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2012 and Beyond: A Political Fantasy

by William McGaughey


The “jobless recovery” of the 2009 and 2010 is levelling off on a plateau of high unemployment and continued frustration as all eyes turn to the 2012 presidential election. Will the new president, whoever that might be, continue to tinker at the edges of job creation or will a more substantial change in policy take place?

All is calm on the American front as “zombies” in Britain, Germany, and other European nations take to the streets to protest cuts in social spending to benefit the rich. These are persons, mostly young, who are used to being supported by the government. When that support is withdrawn, they rebel.

In America, the educated underclass is too demoralized to protest. It takes a certain faith in one’s community to do that. It takes unselfish idealism to expose oneself to arrest and incarceration in the hope that government policy might change. Rather unlikely here. There is less of a community to defend.

The United States has 100,000 young men and women in Afghanistan seeking to prevent the Taliban from regaining control over the government and preventing women from gaining an education. Our unmanned drones are killing Al Qaeda operatives and innocent civilians alike, creating new enemies for America in Pakistan. We are told these enemies hate our democracy.

Recent wars in Iraq, Afghanistan, and Libya, and the hundreds of military bases around the world, have cost the United States trillions of dollars in the last decade. There was a furious debate in Congress about raising the debt limit. Social programs must be slashed, but there will be no increase in the income-tax rate in the upper brackets or cuts in military spending. Fiscal conservatives are hawks with respect to national defense.

If America ever did pull out of Afghanistan, its homeland would be filled with tens of thousands of persons, mostly young, who need jobs. Some have psychological problems as a result of their war-time experience. Some have physical impairments. Many would have combat experience; they have learned how to kill. All this adds up to a social tinderbox if the veterans are let down too hard upon their return to civilian life.

There used to be manufacturing jobs for young men starting out in a career. Most of these have gone to low-wage countries abroad. China is today’s manufacturing giant; its products are sold mostly in the United States. We say the Chinese are “cheating” by holding the value of their currency down in relation to the U.S. dollar. But if that’s what it takes to become a manufacturing powerhouse, what government taking its own people’s interests primarily into consideration would not resist devaluing its currency?

The question is why the U.S. government has instead allowed its work force to compete head-to-head with workers in south or east Asia who can do comparable work for a fraction of the cost? Would it not consider buffering the cost differential with protective tariffs on goods exported from low-wage countries that will be sold in the United States?

No, that would be “protectionist” - a no-no, say professional economists. Besides, it might anger the corporate CEOs who can quickly boost profits and their own compensation by cutting out the high-priced U.S. labor. It might anger the Wall Street investors who contribute significant sums of money to Congressional re-election campaigns.

It’s politically smarter to rail against the communist Chinese government that prefers its people’s economic well being to ours. Besides refusing significantly to let the renminbi appreciate, this government permits violations of worker rights.

Who or what are we talking about? The world’s largest manufacturer is a Taiwanese firm called Foxconn that contracts with Apple, Sony, Nokia, Dell, HP, and other electronics firms to make their products. Foxconn employs 1.2 million persons, mainly in south China. This firm has been criticized for its long hours, harsh working conditions, and low pay. News organizations have reported that 18 Foxconn workers committed suicide last year. There are other contract firms in China which operate in similar fashion, though on a smaller scale.

The free-trade system to which U.S. policy makers are so ardently committed allows U.S. electronics firms to have its products produced cheaply in China and then be imported with minimal tariffs into the United States where the products would be sold at a full-scale price. Trade regulations do not permit consideration of how workers were treated in the production process. Instead, we hold the Chinese government responsible for policing or failing to police that aspect of the operation.

In response to criticism of its labor policies, the CEO of Foxconn, Terry Gou, announced at a company dance party that by 2014 his firm would be installing one million robots to replace human labor at some of its plants. This would merely slow the growth of Foxconn employment in China. It does demonstrate, however, that automation may be as great a threat to U.S. employment as outsourcing to low-wage countries. The displacement of human labor by machines is a worldwide phenomenon.

What can anyone do about this type of unemployment? If protective tariffs were, at least, a theoretical remedy for the importation of goods produced under sweat-shop conditions, the theoretical remedy for having machines do work once done by human beings is to reduce the working hours of the remaining human workers. Unless a factory can operate with machines alone, there will always be a need for human labor. The economy needs these workers not only to help produce goods and services but also to earn wages that can purchase consumer products.

