Quotes from The Growth Illusion by Richard Douthwaite
Page 82
Chapter Ned Ludd was Right
I start this quote after a metaphor in which he used an imaginary country
called Erewhon to illustrate his statement, "One of the distortions was
that new technologies made people redundant without the economy having
anything else equivalent for them to do, just as Ned Ludd feared was
happening in 1812.
So that the next question has to be, where are the redundant workers to go?
They have only two options:
1. to remain unemployed "Which, as Erewhon has a system of state
unemployment relief, we can regard as becoming members of a special
category of state employees that provides no services in return for its
pay"
An interesting way to describe those on Unemployment Assistance or Welfare.
Of course with so many services having no monetary value, the capitalistic
system can find no way to generate a profit for such work and therefore
consign it to the outer darkness. The state might be well advised to have
a contract with it's citizens that in return for a "basic income" that is
liveable, other forms of work can be assigned and accomplished. Of course,
if the state can only tax that which is labelled "income", they have a
conundrum, how can they tax enough to provide for an expansion of the
"special category of state employees" who are available for non-monetarized
work? In todays Ottawa Citizen, Jean Chretien outlined a youth employment
initiative in which the government would put up $90 million dollars over
the next 3 years to employ 3000 young people for one year. This works out
to about 300 young people for each province - surely not guaranteed to make
a dent in youth employment. I would suggest that they would have been
farther ahead to give them $1000 per month in real money and $1000 in tax
deferred script which they could sell for $1000 to employers or education
institutes. Or the script could be used as part of a downpayment on a home
of their own with the government accepting the script in lieu of cash for
the 7.5 mortgage qualifying payment. Or, if you are interested, I have
about another 30 ideas.
1. or to join the service sector proper and bid down the rates of pay
there until everyone seeking work is taken on or wages fall to a level so
little better than unemployment pay that the mutual undercutting stops.
This is the neo-con's preferred solution. Eliminate the minimum wage,
benefits, work hours and standardized work week and they will pick up the
slack. A Faustian bargain if I ever heard one. Of course, in the neo-cons
world, they resent even having to compete with Unemployment Insurance and
Welfare rates and would prefer that the government drop these two programs
which Douthwaite assumes establishes the baseline.
This latter outcome seems to be very close to what has actually happened in
the United States. In their 1986 report to the Joint Economic Committee of
Congress entitled the great American Jobs Machine, economics professors
Bennett Harrison and Barry Bluestone investigated the wages and quality of
the new jobs the United States was able to create in such great numbers
from the early sixties until the beginning of the present recession. "Were
we becoming a nation of low-wage hamburger flippers, nurse's aides,
janitors and securities guards as the mass media sometimes reported?" They
ask. "The demise of high-wage manufacturing jobs in cities like Detroit and
Youngstown, combined with the proliferation of McDonald's and K-Marts in
virtually every town provided an image of the American economy as a new
low-wage bastion." What is their answer? In a later book, The Great U-Turn
(1990), the write:
During the first half of the 1980's the U. S. economy continued to turn out
new jobs at about the same rapid pace as during the previous decade, but we
discovered that a majority of the jobs created after 1979 were of dubious
quality when measured by the annual earnings the offered. America was
surely creating more than just hamburger flippers and security guards but
nearly three out of five (58%) of the net new jobs created between 1979 and
1984 paid $7,400 or less a year (in 1984 dollars). In contrast, less than
one in five of the additional jobs generated between 1963 and 1979 had paid
such low wages.
This is the great shift between two types of income. The first is labour
income which comes from the exchange of personal services and the second is
investment income which comes from profit and the exploitation of the those
who labour. The conservative movement started in the late 60's as a
rejection by business to the "nanny state" which was introduced by Lyndon
Johnson and Pierre E. Trudeau in Canada. Over the next ten years the
corporate agenda was able to reduce their own contribution to society and
increase the contribution of those who labour by shifting the tax burden.
