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Wednesday, September 5, 2012

Full Employment Revisited

During the last two decades there have been major structural changes in the U.S. labor situation. These are primarily the result of the microcomputer revolution. Computers, with appropriate software, enable a great reduction in required staffing levels. This is true both in the office and the factory. In the factory it is by the use of manufacturing robots, and also by automated logistical systems. In the office it has eliminated typing pools, and reduced the number of bookkeepers and accountants and inventory clerks required. So nowadays the goods and services that are really needed can be produced by a fraction of the total workforce, and many people are left without jobs.

But there exist numerous ways to keep almost everyone working, if the government had the political will. Many of them are already in use, else we would have much higher unemployment than we currently do. Many of you probably have read my article here:
Now I want to expand on that a little.

What some business people would like would be to emulate China. If real wages are made low enough we can sell lots of stuff to the rest of the world at very low prices. This would be one way of having low unemployment. But most of the U.S. population would not like this at all. The bulk of our population would be in poverty, as in China. The business owners, however, would be raking in previously unimaginable incomes.

The biggest make-work program that we currently have is defense. This uses tax receipts to employ tens of millions of people. Most of these are employees of the various defense contractors. Many more are military personnel. And then there are the many cities with military bases. These local economies depend on the personal spending of the local military personnel. Why do I call this a make-work program? Isn't it necessary to defend the nation from foreign aggressors? Well, our defense establishment is about twice as big as necessary for this purpose. (So it's only half a make-work program, and half a necessary program.) Defense is also a form of corporate welfare, and that in fact is why it's so large. The various companies that manufacture all of that military stuff also spend lots of money lobbying our congress, and contributing to the campaigns of favored politicians.

If it was up to me I would greatly increase spending on all kinds of scientific research, including the space program. Plus I would embark on a vast infrastructure improvement program to give us roads, bridges & railroads as good as they have in Germany. Also, we should be building many medical schools and clinics and providing scholarships to train medical personnel at all levels. Money for all of this stuff would come from restoring the tax code to what it was in America's best economic years, the 60's and 70's, but also, the greatly increased GDP that would result would bring in substantially increased tax receipts.

Finally, I would start a long term program to gradually reduce the standard workweek from the present 40 hours.