Unemployment: The Great Betrayal

*Editor’s note: The following article appeared on littleguy123’s Outside the Market blog on November 8.

I was leaving the supermarket the other day, when an "average Joe" stopped me to ask a couple of questions. Being an "average Joe" myself, we ended up having a short conversation. Soaring prices came up, and then "Joe" said that he could remember a time when a SINGLE wage-earner could support a wife and family (and he was NOT that old).

There was obviously some bitterness behind that observation, and he went on to add that he blamed the government for the steady deterioration in both earnings and job opportunities for Canadian workers. Sadly, while he was clearly correct that our government (and other Western governments) were to blame for this scenario - his reason for casting blame was that they had let "too many immigrants" into the country.

While I certainly am not endorsing those racist suspicions, it is VERY easy to see how average Canadians can reach that conclusion: there are not nearly enough jobs for those who want to work - so allowing MORE people into the country seems to be aggravating this problem, if not causing it.

The reality is that we do NOT have too many people in our (vast) country, and thus we don't have too many immigrants. In fact, with one of the West's aging populations, we need a large, steady influx of new (younger) blood to help support the large bulge of seniors (the "baby-boomers") who are about to retire - after pillaging the national treasuries of every Western democracy.

However, the reckless and selfish expansion of national debts by the baby-boomers is NOT the most serious crime that generation has committed against their children and grandchildren. THAT offense is the refusal to structure our economy so that everyone has at least a shot at prosperity. Instead, they have willfully sacrificed the prosperity of roughly one in five Canadians - reducing our wages at the same time they expect us to pay off their debts.

How is this being done? Through lying about unemployment. Specifically, unemployment rates in Western democracies only measure (at most) about half of our societies' unemployment - and less than half during economic troughs, such as the one we have now entered. Lying about unemployment (while simultaneously lying about inflation) has allowed Western governments to insidiously erode the standard of living for the vast majority of our citizens - and almost all of these victims are essentially oblivious to this victimization.

Many, like "Joe" know they are being screwed, but lack the sophisticated understanding of economics and statistics to CORRECTLY determine who to blame (and HOW they are being screwed). This naturally raises the question: how has the government been able to lie so successfully?

In the case of inflation, many of the lies are rather transparent: "core" inflation, "hedonic adjustments", and many other statistical "innovations" - mostly pioneered in the U.S. However, in the case of unemployment, the government has lied by simply by refusing to update the definition of unemployment to match the dramatic changes which have taken place in our economy.

To explain this, I have to go back to the beginning, which in this case is the "Industrial Revolution". At the birth of our modern economy, the standard work week was seven days a week, twelve hours a day - an eighty-four hour work week.

However, rapid improvements in mass production and other kinds of technological innovations were able to reduce the need for labour faster than economic growth and innovation created new employment. The result was rapidly rising unemployment, establishing a pattern which remains true to this day. It is an incontrovertible fact that improvements in technology ALWAYS reduce employment faster than they generate new jobs.

The only possible solution to this permanent dynamic is to regularly reduce the length of the work week - to evenly divide up the total hours of labour needed by a society amongst the entire pool of labour of a society. Thus, we have gone from a seven-day, eighty-four work week to a five-day, forty hour work week. And there we have remained frozen for the better part of a century.

So, why has there been no reduction in the work week during the entire lifetime of most of those who are currently working? Has the fundamental rule involving technological change and its effect on employment suddenly changed? Hardly.

The invention of computers created the biggest labour-saving technology in human history, or, to put it another way, the greatest employment-killer in history. In an age when we needed to be reducing the work week even more rapidly, our governments have DELIBERATELY REFUSED to do so - dooming roughly 1/5th of our population to a standard of living at or below the poverty line.

This brings me back to LYING about unemployment. Currently, to be considered unemployed you must be ACTIVELY looking for work, or recently laid-off. When this definition of unemployment was first created (generations ago) it made sense. At that time, with a properly balanced labour market, every employable person who looked for work found work - maybe not in a few weeks, but certainly in a matter of months.

