The Lies of Neoliberalism; Governments Don't Create Jobs or Economic Growth by NY Brit Expat

It may be my masochism, but I actually watched the Presidential
debates. I also regularly watch the news over here in the UK. Cameron
and his cronies constantly spout this argument that governments cannot
create economic growth. During the Presidential debates, Mitt Romney
even went a step further; he argued that governments cannot create
employment. The Tory argument is a bit more sophisticated, but both
arguments have their roots in the fantasies of neoliberal economics of
which both the Tories and the Republicans have adopted in its most
fundamental form; their arguments also tie into the perspective of
reduction of the central government budgets along the lines demanded by
the IMF and the introduction of austerity measures to ensure these
results. Except, and this is a big exception, neither of these governments have been forced to do so by the IMF.

Given that these statements are not only historically inaccurate, but
bordering on the patently absurd, it never ceases to amaze me that
challenge from the mainstream media is not forthcoming. Even more so,
during the debate, President Obama did not respond to the absurd
statement by Romney; in fact, he also raised budget deficit reduction
which essentially means cutting state employment and social services.
The Labour Party does not disagree with the Tories; they only say that
austerity must be done more slowly and Ed Balls (the shadow Chancellor
of the Exchequer) has said at the Labour Party conference that, if
elected, they had no intension of reversing the austerity measures
forced upon the British populace by the Con-Dem government.
Essentially, all of the mainstream parties are singing the same tune;
honestly, different tonalities of the same argument do not change the
fact that the underlying tune is the same.

sheepsfightingwhowilleatthem

To someone that is living in the real world, in other words, someone
that actually heard about the New Deal, that knows the role of
government in ensuring economic growth during the post-war period in
Europe, who knows damn well that state (or public) sector workers exist
and that the government’s purchase of goods and services from the
private sector and investment in the private sector help to ensure
economic growth it makes me wonder if they think that we are extremely
stupid.

I. Can Government create Employment?

John Harvey, a post-Keynesian economist has written an excellent piece in, of all places, Forbes Magazine
which raise some of the points that I will raise here, but I will
actually go a bit beyond what he has said and try to address exactly
what is underlying the arguments of mainstream politicians and what is
lying beneath the bizarre arguments that we are hearing these days.

Harvey correct asserts that those who claim that government cannot
create employment are re-defining the meaning of the word “jobs” to suit
their own private profit margins:

“But, those who say that the government
cannot create employment are adding another element to the definition.
To them, a job is any routine activity for which we earn income paid by
an entity required to earn a profit. There is no compelling reason for
this addendum and it arbitrarily excludes people like James Galbraith,
who is an economist just like me, but at the University of Texas, and
Jeffrey Halstead, Chief of Police in Fort Worth, Texas. By the qualified
definition, they don’t have “jobs” because their income is derived from
tax revenue and not private-sector sales. Ditto every single fireman,
public school teacher, Marine, sailor, airman, soldier, national park
ranger, defense industry employee, NASA scientist, social worker,
librarian, etc., etc. None of them has a job.

Why would someone embrace such a questionable characterization?
Because their true goal isn’t to generate a scientific understanding of
the manner in which the macroeconomy operates, but to make a moral
statement. Specifically, their contention is that only those routine
activities financed by profit are truly of value. Everything the
government does is unnecessary because if people really wanted it, they
would have bought it in the private sector: that which is useful is
profitable. Furthermore, they say, were it not for my taxes, those in
the public sector would not have a job. Firemen earn a salary only
because some of mine was taken away (under threat of imprisonment) (http://www.forbes.com/sites/johntharvey/2012/10/22/government-creates-jobs/).”

John Harvey makes some excellent points. This is the reason that I
have cited his article. However, I would say that he is doing those
advocating this perspective quite a favour in terms of saying that the
view that the government cannot creates employment is a moral one. I
would demur; instead, I would argue that this is an ideological position
with little, or no, link to reality, much less morality. They are
outright liars, not moralists. I would argue that the resurgence of
this argument is not based on the idea that only things produced for
profits are things of value, they know that fire services are of value;
but rather that these things should be produced and
provided on the basis of profitability; that is, they should be produced
under the control of the private sector. In other words, why should something be produced and provided if they cannot make a profit on it?!

