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HughPickens.com [hughpickens.com] writes:

Rebecca Rosen has an interesting essay at The Atlantic on economist John Maynard Keynes' prediction in 1930 that with increased productivity, over the next 100 years the economy would become so productive that people would barely need to work at all [theatlantic.com]. For a while, it looked like Keynes was right: In 1930 the average workweek was 47 hours. By 1970 it had fallen to slightly less than 39. But then something changed. Instead of continuing to decline, the duration of the workweek stayed put; it’s hovered just below 40 hours for nearly five decades. According to Rosen there would be no mystery in this if Keynes had been wrong about the economy’s increasing productivity, which he thought would lead to a standard of living “between four and eight times as high as it is today.” Keynes got that right: Technology has made the economy massively more productive [yale.edu].

Now a new paper Benjamin Friedman says that “the U.S. economy is right on track to reach Keynes’s eight-fold multiple” by 2029—100 years after the last data Keynes would have had. But according to Friedman, the key reason that Keynes prediction failed to come true is that Keynes failed to allow for the changing distribution of wealth [springer.com]. With widening inequality, median income (and therefore the income of most families) has risen, and is now rising, much more slowly than Keynes anticipated. The failure of the workweek to shrink as he predicted follows. Although Keynes’s eight-fold figure holds up for the economy in aggregate [gpiatlantic.org], it’s not at all the case for the median American worker. For them, output by 2029 is likely to be around 3.5 times what it was when Keynes was writing—a bit below his four- to-eight-fold predicted range. "What Keynes foretold was a very optimistic version of what economists call technological unemployment—the idea that less labor will be necessary because machines can do so much," writes Rosen. "The prosperity Keynes predicted is here. After all, the economy as a whole has grown even more brilliantly than he expected. But for most Americans, that prosperity is nowhere to be seen—and, as a result, neither are those shorter workweeks."

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