Unemployment the Role of Information Technology and the Internet, in the 21 st Century.

1. By Dr Costas Kyritsis (http://preveza.teiep.gr/kyritsis) (September 2006) Unemployment the Role of Information Technology and the Internet, in the 21st Century.

2. Outline of the presentation • Part 1 : Unemployment; How much, Where, When, How, Why. New macroeconomic cognitive principles , and new understanding of the emerging workplace of the 21st century. • Part 2: How the web in the society of information is absorbing unemployment. New insights to the subjectivity of the self-employed individual. New techniques of web-sites for e-business and remarkable cases from unemployment to innovative e-business success

3. PART1 1) We analyze with meaningful and reliable statistical data the macroscopic situation and its dynamics of the unemployment in Europe , USA, Canada. 2) We discuss the hidden and long term macroeconomic reasons for this phenomenon. 3) To do so we introduce some of the basic tools in macroeconomics like: 3) Power and Pareto distribution of the size of organizations (as an instance of a more general law that appears also in physics, the web, ecology and even astrophysics) We explain the emergence of this law from randomness and evolution 4) We formulate the win-lose war of business competition and the win-win peace of business cooperation as linear coupling system, and with Volterra equations (that were first introduced in ecology) 5) We deduce increase of unemployment by the win-lose war of business competition and decrease by the win-win cooperation which we term as “complementarity” 6) We explain also unemployment as a temporary symptom of fast social transformation due to technology advance and growth 7) We describe the new workplace of the 21st century as a shift to a less smooth shape of the Pareto distribution, where self-employment is increasing fast trying to absorb the unemployed. 8) We also discuss governmental social welfare and moral issues of the unemployed Detailed Preview of the Presentation : Unemployment

4. PART 2 1) We analyze the requirements and advantages of small e-business for a self-employed. 2) We analyze all the necessary spirit, mind-set , beliefs, and emotional intelligence about money, success in goals, risk, and business socialization, for the individual These elements may be a radical change to a new type of subjectivity compared to the standard of the past of a typical employee that is compensated for his duration rather than his innovation 3) We give a detailed technical description of the functionalities and features that are required for a successful site in e-business 4) Finally we describe remarkable cases from unemployment to successful innovative e-business in a) New Internet marketing techniques b) New information products and services c) Web Advertising d) Information technology tools e) Retail e-commerce Detailed Preview of the Presentation : Techniques for Self-employment in the web

5. Part 1: The Statistics of Unemployment

6. Unemployment Rates in Europe

7. The time trend of Unemployment Rates in Europe

8. Unemployment Payments

9. Qualifying time periods of employment before entitlement of unemployment payment

10. Maximal duration of unemployment payment

11. Unemployment payment as percentage of salary

12. USA: No tax advantages for the unemployed that turns to self-employment in health insurance and retirement plans compared to employees of large company Serious disadvantages in the payments and terns of health insurance and retirement plans for the self-employed compared to the employees of a large company No unemployment payments by the governments except of small compensation by the employer when firing No government financing of continuing training of unemployed to new types of jobs and skills Europe: Same tax rules in health insurance and retirement plans for employees and self-employed Same advantages in in the payments and terns of health insurance and retirement plans for the self-employed compared to the employees of a large company Significant unemployment payments by the governments especially in the Europe of 15 EU financing of continuing training of unemployed to new types of jobs and skills The Remarkable difference of Europe and USA in supporting unemployment and self-employed

13. Sources for comparisons in unemployment payments

14. Europe: Eurostat, http://epp.eurostat.ec.europa.eu/ USA: Census bureau, http://www.Census.Gov/ Bureau of labour statistics, http://www.bls.Gov Bureau of economic analysis, http://www.Bea.Gov/ Statistical Sources for USA and EU

15. Phenomenological Reasons of Unemployment

16. The macroeconomic realm as a network: Input-Output equations 1 • The macroeconomics realm can be formulated as a network where each node represents a production organization. Then simple linear equations resembling the Kickoff equations in electrical engineering of circuits, formulate the production transformation in the production organization. We set one equation for each kind of produced good or service. Input are the raw materials and output the volume of produced goods or services. The input and output volumes are the linear variables. In such output and input services, can be included the financial services too. The coefficients of the above linear equations are related to technology or financial services strategy decisions. The first to study in a systematic way such linear systems of input-output equations was the Nobel price winner W. Leontief during 1950-1960.