In fact, looking at history quite easily disproves this position;
this argument is a dangerous fantasy with the lives of the majority in
the advanced capitalist world at stake. Reprivatisation arguments are
central planks in the neoliberal agenda and after being forced on people
in the capitalist periphery and emergent economies (see, e.g.,
Chile and Argentina), these are now being forced on the majority in the
advanced capitalist world. For example, a cursory examination of the
situation before generalised nationalised fire services existed in the
UK, where insurance companies provided fire services turned out to be
not only too expensive but incapable of providing provision; in fact it
was the insurance companies themselves that asked for national funding
and provision of fire services and this was in the height of free-market
ideological arguments in the nineteenth century (London Fire Brigade).
Yet, if you look at right-wing arguments in the US and in the UK,
there is an attempt to privatise fire services; already in the UK, parts
of an holistic service are being forced to be contracted out to private
companies to “cut costs” in the face of government cutbacks.

Another example that I have written about previously is water
privatisation, not only are costs not reduced, but access to water is
limited to those that can afford to pay for it; so something that people
require in order to survive is now no longer available to them due to
privatisation, some forced by the IMF and World Bank, others done in the
erroneous attempt to cut costs (http://www.dailykos.com/story/2011/08/28/1011343/-Anti-Capitalist-Meet-up-Water-Privatisation);
we are seeing resocialistion of water services in France and in other
countries to regain control of water away from firms as it is an
essential component of survival for human beings.

Halliburton

The problem with private provision of services is that it is your
ability to pay is what is important not the quality of the service;
profitability considerations means cost cutting and that does not
necessarily provide quality and guaranteed service. This is why a number
of things became public goods rather than be left to markets to
provide. The insistence of reprivatisation of services is not based on
whether historically these can provide the most effective service; it is
done so that they can literally find a new area of capitalist
investment which they think has a guaranteed market. However, rather
than acknowledge an obvious point that not everyone can afford to get
these services if they have to purchase them directly rather than paying
for them through taxation and subsidising those that cannot pay, we are
seeing an argument that is based on an assumption which has been proven
to be erroneous, that if something is produced there will be demand to
sustain it.

In fact, this is a revival of an old argument whose demonstrable
failure is what I would say is what exactly led to Great Depression and
to the subsequent creation of the social welfare state and public sector
back in the 1930s in the US and in the post-war period in the UK. I
want to stress that the only reason that I think that this earlier
argument was defeated was not due to the Great Depression on its own,
but arises from the existence of a strong left and powerful union
movement which led the Capitalist class to try and ameliorate the crises
that are a normal part of the capitalist economic system not only to
protect their own interests, but also to remove some of the threats of
the left and a strong union movement.

Essentially, the argument endorsed by the right-wing of the
mainstreams in the US, UK and EU is based upon a perspective that
refuses to acknowledge that the private sector cannot create sufficient
levels of employment to ensure that their own products are capable of
being sold in the market at a price which ensures that they can earn a
profit upon them. In the absence of the ability to earn a profit, these
goods will not be produced. Moreover, in the absence of incomes to pay
for these things, production and provision will simply not exist.

humansacrifice

The laws of motion of the capitalist economic system in which
profitability (or expected profitability) determine the techniques of
production in use (how much labour, how much and what type of machinery
are used to produce output), how much output (goods and services) are
produced and what type of goods and services are produced are
essentially what produce economic crises. That is, crises derive from
the system itself, and are not an aberration, but are a normal part of
the system.

What Keynesian economic policies did was not to eliminate crises, but
rather to ameliorate them; that is why people began talking about
recessions rather than economic crises. But in the absence of coherent
regulation and attempts to stimulate and cool down the economy when
needed (as advocated by Keynes) what we are seeing is prolonged crises
and smaller and shorter recoveries. Moreover, recoveries (if you have
not noticed) make no dent in the substantial amount of structural
unemployment that now characterises advanced capitalist economies.

