Why we’ll never have full employment – even though we need it

austeritydolequeueToday Vox Political is offering a guest blog, for your edification and education. Graeme Beard wrote the following in response to ‘Millionaire’s government will make paupers of us all’. It’s far too long for me to put in the ‘Comment’ section of that article but far too interesting to let it go unpublished. Therefore I am reproducing it as an article in its own right. If anyone else has anything they want to get off their chests, I’ll happily consider other submissions as well.

Over to Graeme:

OK – well let’s get something rather nasty out of the way first. Austerity for the masses is an extremely efficient and effective macro-economic device. Absolutely counter-productive and even destructive to a consumer based economy it is the best way by far, (apart from slavery) on a macro-economic level to shift money from the pockets of the poor to the pockets of the rich.

Make no mistake, the austerity measures being introduced are moving £Billions ‘upward’. None will come ‘downward’. The national debt will be paid off by the poor and the poorer. It will not, and is not being paid off by the rich and affluent. They are untouched and seem to be untouchable. In fact the rich and affluent are seeing their personal wealth increase at an incredible rate.

The following is a global perspective but it applies just as strongly to the UK. The rich are enjoying a boom time and for this particular conspiracy theorist I am of the opinion that it is a deliberate measure. They want it all.

Secondly, let’s state the ‘bleedin obvious’: We live in a consumer society. Like it or not – want to change it or not – it’s what we got, playmates. To that end we have to play the ‘consumer game’ cards in hand. There is no choice. It is a given.

A consumer society (be it local, national or global) depends almost entirely on consumers having a disposable income. That is, money above and beyond that which they need purely to survive. If they do not have a disposable income over and above that needed to satisfy their basic needs such as food, clothing, utility bills, shelter etc then, in many ways, they become what economists call ‘non-consumers’.

For instance, they can’t spend money on what some would consider to be luxury goods like new or used motor cars, or books, or education, or to replace a cooker or fridge that’s on its way out. They make-do, make-shift and mend. Their ‘extra’ spending on consumer goods (the very goods we need to be purchased by consumers in order for the economy not only to grow, but survive) is dead in the water. If they haven’t got it they can’t spend it. The more that have no – or diminishing – disposable income, the more the economy will contract.

It’s happening now and there’s more to come. Far more. People thrown out of work, because of slowing demand or even a demand crash in consumer goods they make or services they provide, or those that become disabled and draw state benefits, are a prime example. They do little more than survive and become non-consumers above subsistence in double quick time. Ergo they are lost to the consumer society. It is a downward spiral and the Multiplier Effect takes over in negative form. See below.

Now this is not rocket science and can plainly be seen repeatedly with only a cursory glance at macro-economic history. Don’t believe me? Look for yourself! To introduce and pursue measures of austerity for the mass of the population in an attempt to ‘heal’ a consumer economy is like trying to catch hold of the world by the arse and pull it uphill.

These austerity measures are either being pursued in ignorance (which I find very hard to believe) or as a deliberate measure to engorge the rich and affluent at the expense of the poor.

For 35 years, post-Second World War, the UK had full employment. Bankrupted by the conflict and in massive national debt, the population was fully employed; the NHS was introduced; the welfare system proposed by ‘The Report of the Inter-Departmental Committee on Social Insurance and Allied Services.’ (The Beveridge Report) was adopted and applied with vigour. People had jobs with disposable income; they consumed (and in quantity – demand for consumer goods went through the roof); tax incomes to the government went up enormously; numbers of people on benefits were minuscule (they had jobs); the construction industry went off ‘bang!’; etc etc. I’m sure you get the drift. John Maynard Keynes’ ‘Multiplier Effect’ in motion and this time in positive mode.

Bit of a problem though! Full employment came with a terrible cost. It gave those in employment power – mainly the power to withdraw their labour and expertise.

And that’s the reason we will never have full employment in the UK ever again.

It gives people at the bottom power and those at the top really don’t want that. They need the sticks of unemployment and poverty for them to sustain their lifestyles.   People on the breadline and/or in debt or under threat keep their heads down, live smaller and smaller, and consume less and less in the hope it will eventually, by some kind of magic, get better. It rarely does.

In concert with that, and at the very same time, those who feel insecure and threatened but are in decently-paid jobs and who could shut down their spending too and save more and more for their (maybe) ‘rainy day’ are also removed, if only in part, from the consumer society that we all depend on.

So, actually impoverishing consumers – the very consumers who could – and, history shows, would – drag this economy out of the faecal mess that the cretinous politicians and bankers put us in in the first place, means they are unable to do so – because they are struggling with ‘austerity measures’ and seeing their disposable income decrease alarmingly.

Full employment, as dangerous to those ‘above’ as it may be, is good for a consumer society. Taxes are paid alongside National Insurance contributions; welfare payments reduce exponentially because people have jobs; demand for consumer goods increases and, via the ‘multiplier effect’, more jobs come online and more money is made available to spend. It is an upward spiral.

If you want to heal a consumer economy, don’t introduce more disease. Austerity for the masses is exactly that – a disease – to a consumer society. Don’t believe me though – gawd forbid! Look around you, because it’s happening now, and happening just about everywhere apart from the more affluent areas of the UK.

