Thursday, August 12, 2010

Gotta Have A Job If You Want Me To Buy Stuff.

The Dow Jones Industrial Average is regularly above 10,000 again, but the national unemployment rate still hovers around 9.5%-10%. There are those who claim that it is actually worse than this, that there are large numbers of people who have given up looking for work and thus do not figure into the statistics any longer. All across America state and local governments are laying people off, cutting services, and in at least one case turning off the street lights, to save money.

So let's get this straight. Corporations have returned to profitability but they are not hiring and they continue to cut benefits and demand more of their workers for less. What they are not seeing is that without employment people cannot pay taxes. Without tax revenues governments cannot provide basic services. That means policemen, firemen, teachers, garbage collectors, and road crews who fix the potholes. This drives up the unemployment further and increases the numbers of people who are not paying any taxes.

Furthermore, when people are unemployed they do not make any purchases beyond the basic necessities, food, clothing, shelter. When they are unemployed long enough they may cease making even these basic purchases. Want your company to sell products. We need people to be employed. Then they buy air conditioners, televisions, cars, and houses. With a job, they are less likely to default on a mortgage and end up in foreclosure.

Then there are the retirees and future retirees. 401(k)s are tanking. Public pension funds are in danger of defaulting and leaving their membership out in the cold. Again, let's get something straight. Retired people without money neither pay any taxes, nor buy cars, televisions, or any of the other things that keep the economy humming along.

So what's up? How do we get out of the current economic morass? Part of the answer lies in one of President Obama's favorite topics, creating new industry via green technology. This country needs to create new sustainable industries that will employee people for the long haul in real jobs that create and sell things, not in more service sector low-wage employment. Recognizing that we live in a world where the economy is global, we have to recognize that certain types of manufacturing will continue to be done overseas until the standard of living in China, in Indonesia, in other Third World nations improves to the point that it is no longer profitable to send your work overseas. We need to be working toward worldwide minimum standards of living and wages.

Part of the problem lies, however, with corporations that had a 2% decrease in profits and promptly laid off 6% of their labor force, resulting in soaring profits. These same corporations cut benefit packages to those who were lucky enough to keep their jobs. Profits soared. Executives reaped huge bonuses to their already extravagant salaries. Stock holders cheered because their stock values bounced back. The trouble is that corporations need to recognize some middle path between enormous profits and low labor overhead and that of no profits and shutting down operations. If corporations employ more persons, there are more persons to pay taxes, keeping the roads paved, the garbage picked up, the streets safe, the fires put out, and the country's students educated. The more people who are employed, the more profitability there is for corporations that sell products, because now people can afford to buy them.

So what am I saying? Employ people you rich schmoes. Quit stuffing all the damned money in your owned already overstuffed pockets. With high employment (and I'm not talking about a nation of Wal-Mart greeters and Starbucks barristas here.) everybody benefits. Maximizing profits for the benefit of a few? Well, I have to think that's going to eventually result in social unrest and the overall standard of living in this country sinking to Third World status. So take your choice ladies and gentlemen.

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