II. What is causing structural unemployment?

The answer is the laws of motion of the capitalist economic system
itself. Competition exists between and within industries, where money
capital (and technology which is privately owned, and sometimes when
appropriate to production physical capital itself) is moved between
industries in search of the highest profits. The introduction of
machinery in the attempt to increase productivity occurs so as to ensure
that workers’ wages are produced more quickly and hence that the
surplus value is greater in production are what leads to several
interrelated phenomena. The reasons underlying colonialism and then
imperialism was part of this process, these enabled getting hold of raw
materials and cheap labour. In some cases, like the cotton textile
industry, the goods could even be sold back to colonies thereby
providing part of the market for the goods themselves.

Now, globalisation means that competition occurs on a world level.
Lack of restrictions on capital mobility in search of profits has led to
outsourcing of industries to the capitalist periphery and emergent
economies where labour costs and raw materials are cheaper. The fact
that you can produce something for pennies in these countries and sell
them for hundreds of times more means that multinational corporations (MNCs)
need to lay out far less and will make a far greater profit if the
goods are sold (even if they are sold for far less than they expected,
they will still be making a far greater profit than if they are produced
in a country with higher costs of production). The only advantage (and
this is rapidly declining) that the advanced capitalist world has is in
technology (and that is the reason that the Chinese are insisting on
technology transfer when they allow for foreign direct investment and
MNCs into the country).

So let’s go through some of the
dynamics of the system in order to understand what is happening due to
the internal laws of motion of the system:

 

1) Introduction of machinery means that less workers are needed
relatively to produce the same level of product, that is what
productivity means; but the problem is not only one of relatively less
workers being needed as whole sectors of production have been destroyed
leading to structural unemployment, that is an absolute increase in
unemployment in these countries.

2) Introduction of machinery or cheapening of costs of production
(e.g., using cheaper raw materials obtained from overseas, or goods
produced overseas that are cheaper to produce than in the advanced
capitalist world due to both cheaper raw materials and labour costs) in
the sectors that produce workers consumption goods, means that the
production and reproduction of workers subsistence (the socially
determined commodities that workers consume) is lowered; this lowers
the value of the wage goods meaning that more time will be spent on
goods that go towards the surplus product.

3) Introduction of machinery leads to increased unemployment;
unemployment then weakens the bargaining power of workers. The
deliberate destruction of the industrial and manufacturing sectors in
the advanced capitalist world not only led to increased unemployment, it
also destroyed the power of trade unions concentrated in those sectors.
In fact, before the sectors themselves were weakened so badly, right to
work laws led foreign automobile companies to open factories not in
traditional regions but in states in the US where they did not have to
deal with the demands of unions.

4) The decrease in wages due to the decline of union power and
structural unemployment has led to a break-down in job protections and
conditions of work. More and more, part-time and temporary low-paid work
has replaced well-paying and secure jobs for life. To avoid, payment
of benefits and social security (national insurance), employers have
shifted towards sub-contracting jobs which places workers in greater
precariousness as contracts are mostly temporary and you have no job
protection. General attacks on the social welfare state have undermined
the abilities of the poor and working poor to maintain their income. The
attempt to stimulate demand by enabling access to easy but expensive
credit has blown up in their face; witness the sub-prime crisis and
personal bankruptcy as borrowers cannot pay back what they purchased.

5) While increasing the amount of surplus produced, they have seemed
to have forgotten an incredibly important point. That in order for
profits to exist, someone must buy their product. In the absence of
demand backed by income, these potential profits only remain potential
and we have what is called a realisation crisis following a point of
over-accumulation (the crash in 2008); guess what, Marx was correct in
Volume I of Capital.

