The energy problem behind Trump’s election is not the one people have been looking for. Instead, it is an energy problem that leads to low wages for many workers in the US, and high unemployment rates in the European Union. (The different outcomes reflect different minimum wage laws. Higher minimum wages tend to lead to higher unemployment rates; lower minimum wages tend to lead to higher employment, but unsatisfactory wages levels for many.) The energy problem is also reflected as low prices of oil and other commodities.
To try to solve energy problem, we use approaches that involve increasing complexity, including new technology and globalization. As we add more and more complexity, these approaches tend to work less and less well. In fact, they can become a problem in themselves, because they tend to redistribute wealth toward the top of the employment hierarchy, and they increase “overhead” for the economy as a whole.
In this material, I explain how inadequate energy supplies can appear as either low wagesor as high prices. Basically, if energy supplies are inadequate, workers tend to be less productive because they have fewer or less advanced tools to work with. Their lower wages reflect lower productivity (Slide 20). Slide 6 offers some additional insights.
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