|US umemployment. Image source.|
To those who live by means of a real job, recessions and depressions are marked by a decline in the availability of work at a decent wage.
The difference between definitions is important. It is possible for an economy to grow through increases in productivity, while jobs are lost and real wages decline, as has happened in the US during recent years.
It is possible for an economy to shrink through declining labor productivity, while jobs are gained, as has happened during the last four years in the UK.
So whatever the economists and politicians have to say about green shoots, and economic recovery, the economy for tens of millions of unemployed, under-employed or discouraged workers in the the US, Canada, and Europe is lousy, stinking, and depressed.
The reason for the massive shortage of jobs is simple: tens of millions of workers in the West are not worth hiring.
First, globalization, which puts workers in the West in direct competition for most manufacturing and many service jobs with workers of the Rest, many of whom work for only pennies an hour.
How do you compete with that when there's a US Federal minimum wage of $7.25 an hour and a European minimum wage twice as high?
There was a time when robots cost a fortune and were used mainly to eliminate production-line workers in high-value manufacturing, such as car plants. But no more. A general purpose readily trained robot can be had for a mere $22,000. With a rated life of 6000 hours, it provides precise, reliable service, 24/7, at a cost equivalent to half the US minimum wage.
And it's not just dumb jobs that will soon be eliminated by computerization and robotization. Watson, a pizza-sized computer diagnostic system from IBM is more accurate than the average physician.
How long before your physician is made redundant by a Web site or a computer-aided graduate in medical diagnosis earning about a tenth of what a physician expects to earn?
Many teachers and university professors are also likely to experience redundancy as online courses, examination systems and accreditation methods replace traditional institutions of learning.
Which means that millions of people, most people, in fact, are unnecessary in the modern economy.
Which no doubt explains the enthusiasm of some rich bastards for wiping out most of the human race.
But for those disinclined to genocide, the question must be: how can wages of marginal workers in the West be made less than the value that such labor is able to generate, while insuring that workers nevertheless receive a living income?
This is not a hard problem.
The US Federal reserve is currently printing $89 billion a month to purchase treasure bonds, thereby increasing the money supply in an operation that appears destined to create not jobs but hyperinflation.
So what else could they do?
Take the $89 billion, double it and send every full-time worker a monthly check for $1000.00. At the same time, all state and federal minimum wage laws would be abandoned.
The United States or any country adopting such a policy would have the cheapest labor resource in the World, i.e., wages could fall as low as a penny an hour (though competition would prevent significant quantities of labor being available at that price), which would provide a huge stimulus to entrepreneurial activity.
It would result in the rapid re-patriation by the West of jobs off-shored to Asia, the Middle East and Africa as workers in the West again manufactured shoes and shirts, car parts and computers that are now imported from sweatshops and slave plantations of China and elsewhere.
The economic resurgence would swell government revenues, slash welfare costs, including the costs of crime and mental illness that are accompaniments of mass unemployment.
These effects alone, would largely offset the cost of the job subsidy payments.
As necessary, the remaining cost could be recovered through a job subsidy claw-back at the rate of, say, 10% on incomes between $12,000 and $132,000.
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