Therefore, if an employer installs “labor-saving equipment” (such as robots) to produce the same output with fewer workers, employment might be stabilized by cutting those workers’ hours of work. It might then become necessary to hire new people to maintain the same level of production. Suppose the extra workers are not needed because the machines are so efficient in producing goods? Then cut work hours further. At some level of hours, the employer will need a full roster of employees. From a macroeconomic standpoint, that is necessary since there would be no point to producing goods and services if there were not people with money in their pockets to buy the products.

Shorter work hours have been the traditional line of defense against unemployment caused by automation. Traditionally, labor unions have provided organizational support for shorter hours. This is no longer true. As organized labor in the United States has become concentrated in the public sector, union members care less about creating jobs for the unemployed than about maintaining or increasing their own wages and benefits. In fact, some working people are eager to work overtime because of the premium overtime wage.

Since business generally opposes reductions in work time and the labor movement has effectively collapsed as a countervailing force, the only institution capable of bringing about the needed change in work schedules is government. The federal government, rather than those on the state or local level, would be the appropriate entity in the United States.

The federal government could create a new incentive for employers to reduce work time by amending the Fair Labor Standards Act. For instance, if it changed the standard workweek in this law to thirty-two hours instead of forty hours, there would be a financial incentive to reduce the weekly work schedule to thirty-two hours which would likely consist of four eight-hour days.

This is one thing, then, that the federal government could do immediately to relieve the nation’s long-term employment. It would not involve creating new public-works jobs with borrowed money. It would not involve “growing government”. Instead, shorter work hours would create new jobs in firms already employing human labor. These firms would be mainly in the private sector. The jobs would be good productive jobs, not make-work.

Another thing is to reform our nation’s trade policy. Stop pretending that American workers can compete against workers in less developed countries who can do the same work for much less money. Stop pretending that education will give Americans special skills when other countries also have first-rate colleges. The problem with our current trading system is not “cheating” by other countries; it’s that we are at vastly different levels of economic development. No American can afford to work for thirty cents an hour, but Chinese workers can. Tariffs on imports could help to bridge the wage differential so that products are put on the same cost footing.

The solution then is to scrap free trade and replace it with an international trading regime that encourages advancements in wages and reductions in hours while maintaining environmental standards. Each nation should be allowed to impose tariffs on imported products whose producing firms have violated international standards. In this age of computers, we have the technical capacity to record work conditions at the level of the individual factory and calculate a tariff accordingly. Employer-specific tariffs would redirect trade relations from a relationship between governments to a relationship between government and exporting business firms.

With the mechanization of industry, there is a surplus of labor in all countries, regardless of their stage of economic development. There is a need, therefore, for working hours to be reduced accordingly. Nations that countenance longer hours are, in effect, stealing employment from nations that are their trading partners. Instead of free trade, let this be the new trade imperative - cooperation between nations in stabilizing worldwide employment and minimizing environmental damage. All nations are in the same boat with respect to that need.

What we have in the United States is not trade in a conventional sense but an exchange of goods and services for debt. Such a practice cannot be maintained without, at some point, defaulting on one’s debt obligations either through currency inflation or outright repudiation of debt. Let those who argue for the free-trade system show how the nation’s trade accounts will ever come into balance under the current system. If they cannot, we should move to another system. Hopefully, this can be done with the cooperation and consent of the international community.

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It is customary for persons concerned with unemployment to talk only about the problems. They are not hard to find. We could discuss at some length unemployment rates resistant to tax cuts or new government spending, higher education and the military as holding tanks for young people who cannot find jobs, the large student loans they will later have to pay, the financial sector continuing to drain our national wealth, the endless cycle of wars fought to spread democracy and protect Israel, the corporate media that refuses to cover real policy questions, the continuing racial divisions and recriminations, the big contributors to Congressional or Presidential campaigns with their undue influence upon government policy, the widening gap between rich and poor, etc.

As for solutions, none are suggested except to sweep one group of people out of office and put another equally clueless group in. At some point, one would think that Americans would take to the streets and demand that government do something real. I think we are too demoralized as a people to take bold action of this sort. Or, if we did, the huge post-9/11 security apparatus assembled in this country would quickly defeat the protestors. It will not be easy to deal with the police state that has emerged to control and intimidate people in our self-styled “democracy”.

Pessimistic realism will lead us to the conclusion that America will sink into a morass of prolonged hardship and despair. I prefer to paint a more optimistic future. While the political forces and personalities to bring that future into being cannot be identified at this time, let’s ignore that part of the scenario and instead focus upon what could happen.