Structural unemployment is a normal part and parcel
of the system and derives from its internal laws of motion. It can be
combatted, but it won’t be done if wages are continually eroded in the
advanced capitalist world. Not only can we no longer survive on the low
wages on offer in the capitalist periphery and emergent economies (which
have been deliberately kept low), but also this would eliminate the
demand for goods and services that the private sector and capitalists
need to enable economic growth. The only thing that may actually keep
the system going (and to increase profits in the real economy rather
than the financial sectors) would be if China and other emergent
economies actually increase wage incomes in their countries. In that
case, essentially the workers in the advanced capitalist world become a
lot more redundant to the needs of international capital.

Serwotkaonaspiration

Rather than destroy the state sector, what is needed instead as a first
step is direct government jobs creation. That is, the government itself
needs to hire people at all levels. It also needs to create new sectors
for them to work; the creation of a green transport industry and green
manufacturing would be an excellent place to start. However, since
construction is primarily a male occupation, increasing money spent on
education, social services government provision of health care,
nurseries (crèches) which are all traditional areas of women’s work
would offer women a far better choice than the low-paid part-time and
temporary work to which they are being relegated. However, no
mainstream politician is advocating the only known and proven thing to
get the system out of the crisis, they are all parroting the line of
reduce state expenditure, cut public sector employment and cut social
services and benefits.

III. The Role of Government and Economic Growth

It may be asked what does the above have to do with this argument
advanced by politicians which denies that the government can create jobs
and/or economic growth. The answer is quite a lot.

For all the babble about the importance of the private sector, the
reality is that the government provides many things that help enable
economic growth and profitability for the private sector. From
government purchases from the private sector (think about how much the
military industrial complex make from various government orders for its
products and services); this alone eliminates uncertainty in terms of
profitability and provides demand for their goods and hence leads to
growth and rising employment in the private sector). Government spending
and investment in housing, research and development, road building,
etc. winds up in the pockets of the private sector. In fact, your tax
dollars and government borrowing has been sustaining the private sector
for quite some time and in fact in the post-war period it has enabled
economic growth.

To quote John Harvey:

“That leaves investment and government
spending as the real engines of growth […]. They are the forces that
drive the business cycle rather than follow it. Businesses and the
government together determine whether or not we are in rapid expansion
or the depths of depression. This chart illustrates the point:

Harveyusgdpandmaindrivers, shrunk

[…] Note that this means that if there were no government sector, then
the job of driving economic activity would be left to investment alone.
This is similar to the situation we faced before WWII, when the
government was tiny compared to the rest of the economy. The problem is,
firms can build new capacity (i.e., invest) relatively quickly
so that, ironically, at the very moment we have our greatest ability to
produce goods and services, investment falls, layoffs occur, and we
slip into recession. This is an absolutely critical point (http://www.forbes.com/sites/johntharvey/2011/04/29/why-the-private-sector-needs-the-government-to-spend-money/).”

What Harvey is demonstrating is the role of Government in creating
economic growth. He argues that consumer spending follows the state of
the economy, rising as the economy grows and falling as it declines.
There are two things that drive economic growth, but in a recession,
private investment is insufficient; it is government spending and
investment that drive economic growth.

But let’s talk how government does drive economic growth. We know
that this is due to government spending. But what else the government
spending provides? It provides income to state workers which will buy
the goods and services of the private sector. Unemployment insurance
and pensions and social services (think of food stamps, welfare
payments, and disability benefits) also ensure that those that would not
have income due to unemployment actually can purchase goods and
services. Quite obviously, those are for the most part produced by, yes,
the private sector as we live in a capitalist economy.

So, given the situation, the last thing that we want to do
when we are in an economic crisis in the advanced capitalist world is to
cut the state sector, cut benefits and reduce wages. All you are doing
in this situation is creating more unemployment and throwing people into
poverty.

“In fact, Matthew Weaver of The Guardian
reported, that one in five British workers are being paid less than a
living wage, that is 4.82 million workers are not earning enough to
survive on. This is because the designated minimum wage (£6.19/hour) is
not a living wage (£8.30 in London, £7.20 in the rest of the country)
and the Tories are opposing raising the wage due to fears of affecting
employment.

