Friday, October 30, 2009

On Direct Jobs Creation

This is a follow up to my previous post/rant on the continuing high unemployment rate and what to do about it based on L. Randall Wray's suggestions at Economic Perspectives from Kansas City that was mentioned by Meteor Blades over at dKos.

MB has been one of the very few Lefty Bloggers to consistently focus on the unemployment situation during this Recession, and one of even fewer to recognize the policy implications of maintaining such a high unemployment and underemployment rate for so long. I suspect the general lack of focus on unemployment/underemployment and the widespread obliviousness to the policy implications (ie: high unemployment/underemployment is being deliberately maintained in order to drive down worker pay and benefits substantially, and to keep it down "when employment returns") has something to do with age. MB is relatively old for the blogosphere, in his 60's, old enough to remember federal jobs programs and the rationale for them back in the day, and old enough to wonder at their absence during this, the most far-reaching and devastating Recession in several generations.


And it is Policy that I'd like to get into first in connection with the Wray suggestion to establish a Federal Jobs Program that would employ everyone who wanted to work and was ready to work but who could not find employment in the private sector.

While the country has had temporary programs something like this since the Great Depression, there has not even been a hint of such a thing during this Recession. The idea is so "radical" that the Wray suggestion is the first of its kind to appear in the open as it were. Not even Paul Krugman has gone this far.

There are several Policy issues to keep in mind, however:

1) Not everyone can or should work. There is a tendency when "full employment" is considered and discussed to presume "everyone" (except perhaps children under 10, the very old, and the permanently incapacitated) should be working. The fact that they don't raises the un-and-underemployment rate to rather spectacular levels (approaching 30-40% depending on economic conditions) and getting the unemployable working becomes a mission for labor reformers (especially on the right but not exclusively so)... I would suggest it is a distraction, and there should be a recognition up front that a significant part of the population cannot and should not be considered part of the labor force, should not be forced, permitted or encouraged to work, and that this is a good thing. Further, provision for people who are unemployable should be a basic right. It is not at this time (the stories of struggles that some people go through to get disability payments are legion, child care provisions are a disgrace, and elder care is lacking in many respects), and making it so should be one of the focuses of Labor Reform.

2) Federal jobs programs should supplement the private sector, not substitute for it. From appearances, the ongoing shedding of jobs in both the public and private sector is a deliberate policy choice that goes well beyond the immediate economic situation. Reduction in the absolute number of those employed appears to be intended as a permanent feature of the Labor Market, with a two-fold purpose: a) to prop up productivity; 2) to force and maintain lower wages and benefits for those who can get or keep a job. The upshot being the continued high profits to the Owners. Any jobs program would of course threaten those objectives and so would be opposed fiercely by Ownership, but a Federal jobs program that simply replaces absent private sector employment with public sector jobs at a low wage and benefit level would actually serve to reinforce the private sector's determination to reduce wages and benefits, on the one hand, and increase productivity and profits on the other. Consequently, the Labor Reform Policy must be to push the other way: to force the private sector to compete for workers -- by paying them more and better among other things. The Wray proposal basically provides low-wage drone-work for the unemployed, some of which has a beneficial public interest purpose to be sure, but it would have the effect of driving down wages for everyone, and it would give the private sector further excuses to shed more jobs, keeping the current downward cycle going.

3) Any Federal jobs program should be intended to improve the overall economic condition of the nation -- by providing work which rewards the worker and improves living conditions for all, and by providing decent wages which become part of a resurgent consumer economy.

4) Wray's notion to regionalize and localize an employment program is essential but there are risks. As corrupt as the Federal government has become, local and state governments are in many cases more corrupt. A forthright jobs program would have to run counter the widespread corruption at all levels of government. Have it help model a less corrupt future. That's a public interest most of us could agree with.

5) Finally, a Federal Jobs Program should be designed primarily as a "bottom up" economic recovery program, something that has been missing from all the efforts made so far. It should be "for" but also "by" the People. It should be empowering. Yes, Socialism. Ha ha!

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