The state was complicit in this shift by becoming susceptible to lobbying
groups, political contributions and patronage pay-offs for when they were
ejected from office. Last week, Brian Mulroney made $2.5 million by
exercising his stock options due him as a Board of Director member, a
position which did not come as the result of impressive legal or business
skills but because as an ex-member of government, he had connections and
insider knowledge that was beneficial to the business agenda. I would
venture to guess that he already has the tax shelter set up that will allow
him to defer paying the appropriate taxes and thereby, at least, carrying
his citizens share of his windfall.
National economies only benefit from technologies that save labour if there
are expanding sectors in which those made redundant can be re-employed. It
makes no economic sense to sack people and keep them idle, unless it is
part of a crude and inhuman attempt at wage control. On the other hand,
sacking workers can make a great deal of sense to an individual company as
a way to cut costs and increase profits. Consequently, circumstances
frequently arise in which the interests of the nation and those of the
entrepreneur are diametrically opposed.
This paragraph is so logical that it cuts through the deadwood of illogical
thought like a scythe through a nest of ripe thistles. And yes, one can
only conclude that this is a "crude and inhuman attempt at wage control."
It is the system which makes these kind of decisions have a logic - they
are not logical, but in a warped framework, they become logical. That we
would destroy the environment - very illogical - for profit of a few - very
illogical - and penalize the workers - very logical - though highly
unethical - becomes a virtue because we equate wealth with goodness -
highly illogical.
Mainstream Economics does not recognize that these conflicts can happen,
because it still believes in Adam Smith's "invisible hand". Yet Smith's
contention was not true when he made it and is even less true now in a
resource-constrained world. There is not, and there never has been, any
economic mechanism that insures that if I devise a labour-saving technique
that puts hundreds of thousands of people out of work and gives jobs to
just a few, everybody everywhere will ultimately benefit. The only thing
that determines whether I introduce my technique is my decision whether it
will provide me with a personal gain. I am not required to consider how the
introduction will affect the livelihood of other people. More powerfully,
if I do develop scruples, the growth imperative forbids me to delay
introducing my technique because if I do not innovate someone else will,
reaping the pioneer's profits, and unless I follow suit I will be driven
out of business. What a shame Smith did not remain true to his instinctive
opposition to be Mandeville's ideas! Lord Liverpool's reaction to the
riots might have been very different and, if Hugh Thomas is right, the
Industrial Revolution might not have taken place.
A perfect example of logical actions that create an illogical result.
Growth in fact produces jobs in exactly the way a chain letter produces
money. "If you work as hard and innovate as fast as we do," the
high-employment countries tell the rest of the world, "you too will have
our booming, profitable companies and our low rates of unemployment in a
few years time." What no-one points out is that the chain-letter principle
cannot make everyone rich only those with their names near the top of the
list come away with jobs or a profit, made at the expense of those below.
But the rich countries have exhausted the resources of the country's below
them which longer have any jobs or money to send up the chain, particularly
as the international banks refuse to lend to them any more, consequently,
the only way that the industrialized countries can keep the present game
going is to play against each other, concentrate jobs and generating
poverty within the borders of their own lands.
The "chain letter economy." In all my reading, I don't think I've come
across a better metaphor for the capitalistic system. Perhaps Barnum's
statement, "there's a sucker born every minute" is close. In fact,
exposing the system by a short pithy phrase is probably the most subversive
act an individual can take. John Kenneth Galbraith identifies in great
detail throughout his works, his fascination with "Ponti Schemes" (I may
have the spelling wrong on this) which come from the name of the man who
popularized the pyramid schemes so loved by multi level operators and
swindlers in the world of stocks. In essence, it is taking the money
invested by someone and paying it back in the form of dividends to show how
profitable the stock is to lure others to buy. Of course, it all collapses
when there is no one left to invest as their is no real dividend except to
those few in the know and on top of the pyramid. In a previous chapter,
Douthwaite alludes to the collapse of capitalism happening when there are
no markets left to exploit and which he feels is very close in historical
times. What happens to the few? Well, they disappear from sight for
awhile, only to re-emerge later with a different scheme, same process and
we prove Barnum right.
