My wife, a labor economist, is upset with NPR's "The Take Away" (and many other news programs) for reinforcing the myth that somehow the unemployed are to blame for not having a job. We all should be angry as well because the jobs just aren't there. In fact, the latest unemployment statistics show that there are five unemployed workers available for every vacant job. Why blame workers when it's so clear that Wall Street's reckless gambling caused the jobs crisis?
By now, you'd think we'd have buried this issue. But like Dracula it refuses to die. And so, I return to the subject with the hope of driving a stake through its heart and giving it a proper burial. Among the claims we need to put to rest:
1. Extended unemployment benefits are causing unemployment. Extending benefits for the long-term unemployed will only encourage them to sit at home on their extended derrieres and let vacant jobs go begging.
What jobs? We're down 8 million since the start of the Great Recession. We aren't even creating enough new jobs to keep up with population growth. So what jobs are the unemployed not taking?
Every child knows how to play musical chairs. When you take away 8 million chairs, a lot of people are forced to scrounge around looking for seats that aren't there. Providing nourishment for the chairless is not the cause of the disappearing chairs. It's just the decent thing to do.
Why is this so difficult to grasp? And why are so many people angry at the long-term unemployed and not at the bankers who actually created this mess?
Economist Dean Baker suggests that the Republicans are trying to keep unemployment as high as possible right now because they think that high jobless numbers will spell disaster for the Democrats in November. And if we give the unemployed extended benefits, that money will act as a stimulus, generating more jobs. Well, we can't have that! It's better for the Republicans if the economy stays in the ditch.
But what about Obama and the Democrats? Why aren't they at the barricades, fighting for the unemployed? They could be flooding the talk shows with a raucous defense of the jobless. They could be putting ads up all over the country, explaining why the long-term unemployed deserve our support. They ought to be ridiculing any politician or pundit who argues against jobless benefits. Where the hell is their outrage?
Instead, even as the unemployment crisis continues, the Democrats are pushing austerity and deficit reduction--the financial industry's pet issue. If the Democrats are so worried about unemployment benefits deepening the deficit they should start plugging that money hole by raising taxes on billionaire hedge funds executives. Just ask the billionaires to pay the same income tax rates as the rest of us, instead of dodging behind the lower capital gains rate. Is that really such a hard sell, Democrats? If the public knew that the top ten hedge fund managers were averaging $900,000 an hour (not a typo) during the worst economic year since the Depression--and paying lower income tax rates than the rest of us--the American public would be outraged. Of course, to push this plan the politicians would need to have the guts to upset billionaires.
(Meanwhile, Timothy Geithner is signaling that the Administration will hold down capital gains taxes on the super-rich.)
But even the gutless ought to know that blaming the unemployed for unemployment is insane --not to mention incredibly mean-spirited.
2. Unemployment is caused by "structural" problems in the labor markets. Labor markets have to be freed from constraints like decent pensions, a reasonable retirement age, and adequate health care benefits. These public benefits -sometimes known as the social wage -- are keeping employers from hiring. So, sorry, Americans, we'll just have to work longer and harder for less.
This chilling proposal, now on the lips of Republicans and Democrats alike, will clearly make the markets happy. But what about the rest of us?
Is this grim belt-tightening really going to bring back the 8 million jobs we lost?
If we cut the social wage, corporations certainly will save on labor costs and accumulate more cash. But will they productively invest it? Not according to Yves Smith and Rob Parenteau, They argue that corporate America greatly prefers to pocket the cash and use it for gambling on Wall Street:
To develop new products, buy new equipment or expand geographically, an enterprise has to spend money -- on marketing research, product design, prototype development, legal expenses associated with patents, lining up contractors and so on. Rather than incur such expenses, companies increasingly prefer to pay their executives exorbitant bonuses, or issue special dividends to shareholders, or engage in purely financial speculation. But this means they also short-circuit a major driver of economic growth.
3. The only real jobs are private sector jobs. You see, only the private sector can rescue our economy because the jobs they create spring from consumer supply and demand, not the dictates of corrupt or know-it-all politicians. When you work for the public sector, you're practically on the dole because your wages come from tax dollars. That's quasi-socialism.
Has anyone noticed that private industry has been on the public dole for decades? We have millions of alleged private sector jobs funded by the Defense Department and through subsidies for industries from sugar to oil, and of course banking. We've given so many tax dodges to corporate America that most companies pay almost no taxes at all. The idea of a purely private sector is pure fiction, a soothing fairy tale for Tea Partiers and faith-based, free-market ideologues.
Despite all the perks we've been giving to corporate America, it's not at all clear that the private sector will ever again create enough decent jobs to support a middle class society in this country. Right now the economy is supposedly growing, but employment isn't. So what is growing? Well, the obscene bonuses and pay packages of corporate America and Wall Street --- the only growth that counts for our financial elites.
We're at a critical point in the jobs crisis. Nearly 30 million of us don't have jobs or have been forced into part-time jobs. It's not like there's no work to do. We have millions and millions of kids to educate. We desperately need to slash our energy use--and with an army of workers, we could weatherize every home and business in the country. Our bridges and roads will take decades to repair. We need to build an entire national system of efficient public transit.
When Wall Street is in trouble, we come to the rescue with trillions in bailouts. We've poured hundreds of billions more into two wars. But when it comes to investing in our people to get needed work done, we can't seem to summon the will or find the cash.
There's a one-sided war going on between financial elites and the rest of us. They've engineered the economy to enrich themselves at our expense, with Wall Street taking the lead.
The numbers don't lie: In 1970 the top 100 CEOs earned approximately $45 for every dollar earned by the average worker. By last year, it was $1,081 to one. (See The Looting of America.)
There is no economic theory that can explain this obscene gap. It has nothing to do with talent or productivity or even luck. It's just raw power. And the only thing that financial power understands is countervailing power in the form of a popular mass movement - a movement that only can start once we stop blaming ourselves for the jobs crisis.
We have our work cut out for us.
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.
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