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Unemployment

Idleness when there is work to do.

Connections

 Imbalance

 Population

Solutions

Problem

Problem

In Europe and America there has been a steady rise in the numbers of people without paid jobs, suddenly accelerated from 2008 after the financial crash.

From 1945 until about 1975 there was usually Full Employment in Britain. That is, everyone who wanted a job could get one. In the 1980s there was a steady rise in the numbers without work to between 3 and 4 million (depending on the method of counting). In the European Union as a whole there were about 10% of the potential workforce without jobs. There were pockets where the rate was much higher (Northern Ireland, eastern Germany, southern Italy).

In the 1990s numbers of unemployed in Britain fell and from 1997-2008 numbers in Britain fell to about 1 million or below. The numbers are increasing again, following the financial crash. In the United States unemployment has been caused in areas where the jobs of the mid 20th century in manufacturing migrated (or were sent) to Mexico, east Asia, first Taiwan then China proper. The owners of capital wanted lower wages.

These jobs don't seem likely to return, though gradually as Chinese workers gain the political muscle, wages there are rising. Capital owners also wanted to go to places where environmental controls on pollution were lacking, thus cutting their costs (transferring them to the people who had to suffer from the pollution).

Outside the western industrialized countries the whole Third World could be regarded as unemployed. However, people with some land and traditional crafts may not feel unemployed. It is possible that much of the trouble with westerners is that they have no means of getting money other than through paid employment, or government dole. That is, the Agricultural Revolution, which accompanied the Industrial Revolution, drove the peasants off the land and gave them no alternative to wage labor.

But the rapidly industrializing south east Asian countries are creating jobs. As manufacturing moves to these countries can the former industrial countries find employment for the workers whose jobs have gone there? So far the signs are not optimistic. Governments used to talk about the advantages of "service industries" - mainly finance - but clearly these could not absorb former industrial workers, and they too have disappeared in the Crash of 2008.

Modern industry has abolished unskilled labor.

Unemployed people tend to create trouble for the rulers. In some countries it leads to low level war (Northern Ireland, Yugoslavia); in others it leads to crime and riots (United States, Britain). In 1930s Germany it led to Nazism.

Much of the above was written in 1994. Now, 2008, there has been a financial crash, similar to that in 1929, which led to mass unemployment. Is the same likely to occur again?

A related problem is that in the third world populations grow much faster than any conceivable investment could provide jobs. Japan is a good example of a country where population growth declined and unemployment decreased simultaneously.

Summary

Problem

Possible Solutions

Is it caused by an inadequate conception of the nature of economics? Is the economy an abstract thing to which people ought to conform, or is it the sum total of the needs and desires of people? If it is the latter, the present arrangements do not satisfy the needs for useful work.

In the period from 1945 until perhaps the 1970s most European governments regarded it as an important aspect of policy to provide paid employment for most citizens who wanted it. Joblessness over about 200,000 in Britain was regarded as cause for concern. (1993 total in the region of 3,000,000 plus. Those actually in employment experience demand for long hours and falling pay with casualisation.)

Edward de Bono has suggested that a distinction needs to be made between efficiency and effectiveness.

Thus efficiency in manufacturing requires capital intensiveness, with labor kept to a minimum. However, the existing arrangements do not guarantee that the wealth created in manufacturing will be distributed to people who need the products. (This is related to the problem of Imbalance).

Are there fundamental deficiencies in the western economic system?

It is striking that in many western countries the cities are full of litter, the public spaces are disfigured with graffiti, services for the sick and elderly cannot be provided, school class sizes grow. Everyone agrees that the solution is to employ people to guard the trains, patrol the streets, clean and maintain the public facilities. But governments continually reduce employment in these areas. De Bono observes that in these areas (and other services) effectiveness can only be improved by increasing employees. Japan is often criticized by western retail companies for having an inefficient (though effective) retail system which employs many people. De Bono's solution is to increase employment in services and pay for it by the profits of manufacturing. (People without money cannot buy the products of manufacturers.) That is, we should agree that we need clean streets and a pleasant environment just as much as we need manufactures. The economy needs to be regarded as a complete system rather than a series of isolated systems. As with the World System a means of thinking in wholes is needed.

How far is the rise in unemployment the result of dogmatic insistence on low taxes as the main object of government? See this articleWould people in a harmonious society choose to pay more taxes if the services employed people and produced clean safe streets and trains? Citizens of Sweden and Denmark seem to accept this trade-off. Can a dogmatic Free Market approach solve these problems?

Some say world economic growth is the only cure for unemployment. Can the world sustain an ever-growing economy of our present type? If not, another solution must be found. One of the economic ideas of the 1950s was Trickle Down. Here the idea was that the poor would benefit automatically from the growth of industry of a modern type. The evidence, in such countries as Brazil and India is against this idea.

The New Economics Foundation has researched and published an alternative way of thinking about economics in the hope of replacing the defects of the Free market System that, as even Alan Greenspan, formerly chairman of the US Federal Reserve (Central Bank) and a guru of economic orthodoxy, has admitted, has failed.

Possibly what is needed is more worker owned businesses, that tend to invest their profits in expanding the business and do not allow the profits to go to the Banks or export the jobs to other countries. The root of the power of the banks comes from the universal business dogma that all businesses must Borrow (contrary to all ancient religious teaching).

A large economic sector for investment is necessary: a new energy system to replace the fossil fuels that are damaging the climate and threatening to run out. Could this investment provide useful employment? Some of it will need high technology, notoriously sparse in employing people rather than capital. But other parts will need lots of building skills. New transport systems may be needed to replace the wasteful private car (wasteful in energy terms).

Renewable energy - solar and geothermal derivatives - are not likely to go up and down in price in the way that oil has recently (2008). Thus they would be a force for price and employment stability.

Interesting reading

Edward De Bono


Lateral Thinking: A Textbook of Creativity



Laterales Denken

Last revised 8/06/10


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