Tue, 03 Feb 2004

The Churn

The following reprint from the Federal Reserve Bank of Dallas explains why job destruction is an essential part of job creation. Yes, it's a PDF, but download it and read it anyway. It's good, like everything I've seen come out of the Fed of Dallas. Good people there.


Economists, questioning why America's job creation in the recovery of the early 1990s fell short of expected levels, have reconsidered the ideas of Joseph Schumpeter, who offered the first scholarly explanation of the churn in the 1930s. Schumpeter advanced the paradox that economic progress destabilizes the world. Progress and job destruction go hand in hand in a dynamic process he called creative destruction. Today, as in the 1930s, Schumpeter's insights help explain how jobs emerge and disappear through the innovation and entrepreneurship of free enterprise.


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