Therefore, I will approach this situation as John of Patmos might have approached Christian persecution in Rome while composing the Book of Revelation. Worldly affairs continue to deteriorate. A series of grisly experiences ensue. Then, suddenly, the Messiah comes to earth, smites the evil forces, and an earthly paradise is created. God, not men, has caused this to happen.

I will imagine that, like a thunderbolt, a shorter workweek is enacted in a political environment little inclined to that policy. All of a sudden, the long-term unemployed receive job offers. The nation’s employed have an extra day off work and they find that their weekly paychecks have declined little, if any, in real purchasing power. Hallelujah! Our prayers have been heard.

The American experience has a galvanizing effect on the rest of the world. Now everyone wants shorter hours. The “communist” government in China finds passages in Marx to explain how international capitalism has reached a self-defeating end and work hours need to be reduced. They now place themselves in the vanguard of human rights, demanding ever improved work conditions. Singing “kumbaya”, the nations of the world scrap the cut-throat free-trade system and agree on a system of tariffs that will promote sound, humane industrial development.

The federal policy makers now decide that it is not necessary to pump the military budget to have full employment. Hours regulation will also create jobs. And so troops are pulled back from Afghanistan. A majority of U.S. military bases are dismantled and the facilities returned to the host countries. While the Taliban takes control of the Afghan government, it promptly seeks peace with the United States. That seems to be the pattern everywhere we shrink our military presence. We let the empire lapse yet no enemies come to our shores.

Unlike the situation in Revelation, however, the victory is not complete. The ancien regime will not accept defeat so lightly . There are “sacred” obligations that need to be met by having people work longer hours again to pay the government’s unfunded debt. Is American “greatness” to be compromised by the people’s selfish desire for happiness? “Ask not what your country can do for you but what you can do for your country.” Be worthy of President Kennedy’s high-minded request. You are, after all, Americans.

The electronic Wizard of Oz, which is the media, continues to play on our feelings of national guilt. Maybe government does have better uses for our time than we the people. Being an essentially “privileged” people (at least the white portion of the population), Americans are an inexperienced and shallow bunch. We have never learned what is meaningful in life. Our public officials must tell us what is in the true national interest. Americans will then need to roll up their sleeves and get cracking on what their leaders decide is best.

Then, like a second bolt of lightning, comes new and convincing evidence that the tragedies that occurred on 9/11 were the result of an inside job. It was not jihadist fanatics in hijacked airplanes that brought down the World Trade Center towers but unknown explosives planted in the sub-basements. Furthermore, some top U.S. government officials knew of the attacks beforehand. All that bloodshed in Iraq, Pakistan, and Afghanistan was in vain. Some of those high-level traitors deserve to hang!

Now, George Washington once ordered the hanging of two wretched Continental soldiers who had tried to desert. Lincoln permitted the hanging of 38 Sioux warriors believed to have attacked frontier settlements in southern Minnesota. It is decided, however, that execution would be too harsh a punishment for the present or past U.S. government officials who were in on the 9/11 plot. The American public would not have the stomach for such a disillusioning event. Let the principal offenders instead spend fifteen years each at the Leavenworth prison and let their years of public service count toward satisfying the sentence.

After that, there is an uneasy feeling that the American nation is worth nothing any more. The United States has become a dumping ground for other people’s purposes. It is a “land of opportunity” from which much is taken and to which little is returned. Only the little people are asked to die for their country. The big wigs are exempt from any kind of sacrifice. Everyone’s heart is elsewhere except for the people who have no other place to go.

Straight on the heels of the revelation about the 9/11 attacks comes another shock. The government’s staggering debt has caused cuts to needed social programs. Tax revenues cannot finance programs expected of government. Certain debt obligations are not met. Financial markets panic. Soon it is decided to default on Treasury bills. It is said that the “American people” lack a sense of honor. They have let the investment community down. No, it is government, not the people, that has dishonored its obligations. Investors need to learn that any investment has risks. One generation of Americans cannot be expected to redeem what another has wantonly incurred when the immediate pain is great.

The authority of the U.S. government begins now to break down. The first clash is with the IRS. In their extra day off work, Americans have picked up a few new hobbies. They have learned a few new useful skills. An informal barter economy develops as people exchange personal services with friends. The IRS is demanding that these benefits be treated as taxable income. When law enforcement arrives to enforce the tax collector’s claim, shots ring out. The battle lines are drawn for a new type of politics.