Thanks to generations of new, labour-saving technologies with no reduction in the work week, that definition is no longer valid. In Canada, and virtually every Western economy, if EVERY employable person currently without work began to steadily look for work, roughly 90% would NEVER find a job. Not in weeks. Not in months. Not in YEARS!!!!

Given this 21st century reality, it is no longer possible to defend this archaic definition of unemployment. How can governments REFUSE to classify someone as "unemployed" simply because they are not "actively looking" for jobs WHICH DON'T EXIST?????

It costs money to look for work. For most of us, those costs are relatively minor. However, for someone with no job, living well below the poverty-line on welfare or some other form of social assistance, those costs are NOT trivial. When you already don't have enough money to eke out a decent living, squandering a significant amount of those funds looking for jobs which don't exist makes absolutely no sense.

This brings me to the ultimate proof that our current measurement of unemployment is a complete sham. Those who follow employment statistics closely will have observed that there is very little correlation between job creation and the unemployment rate. When we have a month with HUGE new jobs totals, the unemployment rate is almost as likely to RISE as it is to fall, and vice versa when job creation is week.

The explanation? When the millions of Canadians who are not allowed to work see lots of new jobs being created, they become hopeful and start to look for work. If there is enough hope, then the added number of these people (who suddenly become "unemployed") dwarf the number of new jobs created, and the unemployment rate rises.

Conversely, when times are tough, many of the people on the margins of the employment market lose hope, and stop looking for work. If enough of those people lose hope, the unemployment rate can go DOWN - even when an economy is LOSING jobs.

This brings me to the final question/issue. Why lie to us about unemployment? Why doom millions of Canadians to perpetual poverty? The answer is very simple: to "fight inflation".

It is no coincidence that the last time our economy had a reasonably balanced labour market was back in the 1970's - an era of historically high inflation. What governments observed during that period was that when the prices of almost everything were rising rapidly, ordinary workers (the "little people") had the audacity to ask for wages equal to (or slightly above) the rate of price increases - so that they wouldn't begin immediately losing ground against inflation the day after they signed their contract.

This removed most of the incentive of this banker-created inflation, namely to STRETCH the wealth-gap between the have's and have not's by allowing inflation to steadily erode the REAL wages of the "little people", while the fat cats at the top ensured that THEY always received wage increases substantially ABOVE the rate of inflation.

For those who still doubt this thesis, I'll remind you of a quote from one of the most evil Canadians in history: former Bank of Canada governor Gerald Bouey (and Brian Mulroney's principal hatchet-man). At a time when ordinary citizens of ALL Western economies were experiencing severe hardship from EXTREMELY high interest rates (which causes/caused) widespread job losses, Bouey had this response to reporters who asked him about his punishing policies, "We are fighting inflation with high unemployment."

To explain this evil concept more fully, Western governments DELIBERATELY choose to have high unemployment - to keep virtually all workers with some level of fear of losing their jobs. This fear, in turn, keeps wage expectations/demands perpetually low - allowing Western governments to perform their function: allowing the rich to get (much) richer, while everyone else gets steadily poorer.

To the best of my knowledge, no prominent public official since Gerald Bouey has been foolish enough (or arrogant enough?) to divulge the "dirtiest little secret" of our society - and that of all other industrialized, Western economies. Indeed, with our labour markets getting more unbalanced and oppressive every year, leaking out that secret NOW could easily be a trigger for MASS social unrest.

In the case of the United States, which is about to feel the brunt of this betrayal more than every other Western society, it could EASILY be the trigger for a second American Revolution - as a lot of VERY angry people (most of them armed to the teeth) are looking for someone to blame, and have very little to lose.

This has always been the primary failing of the ultra-wealthy: excessive, obsessive greed. They have never (can never?) accepted merely PRESERVING their wealthy status, but throughout history have always been compelled to loot wealth from those who have much less.

Maybe Marx was right? Maybe our societies are perpetually in a state of evolution which always leads toward violent revolution - to re-take the wealth stolen from the masses by a small, hyper-greedy minority?

This article was written by a member of the Stockhouse community.
 
Read more Stockhouse articles by littleguy123.