Ying and Yang

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Our Social And Economic Dilemma

Sam Rachele


Published in:
  • Social Trends Newsletters, Mar. 1996, No. 145

Two recent books -- End of Work and Jobless Future -- confirm the view that much of the entire world, particularly the US and Canada, is heading toward a major crisis.

The principal theme of these books is about the impact that computerized technologies are having on the world job market. Frequent announcements are being made of industrial layoffs due to downsizing and restructuring. As time passes more and more companies will become more and more automatic, requiring few or no workers.

Replacement of workers by machines is not new. For example, from 1919 to the stock-market crash of 1929, one author contends that productivity (output per person) increased by over 4% a year, while unemployment rose by 2 1/2 million. Productivity has increased consistently ever since.

The primary motivation for investments in technologies and in reorganization is to cut costs, chiefly labor overhead. For businesses this accomplishment translates into greater profitability. Surprisingly, little public attention is given to the consequences of these actions. The obvious question that arises is: When there are few workers, where is the money going to come from to buy the technologically produced merchandise?

One could argue, for now, that unemployment figures are not very high. It all depends on who is counting and how it is done. The author of Jobless Future maintained that normally published numbers are greatly underestimated. Regardless of tallies now, unemployment will steadily increase in the future. On January 2, AT&T announced the layoff of 40,000 workers over the next three years. The list of recent corporate layoffs is a long one. (Recent published unemployment figures for Spain are close to 25 %.)

Since just before World War II, unemployment in the US has been kept relatively low due to government intervention. In the process, deficits and the Federal debt have skyrocketed. This debt, compounded by accelerating interest and entitlement obligations together with a large military budget, is propelling the government toward bankruptcy. While government debt has ballooned, consumer debt has also bounded up, helping to keep unemployment down for now.

As of January 2, 1996, Congress and the White House were haggling over cuts in order to balance the Federal budget by the year 2002. Assuming an agreement is reached, will they both abide by the provisions of the bill, or will it be a repeat performance of the one passed in 1985, in which deficits increased instead of decreasing? Assuming that they both stick to their commitments, we then face the other menacing head of the dragon -- huge shortages of money due to this legislation.

In 1937 when budget balancing demands convinced Franklin Roosevelt to slash expenditures, the economy plummeted, exceeding the decline rate of 1929. Enormous outlays for World War II put people back to work and diverted potential surpluses from the civilian economy to the military. So, when the deficits go, so will the crutch that has been supporting the economy for much of the last 64 years.

Even without a balanced budget the US economy is slowing down. According to the New York Times News Service, retail sales during the Christmas season was one of the worst since 1988. Blame was attributed to high consumer debt, joblessness, and excessive inventories, as well as the weather. Significant is the fact that inventories are outpacing the country's ability to buy. It doesn't take long to reach the saturation point when incomes are declining and machines are turning out vast quantities of goods. In the long run, the Feds moving to lower interest rates will be futile. If one has no income and no credit, even an interest rate at zero will be of little help.

What we face now and in the future has no precedence. Radical social change is taking place, not by any ideology, but by inanimate devices and kilowatts of electricity. Human beings who have created robots are now on the verge of becoming victims of their creations. The anachronism of the technological age imposed within the archaic debt-driven monetary system is forcing us to alter our ways of doing business.

It doesn't take an IQ of 200 to see what is coming down the pike. As purchasing power drastically declines, the economy will head for the basement, probably never to recover. Survival will become a real issue for the vast majority of people.

A monetary solution seems out of the question. So, what is left? A simple but radical solution would be to design a rationing program in which money is not involved. Such a system, called Energy Accounting, has been devised by a group who call themselves Technocrats. If there are other alternatives to our present unworkable monetary system, they should be explored soon. Time is running out.