17. One of the world largest online Library: http://www.questia.com/ An online simulation of a macroeconomic model by Ray C. Fair http://www.bized.ac.uk/virtual/economy/ http://www.ifs.org.uk/ “Linear programming and economic analysis” by R. Dorfman P. A. Samuelson, R. M. Solow, Dover 1958 “Macroeconomics:An introduction to advanced methods” By William Scarth Editors: Harcourt Brace & Company, Canada, Ltd 1996 Some Resources for Macroeconomic Models

18. 10 fishermen in an isolated island fish with strings 2 operate the fishing net 80% unemployment Possible solutions: “Socialistic”80% taxes to unemployment compensation The wealth of the 10 remains the same Educate the 8 fishermen to do Agriculture (2) Woodcrafts from the small wood (2) Use of a mile in the little river of the island (2) Little hydraulic water channel systems from the small lake were the small river goes in the island (2) Finally the new wealth of the 8 fisher men is aso the wealth of the 2 operating the fishing net, in total higher wealth than the initial of the 10 fishermen Pareto principle: The wealth of part of a society is not necessarily the poverty of another part of the society. At the limit were the latter srats to happen, the structure of the society would be Pareto optimal. The Island Parable of Unemployment : Your Wealth Is My Wealth, Pareto Optimality

19. 1979-1980s carburetor and electronic fuel injector (300,000 displayed) 1985-1990s vinyl and CD’s (2 billion $ industry, 100,000 employed ) .Com revolution and the new millennium (10 million displayed during 1990s) Example of Cases of technological growth and unemployment

20. The “unemployment recession” 1991 in USA

21. The major reason for unemployment: 1) Technology transformations in USA and western Europe in the society of information 2) Further radical similar transformations are expected in the future when the present car engines shall be substituted with new that consume hydrogen and oxygen with no CO2 emissions (expected before 2020) 2) Political transformations from a soviet union society to free societies of eastern Europe 3) Similar transformation in china 4) Overpopulation in 3rd world countries A different local reason during technology transformation for unemployment: The War of Competition and win-lose interplay Reasons for Unemployment: the Modern Macroeconomic Perspective

22. Linear coupling differential models for win-lose and win-win interactions 1

23. Economics Interpretations and conditions • X volume of sales of enterprise A • Y volume of sales of enterprise B • Positive growth of the two enterprises: a>0 d>0 • Win-win interplay: b>0 , c>0 • Win-lose interplay: b<0 c>0 • In the case of win-win all a,b,c,d >0 and as x>0 and y> 0 it is easy to deduce that also dx/dt >0 , dy/dt >0 in other words both enterprises in interplay increase in size

24. Linear coupling differential models for win-lose and win-win interactions 2

25. Classification of the qualitative dynamics In the next graphs, the possible solutions permit the same graphs with the arrows going in the opposite direction

26. Details of Vortex points

27. Nodal Point

28. Saddle Point

29. Degenerate Nodal Point a

30. Degenerate Nodal Point b

31. Vortex Points

32. Spiral Points

33. Possible Solutions • Win-Lose:spiral point (vortex point not possible) • Win-Win: • A) ad<bc: Saddle point • B) ad>bc: Nodal Point

34. Long term Results a • Win-Lose: Spiral-->One of the two enterprises shall end to bankruptcy. • This has as effect lower macroeconomic growth and increased unemployment • Win-Win: • saddle point-->Both enterprise grow larger • nodal point-->Both enterprise grow larger. • This has as effect larger macroeconomic growth and decreased unemployment

35. Volterra equations

36. Volterra oscillations of the two populations

37. Volterra Spiral points

38. Lectures on ordinary differential equations Witold Hurevicz The MIT pres 1958 Models in ecology by J. Maynard smith Cambridge university press 1974 Resources for the differential models and Volterra equations in populations

39. Long term Results and conclusions • In the “business war” of competitive win-lose interactions the macroeconomic growth is less and unemployment more • In the “business peace” of complementary win-win interactions the macroeconomic growth is more and unemployment less

40. In addition during growth, after the new technology transformation in society, the Business Interactions should be more towards complementary alliances (win-win), than excluding competition (win-lose) That corresponding situation in microeconomics rather than macroeconomics, is known in the context of total quality management In total quality management the “all stakeholders win” approach has been proved the best for radical transformation of the enterprises. A similar opportunity exists in the domestic economy instead of the microeconomic enterprise Unemployment reduction and Growth through complementarily

41. The universal law of the power statistical distribution of the size of evolving entities in a system. This law appears in many scales in the world and in many sciences like: 1) Physics 2) The web 3) Macroeconomics 4) Ecology 5) Astrophysics etc When the size of the entities has a lower bound the distribution is the Pareto distribution Statistical patterns in Evolution and Growth: The power law and the Pareto rule

44. Resources

45. Resources for Statistical Tables • CRC standard probability and statistics tables and Fornulae by daniel Zillinger-Stepen Kokosa Chapman&hall/CRC 2000

46. In physics: • If we through some water from a glass in a mirror, the population of water drops on the glass in not the normal distribution, but the Pareto distribution!

47. In the web: The size in pages and number of links of the sites in the Web follows a power distribution • Source: The Laws of the Web Bernardo A. Huberman The MIT press 2001

48. In economics: US Firm demises

49. Resources for US firm demises Firm demise=firm extinction

50. In macroeconomics • The income of the population • The size of the enterprises • The consumption size of energy of the enterprises • Follow the Pareto distribution • Also : The size of villages, towns and cities follows the Pareto distribution