No one dares rescind the shorter workweek that was implemented at the national level. The new system of international trade also remains intact. The power in society now devolves to the local level. Alongside large-scale corporate enterprise, the barter economy is in full swing. It becomes so pervasive that no one worries about IRS agents or police any more. Governmental authority is increasingly disregarded as people go about the business of coping with the new conditions of American life.

The public authorities and their friends in large-scale business stage a counterattack through local regulation. They insist upon maintaining “high standards” in various occupations. Individuals who barter their skills informally are, of course, not meeting the standard. Therefore, government must put them out of business.

There are too many barterers for that strategy to succeed. They organize themselves for both a political and military response. When government inspectors show up to put certain persons out of business, some of them are shot. The security forces waver. Who knows how many trigger-happy combat veterans might be among those being harassed.

Cooler heads eventually prevail. The chaotic violence gives way to a new political discussion centered in government’s powers of regulation. To what extent is government responsible for monitoring and enforcing product quality instead of allowing consumers to decide such things for themselves? Can an amateur do the electrical wiring in an office building or should only state-licensed practitioners handle that kind of work? What about doctors and nurses? Should you need a license to practice medicine or should medical consumers be allowed to engage the services of anyone they choose?

The educational establishment lines up behind tougher regulation. Of course, people need to take their courses to become qualified for work. We must continually upgrade educational standards to ensure that only "high-quality" work is done. Besides, the extra educational requirement for a given occupation contributes to growth of GDP. Excellence is good, is it not? A growing economy is good. Only ignorant people would think otherwise.

By then, however, the people have had a taste of liberty. In their free time, more and more people have been learning how to do certain things. There are amateur electricians, auto mechanics, doctors, or other skilled practitioners in nearly every field. A culture of evading certification requirements has developed. Even if laws are passed to exclude unqualified practitioners, people choose to hire whomever they will. The practice is too widespread to be forcibly curtailed. The government inspectors are forced to desist.

Debt collectors hound the generation of Americans stuck with large student loans. The gold-plated educational establishment is now seen as an enemy of progress. New types of schools are organized to educate people at a lower cost, using recorded instruction in place of live teachers to a greater degree. The course work becomes standardized so that employers have a better idea of what students have learned. The educators become accountable to both their customers, the students, and to their graduates’ customers, the future employers.

What is more, many of these schools assume responsibility for placing their graduates in jobs. Some even employ the graduates themselves. They become like temp agencies who furnish workers to employers on a conditional basis, vouching for a certain level of skill. As their pool of employees grows, communities are formed with economic and political influence.

In time, these educational and labor conglomerates win the fight over professional “standards”. Let the buyer beware. Isn't that what a free market says? Government should stay out of the business of deciding what products should be allowed on the market or which ones consumers ought to prefer.

In the meanwhile, computer data bases are developed in several fields with knowledge superior to what professionals have in their head. In the medical field, for instance, there are records of diagnosis and treatment and the outcome produced in each case. Computer software can analyze from millions of records what was the effect of prescribing a particular drug, in particular doses, and in combination with other drugs. Medical technicians need merely to feed information into the system regarding a patient’s observed condition to see what the likely outcome would be of a particular prescription. As more professional work is done through computers, the educational requirement decreases. There is a flattening of salaries as skill levels converge.

Decades into the future, Americans find themselves less dependent on the government, financially and emotionally. They are less dependent on education. They have more time to create lives of their own design. They have learned to grow food in gardens, repair broken appliances, mend clothing, and carry out other personal functions which their forbearers knew but which had become largely forgotten when the third millennium began. They have also learned to be skeptical of claims made by the government or of “news” disseminated by the mass media. They have educated and informed themselves.

It began by observing, in the era of Bush and Obama, that the experts were wrong about economic recovery. Americans prospered by working fewer average hours - and government did not have to spend large sums of money to accomplish that result. It was then the people decided to trust their own instincts rather than the opinions of media-favored experts or college professors.

Government finances were in shambles, yet foreigners continued to do business with Americans. Money was just money, hot air inside a financial bubble. That was what “economic growth” was about. Real living standards were something else. It was the adjustment in hours as productivity increases that gave working Americans a foothold in the mainstream corporate economy to supplement the barter economy. Not just the CEOs and fund managers had the benefit of those increases.

On a personal level, people had figured this out for themselves. They had learned that America is more than its government. They had learned that human dignity is more than the amount of money a person earns or owns. They had learned that learning is not confined to educational institutions. These Americans had learned to be free.

 

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