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Why progress always ‘puts people out of work’

Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation, Adjunct Professor(ret.), Ross School of Business, University of Michigan.

Let’s refine our definition of “the employment problem” by understanding that the biggest, most labor-intensive companies—the kind that absorbed all those farm laborers and created the 20th-Century middle-class—were inevitably destined to become not “centers of employment,” but centers of unemployment.

Here we begin by recounting my Grand Rapids speech and go on to explain the Vector One and Vector Two phenomenon, the entire phenomenon of ever-more-efficient companies and organizations (or entire sectors, like our friends the farmers) becoming smaller and smaller in terms of employment. Meanwhile, new technologies and new products and new market forces breed “job creation” elsewhere in the economy. A company or even an entire sector must do things better and more efficiently, or die. They eventually will die anyway unless they reinvent themselves as producers of new goods and services rather than inevitably obsolete goods and services.

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