Wasted human resources

May 9, 2009

Freddie has been laid of, his bank is broke, and he is a broker. With the bonus he buys a house and plans to spend one year relaxing, jetting around the world.

Joe lost his job in a car factory, his budget was already tense, but now he lost his house. His wife is back from hospital, and they will spend winter in a camping ground. The church and some friends are helping.

The economic crisis is not democratic. What do statistic figures mean ? The working population of the USA is around 154 million ( cf http://www.bls.gov/news.release/empsit.nr0.htm). Presently, 9 % is the unemployment rate, this corresponds to an armada of 6.9 million people. The government has injected vast sums into the finance sector, but now another 75 billion are needed again for the major banks. Probably not for the last time.

How many jobs and how many firms will be saved with this amount ? What would this sum mean for the average jobless population ? What is being done for people hit by unemployment ?

Presuming that each of the 6.9 millions received a salary of 25 000 $ a year, this would cost the government 172 500 000 000 $, or 172 billions a year.

Does this sound like a lot of money to you ? Simply compare it with the cash injected in the finance sector and car industry to name a few. And the bill is not final, more is coming along.

Economic aspect : Unemployment causes a productivity loss measurable in the GNP. It is also a reduction of human resource cost and salaries, for firms still in business. In any case, there are costs for the community, along with lost tax revenues. The private sector has gotten rid of a dead weight, while the community somehow has to assume this human burden. What has been prepared for such a scenario ? Where do these people get a relief, a new social function, a certain sense back into their existence ? Generally, advice is directed towards keeping up moral and remaining attractive for the next job. No moroseness, make the best out of it, be positive. Is it somebody’s fault ? Does the employer or the authorities have a certain responsibility ? How does the private sector regard employees ? Unemployment keeps the workforce quiet, the larger their number, the lower the salaries. Jobless people are geographically mobile, they tend to compromise, they are the raw material for the next boom. All this looks great for the next recovery, from the management side. Firms need help to get started again. Tax cuts, cheap human resource, financial incentive. Aren’t they the motor of the nation, creating wealth, jobs, tax revenue etc ?

Is there an alternative from this scheme ? Could there be a less job-oriented identity for workers ? Does the government only have responsibilities for big firms, not for the individual employees ? Should not the responsibility for the debacle determine who gets financial help ? Among the employees, those in middle to lower positions carry no fault for the crisis. But they are the vast majority and are hit hardest. Firms should not only make profits with the help of their employees, they should also help their staff if they are laid off. It’s a causality principle.

Here is a possibility : the government actually plans ahead for good and for bad times. For the first case, the instruments are known. In the reverse case, there must be more than a help to prevent starvation. The quality of live and human dignity cannot depend exclusively on the exertion of a paid job.

There has to be an alternate pool of activities provided for jobless people. An example would be this : an old idea is to offer works of public interest, building roads etc. The idea is good, since infrastructural work is necessary independently of the economic cycle. During a boom, it would be hard to find people for such tasks. I would like to expand this concept. We don’t need only traditionally unqualified jobs (roads, agriculture). Let’s evaluate what are the most important infrastructural needs of a country right now and invest an equivalent amount of money (as the finance sector received) to realize them before the next economic boom starts. One possibility would be the manufacturing and installation of a. electro galvanic panels, b. thermo solar elements, c. thermal isolation material (walls, roof, windows) on private houses presently empty, on hospitals, schools and other public buildings. To avoid a direct competition with commercial firms doing the same work, there should be a clear separation between the mentioned clients and the usual house owners able to pay for it – a sectorized market. A partly state-controlled economy, yes, I know. And who is running Fannie and Freddie ? Stalin or rather politicians elected democratically ?

With these measures, the future dependency from fossil fuels, the overall energy consumption and the emission of greenhouse-gases could be reduced markedly. If jobless persons received an appropriate salary, they would remain in a productive cycle, experience a useful activity and produce a plus-value for the society, compensating at least their salary. The products a – c could be used for improving houses now devaluated by the sub-prime crisis, belonging to people unable to pay for it, for victims of natural disasters etc. Once restructured, these houses could be sold to people working in these occupational programs. Or the work could be traded against a house. The details would have to be elaborated. Assuming that houses could be sold at a markedly higher price, this profit could go into a jobless foundation and be redistributed among those who work in that system. This is just a rough idea. At this time, techniques for synthesizing fuel from gaseous carbon dioxide are being developed. It would therefore make sense to build large parks of solar panels in advance to power such plants in 1-2 years time. Solar and wind parks in general could replace other power plants and could be installed with such jobless-programs.

The principle detailed here is to pay jobless people real salaries for real products that have a real market value.

There are certainly other and better possibilities. The present approach, whereby people simply drop out of a productive job is a waste for both sides. Since every employee produces a plus-value, a public occupation program could not lose. If longterm improvements of the infrastructure can be created, I see a certain scope in examining such a possibility. The economy would profit from a better infrastructure and from motivated and freshly trained personnel. Other venues are dams ( New Orleans), public transportation, public buildings, computer recycling.

The idea is to create a second economic sector controlled by the government. Having to assume the burden of unemployment without getting a compensation from the sectors responsible, I see no moral obstacles in using free market tools creatively and in the interest of the majority. The government does not only have duties towards firms, he should take his responsibilities equally serious in regards of the primary victims of the crisis.

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