“The study, launched in advance of next week’s Living Wage Week,
found that Northern Ireland has the highest proportion of people earning
below the living wage (24%), followed by Wales at 23%. The lowest
proportion of sub-living wage earners are in London and the south-east,
both at 16%. It found that at least 70% of cleaners, kitchen staff and
waiters and waitresses were paid less than the living wage (http://www.guardian.co.uk/society/2012/oct/29/five-million-britons-living-wage?INTCMP=SRCH).”

If you want to see what happens when these policies are implemented
in earnest, take a look at Greece and Spain and you are witnessing the
deliberate creation of an economic depression in these countries.

“Eurostat figures show that 25.75m
people in the whole European Union were unemployed in September 2012 –
an increase of 169,000 people on the previous month. Compared with
September 2011, unemployment has risen by 2.145m.

Spain and Greece recorded the highest unemployment rates at 25.8% and 25.1% respectively (http://www.guardian.co.uk/news/datablog/2012/oct/31/europe-unemployment-rate-by-country-eurozone).”

In terms of the general state of the economies of Spain and Greece:

“So Spain’s economy has contracted by another 0.3% for the third
quarter, whilst inflation in the country continues to rise and demand
continues to slump. You could be forgiven for thinking that there is no
way out of this hell-hole for Spain: the contraction now means that the
country has been in its ‘double-dip’ recession for five consecutive
quarters, and unemployment is now running at a fresh high of 25.1%. To
add insult to injury, the Spanish government thinks that the economy
will shrink a total of 1.5% this year, and another 0.5% in 2013 (http://www.managementtoday.co.uk/news/1157114/Spanish-recession-deepens-Greece-riskier-investment-Syria/).”

“The [latest Greek] draft budget for 2013, which provides for
measures of 9.2 billion euros, an economic contraction of 4.5 percent
and a primary surplus of 0.5 percent (http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_30/10/2012_468024, my clarification).”

The message is on the wall for the UK irrespective of the blip
provided by the Olympics; circuses without bread do not make for
economic growth and they also make for very unhappy populations as we
see in Greece and Spain.

The fact that these realities are being ignored by politicians is
truly disconcerting. On November 1st, it was reported that in the UK,
both manufacturing and construction industries are shrinking. In fact,
manufacturing has declined for the 6th month in a row; the only thing
that grew is consumer spending (http://www.bbc.co.uk/news/business-20167643).
That is proof that the small economic growth we saw in the last quarter
(which the Tories are claiming is due to their economic policies) is
the result of the Olympics and that we can expect the UK, once again, to
fall into recession. Moreover, the stress on export-led growth (another
plank of neoliberal economics) for manufacturing means that the sector
is far more dependent upon conditions in the world economy and hence
since world recovery is not happening, export-led sectors are simply not
going to grow.

“I was discussing this situation in the UK with Karl Petrick who is an economic historian and he said the following:

“I’m pretty sure that was part of their party programme. The sad
thing is that anyone who is paying attention can already see the effects
of an austerity budget in the UK, but that has never even registered in
the news on this side of the pond. Either that or we are in some sort
of odd one-upmanship: You call that a recession? I’ll show you A
RECESSION!!!! The situation would be funny, if it was not so dire!”

It does not benefit the private sector either as the loss of income
all around means that there are less people now able to buy what they
produce. Since the private sector does not see that the possibility for
investment as a great idea now due to the fact that there is not
sufficient demand for their goods, they will not create new jobs.
Waiting for the private sector to invest, even with all the tax breaks
that various governments are giving to the corporations and to the
wealthiest, is quite simply put, like waiting for climate change to fix
itself, in other words, it is just not happening. In fact, the stock
markets are the investment of choice, short term speculative investment
is what is happening, not investment which creates jobs.

This leaves no choice but for the state sector to once again engage
in direct government jobs creation … without that there is no way to
combat structural employment. Moreover, given that we need far less
labour (due to high productivity), the far more sensible option is also
to decrease weekly working hours, but maintain income. That is, raise
income of working people, not decrease it which is what we are seeing
throughout the advanced capitalist world.

