The opportunities and challenges of unemployment

 

For most people their job is their life, their identity and their future.  Therefor the future of employment is a major issue especially for those young people who, through no fault of their own, are finding the job  scene difficult.  It is both an opportunity and a challenge,

It is an opportunity because most if not all of us can be freed from the drudgery of daily life to soar in the enjoyment of our humanity.  It is a challenge because to achieve this we will have to reorganize our economy and cope with limited resources.

The opportunity comes from the huge agricultural surplus which has allowed us to build an incredible civilization.  Only a few people are required to do the work to provide all of us with food and shelter.  This leaves open what the rest of us do, how is the surplus distributed and who makes the decisions.

Up to this time the rest of us have been making goods and providing services for each other, the surplus has been distributed via employment and it is not clear who has been making the decisions.  Bankers are probably deeply involved as they create money when they make loans and this control over the money supply gives them a lot of power.  We like to think we make our own decisions but there are limits.  We can make decisions so long as they are politically and/or economically correct.

This system is now breaking down and it is not clear there will be a recovery in the near future.  Our civilization is very precarious with numerous threats ranging from a breakdown of the food factories through disease pandemics to an electro magnetic pulse from the sun (or a nuclear bomb) which could knock out most of the electric power grids and all computer chips.  A major source of current economic problems could be that we have used up the most easily accessible energy and mineral resources.  There are lots left but they will require excessive amounts of energy to extract them.

This crisis is being felt most strongly by the “lost generation” of young people who are finding employment difficult.

This breakdown in employment provides opportunities to use the agricultural surplus in new and hopefully satisfying ways but we will also have to make changes in how the surplus is distributed.  One way would be some sort of universal income scheme – the “free money” giveaway which a few people have been talking about.  This would also spread the  decision-making power to more people.   As subsidies distort prices  they should be given to consumers rather than producers.  An income scheme would set a minimum wage and those who like fast food would have to pay enough to attract workers.

The opportunities are great but the challenges are even greater.  A lot of people have vested interests which would be crushed and even more people have religious-like beliefs and faiths in the current economic system.  Some people believe with  committment  that everyone should work and support themselves.   A lot of us who are comfortable now will not worry about those who are less comfortable and will not want to make sacrifices.  But if we don’t make changes in how our economy is organized, a lot of people will probably live poor and miserable lives.

What do we want the future to look like.  There  is a lot of potential for the future and lots of visions.  But overcoming the differences of opinion will be a major challenge.

 

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

 

 

 

 

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Infinite economic growth and the best things in life are free

Please pass the salt.  Here’s an economist, Tim Worstall who writes in The Telegram, arguing that infinite economic growth is possible even though we live on a finite planet with finite resources.

His argument, as I understand it,  is that applying new technology to recycled resources will increase the value of those resources so that GDP can  go up forever.  It’s an argument which a lot of people will want to accept because empires or even livelihoods depend upon continued economic growth.

If we are going to talk about economic growth there are two questions that should be considered.  Is growth necessary or desirable?  Do we need to make changes in how our economy is organized to adjust to the impact of using up the most available of resources?  Some people build empires and amass riches thanks to economic growth.  Others, myself included, are not ambitious in that way  and question the need for economic growth.  I would prefer to do things other than work on the building of somebody else’s empire.  Our agricultural surplus is so great that we have to “work” very little to do our share to support ourselves.  The question is who decides how to use the surplus.  I would like to see our economy organized so that as much as possible each individual could decide how his share is to be used.

The argument is that applying new technology to recycled resources will allow infinite economic growth. The difficulty is that not all resources, especially energy, can be recycled and there is no certainty that there will always be new technology.  There are still tremendous oil reserves in the crust of this planet. However it is not clear how easy it will be to extract those reserves.  How many units of energy will it take to extract 100 units of energy?  If technology can bring the answer down to the point where a barrel of oil sells for $15 to 20,  then we might expect more  old-fashioned economic growth.

Worstall  defines economic growth as an increase in GDP which is the value at market prices of all final goods and services.   In this view the value of an item is determined by its market price which is determined by supply and demand.  I would like to make a distinction between price and value because somethings we value have a low price as their supply is plentiful.  (There’s and old song The Best Things in Life are Free.)  A walk in the forest usually involves only the cost of getting to the forest which depends upon where one lives.    There are lots of things we value which are not captured by GDP.  Some of us might like to see “growth” in these things.  It would be nice if we as individuals could make that decision rather than having an economist tell us what to do.

Economic growth is a complex issue.  There may be problems with the resource base and the most widely used definition excludes a lot of activities which a lot of people value highly.

The current economic crisis is affecting people around the world.  Many people believe that only economic growth will solve our problems.  This blogger figures that to minimize the human suffering resulting from economic problems it may be necessary to reorganize our economy.  Some suggestions are in the essay “LETS go to market: Dealing with the economic crisis” on this weblog.

The pyramids, central planning and capitalism

Three or four millenia before anyone ever thought of the word capitalism the ancient Egyptians built the pyramids using an economic system which was probably closer to the Soviet’s central planning than American “capitalism”.

This blogger has just finished reading A history of Ancient Egypt from the First Farmers to the Great Pyramid (2012) by John Romer and found several points of interest.

It is amazing how much archeologists can tell about ancient Peoples but we also have to realize that we know very little about them.  Romer points out that some good stories have been told about ancients on very little evidence and that often the stories tell more about the authors than the ancients.  My speculation about Soviet style central planning may be an example.

Probably the most significant thing is there is no evidence of money.  The building of the pyramids involved up to forty or fifty thousand people, about ten percent of the working population.  This must have  involved a lot of planning and coordination.

Money and decision-making may be an issue here.  I am wondering if the pyramids could have been built if the ancient Egyptians had money.  Money as we know it represents purchasing power and control over resources.  With money decisions are made by those people who hold the money and they may not always agree.  Who made the decision that the ancient Egyptian  agricultural surplus was going to be used to build pyramids?  Was it one person, was it a small group or did they have a society wide consensus. Unless human nature has changed a lot in four thousand years I doubt if it was the later.  I bet a lot of current national leaders, even  some from democratic countries, would love to have the decision-making power the Pharaohs may have had.

It could be that freedom is in part the right to decide what to do with one’s share of the agricultural surplus and money is an important part of that freedom.  If you have money you have control over some resources. The more people who have money the more spread out is the decision-making and the greater variety of decisions.

Without money there would have been no saving as we think of it.  There was probably some storage of food and maybe some stockpiling of materials for construction but most of the work would have been done with current production and was dependent upon the agricultural surplus which allowed food for the construction workers.  This probably also applies to our own economy where a huge agricultural surplus allows most of us to work on other projects.

While working on the draft of this post I read this article in The Economist about capitalism and inequality.  There appears to be an assumption that capital is something which can be accumulated.  Certainly a large manufacturing or construction project requires resources beyond those available to most individuals but after reading about the ancient Egyptians it is not clear that one can accumulate “capital” .  What is required is control over a quantity of current or very recent production (or agricultural surplus).  The capitalist gets this control by getting money (purchasing power) from others in the form of loans or investments.  Governments sometimes have the ability to get control over large chunks of current production

Economics is about relationships including the relationship between people and their government.  For ancient Egypt the archeological record has two pieces of evidence.  A number of hieroglyphics show tribute being brought to the leaders and there are also the pyramids.

I enjoyed reading about the ancient Egyptians but I probably would not enjoy living in a society where all or most of the agricultural surplus went to another person’s project – except perhaps if I didn.t know anything else.

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