6.7.8.2 Reacting to Job Losses

(This is a current page, from the Patterns of Power Edition 3 book contents.  An archived copy of this page is held at http://www.patternsofpower.org/edition03/6782.htm)

Automation is increasingly causing jobs to be lost across the world.  Globalisation has also caused job losses in wealthy countries, as work moves to places where costs are lower (3.5.4.4).  Politicians have several options to mitigate the problems:

  • They can make targeted interventions in the areas most affected – including development grants, tax concessions and job-creating projects – as described earlier (3.3.7.1).
  • They can subsidise training programmes, so that unemployed people can learn new skills and return to employment.
  • Resorting to protectionism has serious disadvantages and is likely to result in retaliation by the other country (3.5.4.2). It is, though, possible under WTO rules to protect an industry by placing tariffs on unfair ‘dumping’ by other countries: the practice of exporting products at below the cost of supply, with the objective of cornering a market and eliminating competition as part of a long-term growth strategy.

Automation and globalisation have the effect of reducing costs, so consumers have more money to spend on other goods and services.  This results in economic growth and an increase in jobs elsewhere in the economy, so it is not unreasonable that a society uses some of that increased wealth to help those who have lost their jobs.

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