NHSambulanceservices

Conclusion

The re-privatisation of public goods (and it is reprivatisation as
many of these services were provided privately before the existence of
the state sector) represents a coup for capitalists. From
reprivatisation of electrics, water, road services, they are now trying
to get their hands on provision of health care in the UK, care homes,
nurseries, fire services, education, and police services. The problem is
that there was a reason for these public goods to be nationalised in
the first place, private provision is always based first and foremost on
profitability which means that if you cannot afford to purchase these
things, then you will no longer be able to access them. With incomes
falling all over the advanced capitalist world, that means that many of
these things will no longer be part of workers’ consumption bundles.
Moreover, since many of these things cannot be purchased, they will once
again fall onto women as part of their household labour for which they
receive no recompense.

Capitalismo

The erosion of workers standards of living in the advanced capitalist
world is part of a wage squeeze trying to raise profits in a period of
low profitability caused by the crisis. In periods of economic growth,
wages can be allowed above social subsistence; that is what we saw in
the post war period. High productivity and economic growth meant that
the surplus product could be shared between workers and capitalists.
Over time, the social subsistence level rose. What we are seeing now is
the erosion of the social subsistence wage; they are pushing it down (so
it is above physical subsistence and reproduction of the working class
and they are pushing it downwards). What we are seeing is the
combination of normal decreases in the value of labour power (e.g.,
bringing cheap goods in from overseas that are consumed by the working
class) combined with a deliberate lowering of social subsistence wages,
the breakdown of “jobs for life” and the rising number of people
employed part-time, temporarily and as sub-contracted workers.

The problem with wage squeezes is that essentially it means that
fewer and fewer working people and the high number of unemployed people
(facing benefit cuts) can afford to buy things and this means that
capitalists have no reason to increase production, employment, that is,
to create economic growth.

What this means is that cutting the deficit, continuing cuts
to the public sector, job cuts, and benefit cuts are exactly the wrong
policies to deal with an economic crisis. All they do is deepen the
crisis and provide no basis for recovery. Quantitative easing
(increasing the money supply) has not stimulated investment which
creates jobs, rather the money is being put into the financial markets
for short-term speculative investment, which given the lack of
regulation only increases the possibility of another financial crisis.
But it is not financial crises which are the serious problem for the
capitalist system at this point; rising income and wealth inequality
will lead to a crisis in the real economy. With the politicians unable
and unwilling to deal with the fact that capitalism is an inherently
crisis-ridden system and in the absence of determination to ameliorate
the problems caused by the system, the majority will be facing continued
impoverisation. This represents not only a failure of capitalism which
we know is incapable of providing for all, but a failure of bourgeois
democracy as there is no mainstream political party that will actually
stand up for the majority; all pretence that democracy applies to all is
being rapidly eroded in the absence of a political party that actually
speaks for and is answerable to the majority.

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Comments

As I said elsewhere, great work

priceman's picture

Structural unemployment has a few connotations such as the way you used it when technology and mechanization creates unemployment be replacing workers, but commonly it is more of a modern lie about being able to find work through more education which is false.

Rather than destroy the state sector, what is needed instead as a first step is direct government jobs creation. That is, the government itself needs to hire people at all levels. It also needs to create new sectors for them to work; the creation of a green transport industry and green manufacturing would be an excellent place to start. However, since construction is primarily a male occupation, increasing money spent on education, social services government provision of health care, nurseries (crèches) which are all traditional areas of women’s work would offer women a far better choice than the low-paid part-time and temporary work to which they are being relegated. However, no mainstream politician is advocating the only known and proven thing to get the system out of the crisis, they are all parroting the line of reduce state expenditure, cut public sector employment and cut social services and benefits.

Employer of last resort a la Minksy. You know it! NO one is talking about this and this is the only real solution that has immediate benefits. No one, the Tories or Labour or Republicans or Democrats will touch this. Perhaps because it will raise wages across the board and they want to take advantage, corporations, of not having to sell to a Domestic consumer base as the only reason Henry Ford raised wags even though eh was an anti-semitic anti union Ahole.

