“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Wednesday, July 16, 2014

swatting at the structural unemployment solution, again.

The Board of Editors of the Scientific American has annoyed me with their editorial comment in the current issue. It is one of those nattering naif kind of comment about how, gosh, machines are gobbling up jobs, and this explains rising inequality, rising unemployment, stagnatine wages and the rest of it. The quote a study by Carl Benedikt Frey and Michael Osbourne in which the authors predict that, in the coming decades, 47 percent of American jobs will be rendered obsolete by hyper hyper technology, everything from tax preparer to locomotive engineers. Significantly, there’s no mention of CEOs – even though that is a position which, using a few basic data search devices and some algorithms, could easily be folded into a couple of computers. But of course – NO! Not our sacred risktakin’ job creators! Not their jobs, Jesus…
Anyway, what irritates me is the blindness to like data. Because here’s the truth: capitalist private enterprise, as the Great Depression showed and as Marx reiterated back in the nineteenth century, cannot come even near to what the economists call full employment – that is, cannot employ 95 percent of the working population. States increased in size after the 1940s not only because states had more to do – particularly with social insurance and healthcare and education, o my! – but also because without the government hiring, we will be in a perpetual twilight of recession, even in a boom. If Government on the local, state and federal levels had continued to employ, over the recession, as they had before it, we would have long achieved the same level of unemployment as in 2005, Bush’s one boom year.

What I wrote about this in 2009 still stands today. Remember, whenever you hear economists or Janet Yellen or whoever speaking about employment, they are pulling a fast one – in fact, they have pulled it so fast they may believe it themselves. Full employment is not and cannot be achieved under modern capitalism by the capitalists. End of story:
 From 2009 ---

Here’s the truth. Since WWII, the government has gone from employing about 13 percent of the workforce to close to 17 percent. At the moment, according to the Bureau of Labor, there are around 22 million Americans employed by local, state and federal governments.

This means, at first glance, that the private sector employs on average about 82-84 percent of the work force. In actuality, given a very rough average of unemployment of 5 percent, the private sector ends up employing closer to 80 percent of the work force. 

At the moment, what has happened is that the private sector employs about 78 percent of the work force, as unemployment has gone up. Although government has held steady, no doubt in the next year, there will be layoffs from the government, too, This means that neither the private sector nor government will employ the percentage they do on average since WWII.

I put these figures out there so that one isn’t lulled into a discussion of whether the neo-classical models assume full employment or not. This is a nice, liberal discussion, but it overlooks the more fundamental lie, which is the assumption, which is swallowed like the sugar in liquid cough medicine, that the private sector somehow could efficiently employ 100 percent of the work force. It can’t. It has never been able to get past 85 percent in the post war period. There is a limit to the weight it can lift. We know what it is.

So the only argument about the stimulus is this: should the government absorb the extra unemployed or not? That is, should the government grow 3 or 4 percentage points?

The argument against this is not an efficiency argument. That is a stupid argument. The argument is, rather, that somehow, business can absorb the extra unemployed. Which means that the right is saying that, in the next year, the private sector can expand 4 or 5 percentage points to assume its usual standing in the economy.

Do you believe this? Does anybody? No tax break tax cut bullshit should take anybody’s eye off that ball. The question is: how can the private sphere possibly expand to absorb the 4 to 5 percent of the unemployed?

In reality, the right is saying, let the unemployed grow. And underneath that is the notion that if we can actually diminish the salary of the average worker, then businesses will be inclined to hire them. This, without the bullshit, is the right’s position. The recession is an opportunity for business to gain permanent tax cuts and hire people at reduced rates. 

Now, the only way this will actually bring business back up to its traditional 80 percent position is if the pie shrinks. 

I foresee that laying out the numbers in a way that everybody can understand them will not happen. Rather, we will have more endless droning about endlessly bogus functions from conservative economists, who will be countered with ever more esoteric models from liberal ones. The point will be to cover up the real situation, so that we will be fogged in, and deprived of the ability to use our own two eyes to see what the situation is, and decide for ourselves what we want done.”
What I wrote in 2009 has proved to be the case since. The Democrats have silently acceded to the agenda of shrinking the government, which means that the pressure to keep wages down in the private sector becomes much more powerful, and the surplus labor value thus released flows to the wealthy in a sweet, sweet stream of honey.
This will keep going and going and going. Given the Democratic policies that we have now, we are giving America’s children the chance to experience what it would have been like if the government hadn’t stepped in to stop the Great Depression.

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