And that, in part, is why our towns as a working example are full of charity shops, pawnbrokers, and people wanting to buy your surplus gold for two and a half buttons so they can get rich and you can eat or heat next week.

As an addendum: http://www.ted.com/talks/richard_wilkinson.html?utm_source=newsletter_weekly_2011-10-25&utm_campaign=newsletter_weekly&utm_medium=email

8 thoughts on “Why we’ll never have full employment – even though we need it

  1. A Longworth-Dames

    When full employment started to slide and wages stagnate in real terms from the seventies onwards then the whole consumer economy was underwritten by a huge increase in borrowing, an insane increase in borrowing, and financial fraud that ended in the 2008 crash.

    Did we learn any lessons? No. Same old same old. We need a new economic model which factors in global warming, the insane degradation of the world’s natural resources……..etc. Will we get it? No. We now live in a world that is dominated by plutocrats who are in no way democratically controlled or answerable. The Corporation/s run the world and democracy is dead. Sooner or later there will be an economic crash that will make 2008 look like a tea party and there will be an economic free for all and population die back.

    Someone tell me I am wrong please! I will be 65 this year and I just hope the crash comes too late for me to witness but I am not holding my breath.

    1. Niedfaru

      I wholeheartedly agree. I fear that while you may not witness the Collapse, I, at 25, am far too young to hope for a similar fate. The abuse of resources is only going to accelerate. We’ve already hit diminishing returns. By the time my life is over, we will be unable to find the resources needed to find more resources. The current austerity is just the beginning.

  2. Stephanie Clifton

    What is forgotten during this, is that The UK is not a sole entity. People evolve and find ways to get what they want and will move to other places where the wealth is. The UK government may do this, but it would be forgetting that it is in competition with other countries and would lose out in the long term, as the UK becomes an Undesirable place to be or trade with. Other economies would flourish and gain world power, enabling their cultures and beliefs to be used and desired, changing the way that people behave and communicate in the future.

  3. jonathan c

    hmm doesn’t unemployment serve the interests of the left, because people on benefits are more likely to vote labour than say the conservatives who threaten those benefits . Why else would the last labour government have brought in 3 million new people if not to drive up unemployment.
    we have a higher population density than china they have a one child policy we are importing millions of people

    1. Mike Sivier

      That’s a false conclusion, although I’m sure right-wingers and their media would love to hear you repeating it. People on benefits are less likely to vote for anyone at all, in fact.
      Bear in mind that, as the article mentions, the Labour government of Clement Attlee (1945-51) brought in full employment. That was a Labour initiative, that lasted through several governments, including those of the Conservative Party (I know). Labour understood that full employment was in the interests of the COUNTRY, and Labour was governing in those interests.
      If you think the current Coalition is governing in the interests of anyone but themselves and their donors, you’re going to have a nasty shock!
      I think New Labour was hoping the influx of people into the UK would fuel a then-booming economy but I hope people who are more familiar with that situation will step in and answer that part of your comment.
      I’m not a huge fan of New Labour but I think its faults have been greatly exaggerated, partly to feed the demands of the right-wing propaganda machine (I would say Tory, but I’m including the Liberal Democrats and UKIP as well).
      The challenge for the current Labour Party is to dissociate itself from the undesirable elements of its past and set an agenda for the future that will place investment over austerity, and prosperity for the many over the profits of the few.

    2. Peter Nicholls

      I have to agree with Mike here. Let’s take the other side of this for a moment: Is Lord Sugar less likely to vote Labour because he is successful in business?

      It does no one any good to have high unemployment. But those without the ability to support themselves, still need supporting. (Even if all vacancies were filled tomorrow, there would still be 2 million unemployed.)

      Labour, The Left, Social Democrats, what ever you call them, care about welfare of all. I suggest a total redefining of what we understand by the term ‘welfare state’- not providing benefits, but making sure the welfare or well-being of all is as good as it can be. Is this not the foundation of the NHS, legal aid, employment support?

  4. belladonichazel

    Reblogged this on Life, the Universe and a Gutter's-eye View of the Stars and commented:
    The Conservative party should be outlawed and this article explains in nice easy terms why. Since the radical change in the class system at the end of WW2, the tories have been fighting to maintain their affluent lifestyles. Why? Because the “lower classes” suddenly had power, the power of their hard-working selves. Tories hate this and there will never be full employment while they’re allowed to govern. The Tories always have and always will only look out for the wealthy at the expense of the working classes. Not news, really. This is what capitalism is all about. The rich can only ever be super-rich by grinding the poor into the dirt, that’s all they’re there for, really.
    This is a criminal, evil government out to return the class sytem and back to the glory-days of Conservatism where the rich were rich and the poor and working-classes “knew their place”. Do we really need or want that? Conservatism – capitalism – is outdated if you don’t believe in a class system because they can only flourish by keeping the masses so far below them and struggling.
    Therefore, I say the Conservative party should be outlawed and never allowed to govern again. They are obsolete. Dinosaurs. Let’s relegate them and their capitalist ideals where they belong – to history.

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