We really need to talk about ‘Jobs and Growth’!
Capitalism (as we know it) is in Crisis, and it is going to fail!
We live in an increasingly brutal economy. Almost everything is granted or denied on the basis of your ability to pay. If you have the cash you get the service, if not you get nothing. The economy just doesn’t care if you are homeless, hungry, sick, war wounded, traumatised or retrenched. It only cares whether or not you can pay.
The system pits us against each other in an endless quest for money, and it encourages us to view our fellow humans as either a means to increase our personal wealth, or as a potential drain on it. This is the stark reality of living in an economy rather than a society.
But given that this is the system we live in, and we all need money to survive, how exactly does one make ends meet?
The easiest way is to be born into a family that has enough resources to feed, house and pay for a good education for you. However if you fail to secure such a birth then I’m afraid your chances of wallowing in poverty are astonishingly high, no matter what country you were born into.
You could enter the “labor market” and sell your time to the highest bidder. While this works reasonably well for some highly educated folk, unfortunately education has become extremely expensive of late, and often only results in a massive personal debt with no prospect of a job at the end of it.
You could of course forgo education and seek out unskilled work, but the drive to ever-decreasing levels of service and ever-increasing mechanisation has created a large reserve of unemployed, which keeps the price of human labor cripplingly low. (This fact is vividly on display in places like Bangladesh or downtown USA, where a person can easily work a gruelling 60 hour week and still fail to make enough money to eat well and rent somewhere semi decent to live).
There are of course the much-touted inspirational tales of those who start out with nothing and work their way to the top. But what are the odds of such a meteoric rise in status, especially if you had the misfortune of being low born in a 3rd world country? Suffice to say we are talking odds that would make a lottery ticket look promising. Even if you were blessed with the brains of Einstein and worked like a proverbial dog, without the right start in life you’re pretty well screwed.
For most people the system as it stands is precarious enough, but when you factor in the disruptive force of mass mechanisation that is hurtling towards us at break neck speed, it’s pretty clear that without major structural reform things could get much worse very rapidly.
There is credible research out there suggesting that up to 40% of Australian Jobs could disappear by 2025. That is LESS THAN 10 YEARS PEOPLE!
For the first time in our history we look set to run head long into the ultimate capitalist paradox. You know, the one where the .01% has everything and no one else can afford to buy anything, which rapidly brings the whole thing to a grinding halt. It’s the classic end to every game of Monopoly ever played. One person is filthy rich and smilingly self-satisfied, and everyone else is broke, resentful and threatening to up end the board.
Like it or not robotics and automation are on the rise right across the globe, & HUMAN EMPLOYMENT IS STRUCTURAL DECLINE. Just last week Adidas announced it was going to open new fully automated ‘robot’ factories to make shoes. The driverless cars and trucks are coming people, and no matter how much the LNP might wish it, the attendant tsunami of unemployment is not going to be halted simply by tinkering with the company tax rate.
We are talking about four out of ten Australians potentially losing their jobs within a decade.
And even if our job is safe, we need to understand that every new face on the unemployment line, every 457 visa granted to an underpaid Chinese worker puts Australian wages and conditions under increasing pressure. And as wages contract people’s disposable incomes shrink, and as people’s incomes shrink demand falls away, and as demand falls away profits start to fall, and before we know it we are in a full blown recession, or worse.
One thing is for sure; this slashing of labor costs due to mass mechanisation is NOT going to result in GROWTH for anyone but the 1%, (and even that growth could be very short lived if no one can afford to buy what they are selling).
We also have to take into account the massively increased cost of welfare, policing, and health care as record unemployment, increased crime, depression, addiction and ‘unforeseen’ climate events starts to ripple throughout the land.
This crisis is real, it’s on the horizon, and left to run its course it could get pretty damn ugly.
We are fast entering uncharted waters. Never before in human history have we had the capacity to produce so much, while having so many people that are just not needed to do the work. And the frightening truth is, no one really knows exactly how this is all going to play out.
How do we address a situation where a large percentage of the population is not able to earn enough to feed and house themselves? We can’t continue to blame and demonise them. After all it isn’t their fault the robots took their jobs.
So what the hell do we do? Do we kill the unemployed; do we turn them into thieves and criminals? Do will build gated communities so we don’t have to watch them quietly starve? Do we all start carrying guns to shoot them if they try to take our stuff? Seriously, what do we do?
There is only one humane answer. We have to reconfigure the model of distribution. We need to start a conversation about introducing some kind of UBI (Universal Basic Income). A UBI is, in short, a no questions asked basic livable stipend given to all citizens regardless of any other income.
I know this is a big leap, and it goes against the grain for many, but what other choice is there; war, famine, mass homelessness?
We have to accept the fact that 40 hours well paid employment is not going to be a viable or achievable expectation for many people in the very near future. We also need to understand that for big and small business to survive people need to be able to afford to buy their goods and services.
