When the disappointing jobs numbers were reported last week (employers added 120,000 jobs in March, about half the number reported in the two previous months), analysts tripped over themselves looking for an explanation. Of course, jobs numbers are bound to vary, but in my view the long-term trend calls for more jobs to disappear, and the reason is clear as day: the exploding Second Economy.
The Second Economy — a term the economist Brian Arthur uses to describe the computer-intensive portion of the economy — is, quite simply, the virtual economy. One of its main byproducts is the replacement of low-productivity workers with computers. It’s growing by leaps and bounds, brimming with optimistic entrepreneurs, and spawning a new generation of billionaires. In fact, the booming Second Economy will probably drive much of the economic growth in the coming decades.
Unfortunately, the Second Economy will not create many jobs.