I don't believe he was right about everything, but Marx was very right about demand and the first one to point out the problem, because as you and the most excellent John T. Harvey point out, spending is income, your income, my income, everyone's income. Always has been historically. Government spending doesn't go into the ether, it's also the private sector income, even running up a deficit structurally puts dollars into the private sector and always has historically as well.

Supply doesn't create it's own demand or investment via Say's law is BS. A race to the bottom hoarding capital and finding the lowest pound of flesh to extract will eventually collapse or leads to the conditions that fuel bubbles like the Great Depression like the depression now(private debt levels are the same so it is a depression). You're right, QE will only fuel speculation and irrational behavior to increase commodity inflation because investors are stupid(Like Chris Cook says).

Government spending, deficit spending, and being the hirer of last resort are the only solutions. Austerity and balancing sectoral balances the wrong way sucking income out of the private sector(something all of our leaders are too stupid or corrupt to get or admit). Export led growth cannot succeed by itself if the governments and central banks of the world are captured by Neolieberalism. Also inflation expectations will not amount to anything, because central banks are not magic factories like some "progressives" like Matt Ygleisas thinks.

You and John T. Harvey outlined the only solutions, especially for countries such as ours that issue our own currency and the EU needs to just go away(it will eventually unless the ECB changes but it won't) so other countries can do the same.

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Excellent comment Priceman!

Anti-Capitalist Meetup's picture

I appreciate your raising the post-Keynesian argument to supplement my Marxist one. We may disagree on solutions, but we are very close on the understanding of the problem from different perspectives. I am putting forward a transition position, while others may think that solves the problem, but it is essential that the voices of alternative economists are heard. We are the only ones speaking sense at this point.

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Yes, as I said about structural unemployment as a term ...

BruceMcF's picture

... over at Agent Orange:
"Mainstream 'real' structural unemployment ...
... can't be "real" anything, since it exists in abstract models that are not scientific cause-and-effect explanations of events occurring in real world economies.

So real world economists and mainstream economists talking about "structural unemployment" are doomed to be talking at cross-purposes, since "the unemployment that is due to the structure of the economic system as it exists in the real world" requires at least two and possibly more concepts that are not expressible in the sparse language of mainstream economic theory ... "structure" in a way that is meaningful in the real world, and "economic system" in a way that is meaningful in the real world.

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this series is wildly appreciated

sartoris's picture

I love this series.  Thanks for posting here.  I'm not anti-capitalist but I am anti-stupid!  Have you ever heard this quote from Big Bill Haywood: I've never read Marx's Capital, but I have the marks of capital all over me.”  That sort of sums of my life philosophy.  Thanks again and looking forward to more of this series.

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Glad to publish the series here

NY brit expat's picture

Having the series in a place where people appreciate it (and we are not red-baited) is fantastic for us, especially now that people are commenting more and we can get some feedback. :) I am only speaking for myself here, we work as a collective and that is why writers differ every week. But I am thrilled that people are commenting!

I have always had a soft-spot for Big Bill Haywood, there was a man who understood exactly what people were facing on a daily level and he was one heck of an organiser and activist. Sorry that I didn't comment earlier, but I didn't see the comments as there are two copies of the dang thing and I was looking in the other one.

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Glad to publish the series here

NY brit expat's picture

Having the series in a place where people appreciate it (and we are not red-baited) is fantastic for us, especially now that people are commenting more and we can get some feedback. :) I am only speaking for myself here, we work as a collective and that is why writers differ every week. But I am thrilled that people are commenting!

I have always had a soft-spot for Big Bill Haywood, there was a man who understood exactly what people were facing on a daily level and he was one heck of an organiser and activist. Sorry that I didn't comment earlier, but I didn't see the comments as there are two copies of the dang thing and I was looking in the other one.

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Great article!

Karl Petrick's picture

Great job! 

In the US, the private sector has added jobs for 32 straight months- something that Obama likes to stress and also something that was ripped out of context by the Republicans- before 'you didn't build this' there was 'we are doing fine').  But the fact remains that the latest jobs report is merely mediocre, and throughout those 36 months the public sector has shed jobs- primarily at the local and state level (-13,000 in October). 

