No. of Recommendations: 4
Or do banks and mutual funds p#ss it into the wind?

Pretty much. Don't forget, mutual bonds don't actually provide working capital, anyway.

As far as I see, starting with Wall Street's con games and blithering idiocy that led to the bust (dot.coms make money by advertising other dot.coms, etc.) followed by the money laundering of mortgages, etc. very little of those record profits, including from lower production costs due to increased productivity, was put to good use as working capital, especially not in this country.

But the bigger concern is that this isn't just because Wall Street is a bunch of greedy buggers looking for a short term jump with no interest in deploying working capital to some further gain (which is, of course, true). My question (and implicitly that of the movie) is where working capital could be usefully deployed to create new and better jobs—I don't accept that this is a "law" of economics or that there is historical evidence this happens, without a host of intervening variables that render any cause and effect claims moot.

Let's take a real world example. 15 years ago, it took considerable clerical staff work to put together a university course syllabus, process book orders for courses, etc. Now most faculty do this themselves and post the syllabus on line. So (ignoring the union), the need for clerical staff has been reduced by about 75%. Now, it does turn out that there is a need for IT support, which is new (but as computing has become more self-sufficient, we need fewer IT staff than a few years ago). So for every 3 clerical staff no longer needed, we maybe need 1 IT person. The other 2 clerical staff then need to find jobs elsewhere. (Again, the union has made these cutbacks less severe, and some faculty have not adopted new ways, but in principle the numbers would be something like these.)

I think this has happened across employers and industries, though some have managed to invent new, unnecessary, overpaid reasons for being (notably the bloated finance industry until the crash). Think about tax accountants for people who were uncomfortable doing their own taxes who can now use tax programs—those accountants now have to get work cooking the books for someone trying to dodge taxes or a company trying run a scam. Once quality medical record and billing programs are really available (the current ones are overpriced and suck), much medical clerical staff will be unnecessary. As people become more comfortable shopping on line, as we saw this Christmas, local shops will disappear (and shipping jobs will not pick up the slack).

It's nice to hear that people need to get better educated for the jobs of the future, but I don't have a clue what those jobs will be. Engineers are having trouble getting jobs. I think IT jobs will be less necessary (who does their own programming anymore? a few technicians can service breakdowns for huge systems). I suppose we could have a society where everybody sues everybody else providing lots of jobs for lawyers (oh, wait a minute, we already have that society). We could certainly improve K-12 education by tripling the number of teachers, but that means tax money not private investment, and in some ways computing, if done well, could actually mean more effective teaching with fewer teachers than would otherwise be needed. We will need more caregivers for the elderly, but so far those have been low skill, low pay jobs.

What we know is if goods and services can be produced with less work and if goods last longer less labor is needed to provide the same goods and services. We also know that planned obsolescence and fashion cycles have been a way to get people to buy goods that they should not need to buy (by opting out of this, I have been able to save more than those who think being trendy matters). But I really think computing/internet is getting too close to the movie for comfort. Until a few years ago, I was very careful to buy each upgrade for computer programs, because falling behind meant not being able to share or possibly not being able to use my own data when I did move to a new generation of computer. Things have gotten better, so I no longer need to upgrade as often. And there is absolutely nothing available now to replace my electronics for which I feel any urgency to buy (except my dead digital camera). I would get a larger capacity iPod, but I'm not in a hurry. New desktops have no features that are improvements on my 3-year old (almost). I gave my never used jogging CD player to our pet campus bum.

Until somebody can say what the new jobs are going to be with believable numbers, not wishful thinking, economic "laws," or hype, I won't believe in them.
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