John Maynard Keynes said in the 1930's that productivity will rise so much, that we will soon have too much leisure time on our hands. But if you look around, that is nowhere close to the reality that we are living.
What happened? Was he simply wrong?
He made this comment a year after the 1929 market crash, in the middle of the depression, so it WAS a big prediction to make. Maybe he was simply wrong. But I do not think so.
For me there are four large dimensions or ideas in play - Productivity, Reward for Productivity, Consumption and Expense of Consumption.
Productivity has increased dramatically since the 1930's, so in that regard Keynes was 100% correct. Just take one single tool most of us carry around - Our Smartphones. This one little device has replaced the telephone, the videophone, camera and video camera, the mapbook (and navigator), calculator, compass, dictionaries (explanatory and translation), the local library, and expanded it to the global library. And that is just scratching the surface. These leaps and bounds in productivity take place all around us.
Unfortunately, the Reward for Production has not kept up with the increase in productivity. Measure after measure of the economy shows different angles of this problem. For example, rising inequality, especially in the USA. Another measure shows that wage rates did not increase much in the last 40-50 years, compared to the increase in wealth of stock exchange investors. (A vanishing small portion of the population owns shares.) Ninety percent of the population's wealth grows at the rate of inflation adjusted GDP, OR LESS. Ten percent of the population walks away with the rest.
Consumption has increased very much. But if you look at the details, again the distribution of this consumption is very inequal, so much so that around one out of every 7 people in the USA went to bed hungry at least once in the last 30 days, because there was not enough to eat in the house. This problem is having a massive spotlight shone on it by the Covid19 pandemic. Also 23.5 million people live in
in the USA. A food desert is an area without adequate access to healthy food, like fresh fruit and vegetables. And this number is probably vastly undercounted. So while the size of the economy has grown not everybody has access to the goods produced by that economy.
Finally, the Expense of that Consumption has become completely distorted. Fast food is extremely cheap; on the other hand healthy, nutritious food is expensive. Basic goods like housing and university costs have exceeded inflation greatly, in a time when wages barely kept up with inflation.
I don't think Keynes was wrong, productivity has indeed increased tremendously. What went wrong is how those benefits were distributed.
On how much is enough - Why (1)?