The US unemployment rate would be around 1% lower if the public sector had maintained its level of employment, much less if the US government had done the sensible thing and created a new "New Deal".  Far from stressing this point, Obama likes to also brag about how much smaller the level of public sector employment is under his watch.

An even bigger problem is the number of people who have been unemployed for 6 months or more, roughly 5 million people out of the 12 million who are counted as unemployed.  That number has stayed pretty much constant.  Long-term unemployment is a very hard problem to fix- but it would be nice to try (did I already say we need a new 'New Deal'?)

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Karl, you are now the newest member at VOTS. Welcome!

sartoris's picture

Hi, Karl.  Thanks for joining VOTS and look forward to more of your comments/articles.  You're 100% correct.  The Obama administration did not need to 're-invent the wheel' to effectively deal with the most current depression, which was caused by a poorly regulated financial industry.  This administration could have implemented an economic plan to rebuild our nation's infrastructure, which would have had a much high economic multiplier effect than any of the other policies that it pursued.  Nearly everything that needed to be done was done in the New Deal era.  It was like nobody in this administration had ever even heard of the New Deal. 

Think about the effect that a casino has on a local community.  It has a negative multiplier effect.  It sucks the money out of a casino and in returns provides a small number of people poorly paying jobs.  That is the same effect that the DOD and the unregulated financial industy has on the American (and by extension the world's) economy.  Nothing has been done to ensure that this disaster will not be repeated.  Now, austerity is being pushed all around Europe and is headed to America in the manner of the odious Grand Bargain.  Now is NOT the time for the government to be decreasing its contribution to the economy, it's precisely the time for the government to be stimulating the economy. 

Welcome to VOTS, Karl!

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Thanks Karl!

NY brit expat's picture

This is what I was thinking about writing when we were talking; as as promised, I quoted you! :)

Thanks for the US data, I literally had a rant and didn't discuss data that much as I wanted to get the points out that needed be there. It is what I am calling structural unemployment that I think cannot even begin to be addressed without a new "New Deal." What is also irritating me intensely is the legitimation of forced underemployment in the stats, long term jobs with good wages and benefits are being eliminated and people are being forced into part-time employment which provides nothing resembling an income which is survivable in this system. People are working several part-time jobs and are still not making what they did before they were laid off. We are losing jobs and services as those that are left are forced to do the work of those already laid off in the public sector. They are talking about having to close 30 fire stations in London alone (which our mayor Boris Johnson has already discussed being turned into charter schools) destroying public services and public education together.

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There is another serious problem

traveler's picture

as described in this article at Zero Hedge by Tyler Durden.

The following is well displayed graphically at the link, that:

while those in the 55-69 age group have gained nearly 4 million jobs under President Obama, everyone else has lost just over 2.5 million.

In other words, those aged 55 and over should be scrambling for "4 more years." Everyone esle... perhaps not so much.

And one must wonder what is the nature of most of those jobs secured by the 55-69 year age group. My guess is that much of those jobs would be hourly, relatively low paying jobs with little chance for advancement. I have no data to back this up, only anecdotal evidence and personal experience.

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Thanks downsouth!

NY brit expat's picture

Promise there will be many more, unfortunately, no one in power is hearing what we are saying, so I will keep screaming. After a while, when they have sunk all of us into a depression and the 99% is out in the streets, maybe, just maybe, they will listen to the demands of the majority!

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Those in power

shaharazade's picture

will not listen to anything that the majority of people have to say until people withdraw their consent to be governed. As long as 'we the people' globally are still willing to have our consent extorted out of fear of  either the 'other' or looming fiscal cliffs of mass destruction they will just continue on this world wide rampage of oligarchical collectivism. I think the only way to over come the seemingly insurmountable grip they have is through that old adage Think global act local. People also have the power of global communication to organize and form coalitions inside and out of the powers that be. This is not inevitable and it's nothing new under the sun, just the latest onslaught by the Visigoth's that always go too far and get too big not too fail and fall. Politics are not static and history is nothing but change.      

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