Almost nine million people aged 16-64 are ‘economically inactive’ in Britain, and few of them are independently wealthy.
And we are doing comparatively well in that department. Germany and the US are only marginally better off, other European countries are much worse. For example, youth unemployment in southern Europe is around 30-50 per cent.
The disastrous consequences are self-evident. Lower employment means a lower taxation base, which makes the governments’ social obligations impossible to fulfil.
Modern governments have no pot of money out of which they pay state pensions. Instead they run a sort of Ponzi scheme, hoping that the money paid in by some people today will be sufficient to pay for other people’s pensions tomorrow. What if it isn’t, as is increasingly appearing likely?
Other, non-economic, consequences are even worse: hordes of young jobless adults turn into a knife slashing the social fabric. Alienated, robbed of any dignity, they become a ballast on society, often a threat to it.
The burden of providing what Dr Johnson called ‘the necessaries’ falls on the state, which either has to extort more taxes out of the economy or run deficit budgets and service huge public debts ($20 trillion for the US, £2 trillion for us).
Everyone knows that mass unemployment is a deadly blight. The lapidary question asked by the pragmatic Anglo-Saxon mind is: ‘What are we going to do about it?’
Before treating a disease we must first establish its aetiology. Pandemic unemployment is caused by multiple factors. Some of them, such as a steadily deteriorating education and wide availability of welfare, have the same source: socialist politics.
Such problems are easy enough to fix in theory. In practice, they are next to impossible to fix without a tectonic shift in political Weltanschauung. That isn’t going to happen without a global catastrophe, such as the collapse of the monetary system or a devastating world war.
But at least one can think of a solution, if only in theory. Two other problems seem insoluble even in that realm: globalisation and computerisation.
Turning the whole world into effectively a single market means that labour will go where labour is cheap. Hence we all wear clothes stitched together by undernourished people, eat food produced by effectively slave labour, use energy generated by those subsisting on what we spend on restaurant tips.
And computerisation enables a chap pushing buttons on a console to do the work of a hundred men with mouths to feed. With the best will in the world (which in this world is rare), even if they all learn how to push those buttons, there aren’t enough buttons to go around.
As a result, manufacturing makes an ebbing contribution to GDP in the West (only about 10 per cent in the UK, 12 per cent in the US). And even the curves of value-added manufacturing look like a downhill slalom.
‘Conservative’ (in reality liberal) economists are ecstatic: both tendencies benefit Western consumers by reducing prices. They see nothing but positives in negative trade balances. Thus, for example, their guru Milton Friedman: “Our gain from foreign trade is what we import. Exports are the price we pay to get imports.”
The immediate monetary price, yes. But looking beyond today and even – dare one say it – beyond just today’s money, there’s an awful social, moral and, down the road, economic cost of millions unemployed.
What are we going to do about them? Are they all going to become systems analysts, computer programmers and fund managers? Somehow one doubts that.
I wish I had a ready answer, but I don’t – not without a complete reversal of modernity, which is an appealing pipe dream, but a pipe dream nonetheless. More worrying is that our ‘leaders’ don’t have a clue either.
Whatever their politics, they’re painfully aware of the problem. Yet at best they can offer only palliative measures that may delay the impending catastrophe but not thwart it.
Witness two politicians very much in the news, Donald Trump and Benoit Hamon, the Socialist candidate in France’s presidential election. Much as I detest socialists in general, and Hamon in particular, he seems to have a wider understanding of the issue, though his proposed solutions are still inadequate.
Trump wants to counter the effects of globalisation by protectionism. Manufacturers will be rewarded for having their plants in the US and punished for moving them abroad. At the same time, Trump is threatening stiff tariffs on imports.
One can understand where he’s coming from, but ultimately such measures aren’t going to work. Their immediate effect will be price increases across the board: labour will no longer be cheap.
The long-term effect will be even greater computerisation: businesses exist to make profits, and expensive labour will be even less competitive with the aforementioned buttons.
Hamon’s solution is two-fold. First, he proposes that every French adult be paid €750 a month, no questions asked. That way, he says, people won’t have to work if they don’t want to or can’t. Second, he wants to tax robots, thereby countering the effect of computerisation on employment.
Interestingly, both Hamon, who’s a communist in all but name, and Trump, who calls himself a ‘pragmatic conservative’, are proposing blatantly statist measures designed to give the state an even greater control of the economy.
This is yet another proof that teleologically all modern governments, whatever they call themselves, pull in the same direction: empowering the state at the expense of the individual. The two gentlemen will make neither America nor France ‘great again’. They will, however, make state power even greater – which is an ineluctable effect of modern politics.
Unemployment and other structural problems of modernity will persevere for as long as modernity does. Within the confines of the thought inspired by the Enlightenment there can be no solution to the problems created by the Enlightenment.
The Swiss had a referendum recently on the proposition that everyone should be given state ‘pension’ regardless of whether they were working or not because of the computerisation crisis and the unemployment it is going to cause. It was voted down.
According to an Oxford University Study, “The Future of Employment: How Susceptible Are Jobs to Computerisation?,” by Dr Michael Osborne, nearly half of all US jobs are liable to disappear thanks to computerisation. The same levels are likely to apply to other ‘advanced’ economies. including Britain. However, another study has indicated that job losses in Germany are likely to be over 60%. That country is more heavily dependent on manufacturing and so, one supposes, more susceptible to roboticisation.
These developments are coming in fast. I mean, we have all noticed the self-service tills in shops and supermarkets. Middle-class jobs such as high street insurance brokers, travel agents and now even estate agents, are disappearing to the intenet. Bank branches are a rarity in some areas, and so on. Factory jobs are going to be history soon. Even the Chinese now have factories almost totally run by robots. And such jobs as maintenance, cleaning and security are doomed. Crop harvesting will soon be done by machines.
All this raises interesting questions as you note. One of them is; why on earth do people keep on saying we ‘need’ immigrants? We need them like a hole in the head.
70% of the immigrants Merkel has wished on Germany are illiterate in their own language and they are coming into a country already famous for the length and quality of the training required for just about any and every job…… When the computer revolution has reached the flood, the only jobs paying a decent salary will fiercely contested . They will be had by only the very highest qualifed. As for the rest, it won’t be silence, quite the reverse.
In the absence of a societal catastrophe, a ‘guaranteed income’ will become a necessity – but it must have some strings attached. Some thoughts on this:
http://hirocker.com/r-economy/replicator-economy.html
Perhaps we need a new Hayek. He developed a much regarded theory of money – bits of it even adopted by Keynes. Unfortunately, governments from Australia to India have started a stealthy process of abolishing money. In the USA you can get arrested for carrying a modest amount of cash, or even for keeping it in your house. We could cope perhaps by using those ethical institutions that call themselves banks except that the IMF has sanctioned the theft of private savings accounts in order to pay off debts of others. If most folks have to get by on subsistence wages or no wages at all, then industry will have no buyers for its products and the world economy and public order will collapse. Result, as Mr Micawber opined, – misery. Cue tyranny and all that could entail.
“Within the confines of the thought inspired by the Enlightenment there can be no solution to the problems created by the Enlightenment.” You can’t say that!
“Almost nine million people aged 16-64 are ‘economically inactive’ in Britain, and few of them are independently wealthy.”
And yet you only see small numbers of persons “living rough”, dressed in rags, starved, never having a lack of cigarettes, liquor, etc. The welfare state at work. I have often thought the welfare recipient is the smart one and the producer is the dumb one. Who is so proud to say and refuse a free handout with almost no strings attached. And by golly the welfare recipient then complains and is promptly given more and better. Again who is so proud to say NO!