; much too long to forestall any danger within the Pipeline. No one can answer the eternal Question of what God wills. The forces affecting this Earth–Sunspots, volcanos, earthquakes, foul Wind patterns, and Ocean currents–all are massive, and outside the current capacity of humanity to alter. A single small volcano could overturn the most rigorous Emissions policy for any nation or planet. We should turn Our efforts to affecting that which We might, and forget the more extreme activity. lgl