The first question most people ask is “but how can we afford it?” While the answer is not yet clear, here is what we do know; if we are to afford it then we will probably need to be taxing companies MORE in the near future, not less. (or at the very least get them to actually pay tax at the headline rate rather than allow them to continue using convoluted off shore structures and tax havens to avoid it).
Sure, in the short term tax cuts might fuel investment, but is Coles investing in automated checkouts, or McDonalds installing a touch screen automated ordering system, or banks adding more automation to their systems, or taxi companies going driverless really going to employ more people? Or is it simply going to strengthen their company bottom line and thus reduce what they cycle back into the community?
Change is coming and we need to start discussing what the hell we are going to do to avoid complete social collapse in the face of massive, unprecedented underemployment.
And I am sorry to say it Mr Turnbull, but your long debunked, trickle down ‘jobs and growth’ tax cut for companies is a lame duck policy that simply fails to grasp or address the structural changes that are upon us.
You will be hearing a lot more about UBI’s over the next few months and years, (they are already being discussed and trialled in parts of Europe). And if we are to avoid a social/humanitarian disaster we need to start reframing the conversation.
The wave is coming, and we either learn to surf it or we are going to drown.
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Letitia McQuade
Return to home pageWe don’t need to tax companies more to provide the goods and services we need to survive. We can just provide them free of charge. We create the money out of thin air. It’s not inflationary and would over time produce a dividend in improved health.
Brilliant article Letitia.
What John said. Monetary Money Theory is the answer. There has to be a mental shift.
. For a long period of time now we have a cynical massive transfer of wealth of income and value from production towards financialized financial sector that remains insolvent it has created two things
1. Deflationary forces affect half of the global economy which is now languishing in negative interest rates which are a result in the collapse of the social contract in the 20th century. The world after 2008 is not the same world as before 2008, just as the world after 1929 could not be made sense of before 1929. This is the first wedge because the working class can no longer insure itself; stagnant wages.
2. The redistribution between capital and labour is becoming increasingly impossible because of the politics are toxic, political governance which is required is not there.
That was the first earthquake. The second earthquake is technology; all repetitive work and all algorithmic work is swallowing up jobs faster than we can create new ones.
Yanis Veroufarkis gives a great discussion on the topic!
UBI is the only way. Why haven’t the 1%ers figured it out yet
Absolutely brilliant article.
Guess what, I ‘live’ in both. That’s my ‘reality’.
Both the ‘economy’ and ‘society’ are ‘abstract’ concepts that both ‘affect’ and ‘effect’ the ‘thinking’ of most (if not all) people I know. They are not binary opposites.
Both are ‘useful’ concepts. And ought to be employed on an ongoing basis if one wants to gain some insights into how this world operates.
There is so much we need to do. We actually have to wind back globalisation without putting a total end to trade. With the best will in the world, we cannot run even an economy if we have to keep depending on changing global circumstances, let alone a society. The First Australians did a fair bit of trading with the islands to the north, but as far as we know, they managed to live long and healthy lives catching or producing their own food, providing shelter and meeting all the needs of their people, with plenty of time for cultural activities and without polluting the planet or bringing on global warming. There seems to have been no problem with depression or suicide.
What was wrong with Indigenous people and why don’t they try harder to be more like us?
There’s a new MMT based party I recommend people look at and join: http://www.australianemploymentparty.org/
Ah, Tim Jones – there’s just no keeping that man down!
Jason, I followed your link and yes it does a pretty good job explaining what MMT is about in simple ways. So congratulations. (BTW get someone to proof read it so that ‘it’s’ and ‘its’ are at least used consistently and perhaps even ‘correctly’.)
One wonders nevertheless, how the leaders of this new party will perform if (and perhaps when) they are asked to explain the relative unimportance of ‘debt’ and ‘deficit’, given that most commentators seem to think it’s very, very important.
The (sad – perhaps) truth is that MMT is the antithesis of ‘common sense’ (for most people) and therefore its proponents have an uphill battle. It’s a bit like an atheist trying to convince a ‘religious’ there’s no God. There’s no ‘common ground’ from which to begin the argument and no (significant) common assumptions which might be examined in any discussion.
But best of luck. I suspect you will need all of that. And then some more.
One reason, maybe the biggest reason, big business demands a bigger migration intake is to expand business profitability – shareholder returns, growth and all that. It pushes the numbers up – GDP etc but really all it does is reduce our flexibility and extends the day we face our reckoning – if you get my drift.
Printing money isn’t the answer. Above all people want meaning in their life and historically that comes from doing stuff – like working. And as much as some people don’t like what they do for an income it does provide a structure to ones life. Most adults are in the work force – some admittedly in voluntary or low paid jobs but I’d argue it is an essential part of human existence (working that is). Money isn’t my god but I do have a viable creative rewarding existence selling my labour. Maybe I’m lucky, I dunno but most here would earn more than me. Thats fine by me. The point is I am gainfully employed and thats what most working people want and will continue to expect into the future. As the writer of the article spells out we need a new economic system that looks after the interests of ‘all’ of its people. Not one that is driven by the interests of an elite few.
