Wednesday, October 21, 2009

This Jobless Recovery

We seem to have found the quickest way across the Great Crater, but we've lost a good number of our passengers en route. It's no surprise that the economy can "grow" without giving Americans any net job gains. In my post in June, I predicted that the economy might make nominal gains for awhile before there were any net gains in jobs, and that gains in jobs might continue for awhile before the unemployment rate would decrease (due to the gradual return to the market of job-seekers). Well before that, I suggested that unemployment will still be an issue in the election of 2010.

In this regard, this jobless recovery is like the last jobless recovery, the Bushite one of 2002-2005. Remember that two years into the "recovery", during the election campaign of 2004 the cry often went out: where are the jobs? Eventually there were some job increases, as there were needs for folks building seemingly endless McMansions, infinite numbers telemarketing mortgage refinancing, and those sly dogs providing outsourcing and re-engineering services, but these have largely gone the way of buggy-whip manufacturers and assembling eight-track players (except for the jobs with contractors supporting our military overseas).

Productivity, The Capitalists' Love Story

After some twenty years of continuous improvements in streamlining processes, supported by wave after wave of technological improvement and the tax deductibility of restructuring costs, modern productivity is truly marvelous.

The next phase of productivity increases--there will surely be more of the same--will require such things as across-the-board wage cuts, when possible (non-unionized hourly workers); or cuts in benefits like employer-provided health insurance (don't expect to see employer mandates to provide insurance in the final legislation); or the most certain of all--a new round of reorgs paring down middle management and piling more work on the remaining salaried workers.

These kinds of measures will protect those jobs which remain here, rather than being sent overseas, but they are hardly victories for the American people. What no American politician, Democrat or Republican, will ever admit, and especially not during the current period, is that we simply don't need all of the efforts of the American work force in order to produce all the goods and services we could ever require. Far less when we consider the poorer nations who would love to take our workers' place.

Fighting Upstream on Job Creation

Documenting that unfortunate fact was the principal theme of Jeremy Rifkin's The End Of Work. Rifkin, a notable progressive activist of the late 20th century, produced that book in 1996--bad timing, in that it was in the midst of the strongest economic recovery of the past 25 years, a time when there was even something approaching a labor shortage. So, it didn't quite sink into the national consciousness that all these productivity increases weren't producing more jobs for us.

OK, so we work less: not a bad prospect on the face of it, but hardly a solution to our current portfolio of mess.

In the best case, our stimulus package will put people to work for a year or two as we re-pave roads that don't need paving, build some new bridges from or to nowhere, and develop some new, cleaner infrastructure and industries that will provide blessings down the road. Assembling wind turbines will last a few years; producing photovoltaic panels and other solar energy-producing materials will keep the silicon industry, and the materials industry generally, expanding; it will take some time to re-fit our walls and water heaters for the benefits of passive solar energy; and rewiring the grid more intelligently might take a decade or so. All these will provide continuing benefits, if not so many jobs, down the road. As for our healthcare industry, it could use some streamlining, so that it can support the increased number of sick and aging patients coming down the road.

I just don't believe that we are going to bring back "full employment"--in plain terms, an economy providing all the work that people need and desire--by just producing more stuff, and offering more services, though. We've got plenty already, though the fierce urgency to create new demand for products we never knew we needed continues unabated.

I see the solution coming from a different direction: most people in America today are either underemployed or overemployed, and it's getting worse. The former category has grown, and for economic reasons it's the less desirable of the two, but the numbers of people who have more work than they can physically or mentally support, let alone do the other things in life that they'd like, are growing all the time.

My recommendation is that, rather than rewarding companies for re-engineering away jobs or redoubling our efforts to produce make-work jobs at the cost of adding to the public debt, we provide some support for re-engineering our society, so that there is a better balance between work and leisure for all of us. Let's make part-time work more viable--affordable health insurance outside the employers' group plans is a big start toward this objective. Let's provide tax advantages for companies who allow their workers to submit their product from their homes--which will cut down on commuting, and allow for better lives--rather than to cut jobs.

Michael Moore's new movie, Capitalism: A Love Story has a closing theme of a Bill of Rights for workers, proposed by FDR in 1944 but never enacted, in which the first item is the right to a job. Frankly, we can't afford to guarantee everyone jobs anymore (maybe when all the boomers retire in 40 years or so), but we could have the federal government give a tax credit to employers bringing on workers who stay for six months or so--and especially including part-time workers of, say, 15-30 hours. Yes, to some extent we will reward companies for what they might be doing anyway, but we will be modifying their behavior in a direction that is positive for public policy.

Resolved: Corporations are only Three-Fifths of a Person

The next big political issue to rise, and this one is going to be huge, is likely to come through a controversial Supreme Court decision in the near future on political contributions and advertisements by corporations. Right now, this behavior is strictly limited by Federal legislation, but that legislation is in great danger.

The Supreme Court is looking at claims that this legislation limiting the "free speech" of companies is unconstitutional, and I feel that they are going to rule that it is. It stands to reason, with the current body of judicial interpretation: if companies are in fact "persons", why don't they have the right to freedom of speech?

Allowing companies to go wacky with political activity will quickly and rightly be seen as a huge threat to our democratic processes, which already cost way too much (for the quality they produce). It will become an imperative--probably after one national election cycle--to limit companies' political activities (for everyone except the right wing--the independents will get sick of this coup against popular democracy real fast).

There will be two ways to go: 1) make Federal election campaigns limited in duration and cost, and paid for through taxpayer funds; or 2) amend the Constitution to delineate exactly to what extent corporations should be considered "persons"--what are their rights, and what rights are limited to "human persons"?

I think that the latter route is both more likely--given the crisis which will emerge, even with our country's extreme reluctance in these latter days to any modification, no matter how minor, to the Constitution--and a better solution.

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