People need to be engaged in daily productive activity – however that is calculated – but take that away and I think a society would crumble.
This is the most concise, blisteringly accurate and intelligent article I have yet read on this subject.
Stellar work, Letitia.
More, please.
Jacques Fresco’s Venus Project has many of the answers utilising self-replicating machines and a cashless society. Much intellectual engineering effort has gone into the foundational architecture of the Venus Project and it is a readily available framework for the transition from employment to a more interactive culture based society. As John points out taxes are not the issue we can produce as much wealth as necessary as long as we control inflation and make sure there are the manufactured goods available to meet peoples needs. Modern Monetary Theory is a good transitional model however Fresco has done much of the hard work of engineering and designing the infrastructure of the future and the technical capacity to meet the objectives of the Venus Project are coming upon us quickly. A big project of massive change yet as the article points put this is just what is required. We need the will to promote the Venus Project as a viable long term alternative while planning the transitional stages along the way. The project has an education unit and study groups run by highly qualified participants. Fresco’s work goes back decades so it is not fly by night trendy idealism it has solid intellectual and empirical foundations and importantly is truly democratic, non-religious and non-sectarian.
We can double full-time employment by moving to a 60 hour trading week with a 30 hour working week. All it requires is the will of the people.
As long as the 1%’ers can keep vacuuming the money up then it’s (to paraphrase) damn the torpedoes, full greed ahead!
the choice is UBI or the French Revolution on a global scale.
https://en.wikipedia.org/wiki/Player_Piano_%28novel%29
I think it would be MUCH fairer to have a shorter equivalent full time working week for everyone – slide the hours down to share the work around amongst everyone, including currently un and under-employed. While ever there is some unpleasant work that must be done by some human beings, why should a minority have to do that work for 35-40 hours per week, whilst others opt for self-fulfilling leisure earning a bit on the side, and other people feel marginalised and excluded. A UBI is not going to return morale to groups and communities suffering high unemployment, for example, Arakun. I reckon we could get the standard working week down to 15-20 hours quite quickly with future productivity gains leading to further reductions. Shorter full-time hours with a living wage would benefit everyone and be much fairer than a UBI.
Macjanet – most people are not by nature lazy. Most people want to engage with the world. Reduced working hours would do nothing for those in society that are marginalised through mental health and or disability. By contrast a UBI would allow for a dignified existence. The whole point of a UBI is not to stop people working, if you work you get extra gravy on top.., but it would allow people to care for elderly relatives, or develop skills and perform research that will enrich the whole of society, without forcing them into poverty… IT would reduce the stigma and shame of the chronically unemployed (many of whom have issues like substance abuse, depression, learning difficulties etc that have made employment difficult… even if they want to work people may not want to employ them… Most people want to do something meaningful…, most people want to contribute.. this would not change with the introduction of a UBI, it would allow people to find new and creative ways to engage with society… none of the writers on this site get paid for it, but we do it because we want to make a difference… that wont change either..
I don’t mind the idea of reducing hours to share employment but the government must play a role because, speaking as a small business owner, if I cut someone’s hours I will be cutting their wage too.
I would like to see community volunteering incentivised in some way and more recognition of the economic contribution of carers – they are saving the government a fortune.
Uruguay and Argentina in the 1950’s were the Australia of today, and what happens now is what Letitia worry that can happens in Australia in few years time.
This interview with Manfred Max Neef address some of the problems,’
http://www.democracynow.org/2010/11/26/chilean_economist_manfred_max_neef_on
I like this bit:
AMY GOODMAN: What do you think we need to change?
MANFRED MAX-NEEF: Oh, almost everything. We are simply, dramatically stupid. We act systematically against the evidences we have. We know everything that should not be done. There’s nobody that doesn’t know that. Particularly the big politicians know exactly what should not be done. Yet they do it.
I really think we must start to look at the idea of a universal basic income . Employment agencies are not much more than leeches. Jobs are promoted that don’t exist. All humans are entitled to dignity and access to the standards of their society.
So my most basic question is this; what would constitute a UBI? In order to make sure people had enough money for rent/utilities/food and pleasure what would we be getting? When would children begin receiving their share? Would it perhaps be incremental as they age?
From where I’m sitting $1000 a week would put most people on an even keel (to those who say their house costs them a grand a week I say you don’t need a house that f*cking fancy). I am on the DSP and get about $1000 a fortnight when my rent assistance and other supplements are factored in. I’m lucky that I live in a low cost house but I still have to pay for my car, my animals, my power, heating, internet and other things. Usually I’m left with about $300 after everything has gone out. $1000 a week or hell, $700 a week would leave me with the ability to easily save for things I’m obsessing over and have a cushion if something went wrong.
But then there is the whole housing problem here. We introduce a UBI we are going to have to do something about housing.
Great Question Casey. This is the conversation we need to have. What would it look like, how much, when and how with kids, all that!