The New York Times (6/02, “After Unemployment Ends, Pain and Trauma May Linger” by Michael Luo) reports: “Raleigh, NC – Antjte Newby went back to work in September, but she has still not escaped the burden imposed by nine months of unemployment.
“Mrs. Newby and her husband were forced to walk away from their house in suburban Detroit and are now living here in as rented house with their three children. They are bracing for a huge tax bill in the spring because of early withdrawals they made on her 401(k) and taxes they still owe on unemployment benefits. Their credit is in tatters, and their 10-year marriage showed cracks they are still trying to repair.
“‘We’re not done living through the fallout of all of that,’ Mrs. Newby said, four months into her new job as an account director of an advertising agency here.
“The wound of unemployment, as her family has learned, is not cauterized so quickly, and lives do not simply go back to the way they were.”
In all there is a deep lesson about the swerving human reactions to drastic shifts in social institutions, be they good or bad. Even religions are caught short in their guidance to their flocks on how to adjust, which suggests that even the Lord in his Heaven takes time to keep up with the improvisations of His creation.
“Interviews with more than a dozen people who were out of work at least a half-year during the recession and have now landed jobs found many adjusting to new realities. Some of these changes are self-imposed; others forced upon them. They include grappling with newfound insecurities and scaled-back budgets, reshaped priorities and broken relationships. In some ways it is equivalent to the lingering symptoms of post-traumatic stress.
“In returning to work, Mrs. Newby, 41, has fulfilled a dream of millions of jobless people as the economy lurches back to life. But with the average duration of unemployment no more than six months, the consequences of the period will continue to ripple into fewer jobs in December, a downward adjustment of roughly 1%. The revisions showed that the economy lost 150,000 jobs to December, far more than the 85,000 initially reported.
“In calculating the unemployment rate, the report used new census estimates of the population, an annual adjustment. That prompted some economists to dismiss the drop in the jobless rate as a statistical quirk though the Labor Department said the change was negligible.
“‘Everyone goes crazy over today’s number,’ said Joshua Shapiro, chief US economist at MFR Inc. in New York, ‘but history has been rewritten.’
“Mr. Shapiro focused on the economic anxiety and tight finances that still grip many households, suggesting this would dampen consumer spending, which represents more than two-thirds of the economy. That would keep employers reluctant to hire. ‘The question is, what is the rate of improvement going to be? “Very slow.”’
“The Obama administration portrayed the report as grounds for cautious optimism.”
“‘It’s somewhat encouraging,’ said Chistina D. Romer, who heads the president’s council of economic advisors. ‘The overall number is too high. You can’t look at 9.7 percent unemployment and say that’s anything but a tragedy.’
“Ms. Romer acknowledged that she and her colleagues failed to grasp the magnitude of the employment crisis last year when putting together a $787 billion package of spending measures aimed at stimulating economic growth. The administration had assumed that without the stimulus the unemployment rate would top our at 8.9% by the end of last year, considerably below the 10.1% which now represents the peak.
“‘Forecasting is a difficult business,’ she said, adding that she felt ‘pretty confident’ the economy would produce sustained job growth by the spring.
“Economists remain divided in that prognosis. Some envision the jobless rate reaching nearly 11% by the end of next year, which would raise the prospected new shocks to the system: a retreat in consumer spending and renewed fears in the banking system as jobless people lose the wherewithal to pay their mortgages.
“Such visions are at the center of concerns that the end of this recession may signal the beginning of a long period of disappointingly slow growth, or perhaps just a pause before another downturn.
“Construction continued to suffer in January, losing 75,000 net jobs. Transportation and warehousing lost 19,000 net jobs. State and local governments collectively lost 41,000 jobs.
“Small companies complain that loans remain exceedingly difficult to secure, limiting their ability to expand and hire. The Obama administration is seeking Congressional approval for a measure that would direct $30 billion towards loans for small businesses.
“In Cleveland, Kirk K. Meurer, the owner of an office furniture store with 30 employees, has frozen wages and stopped buying new cars to trim costs. He has a $250,000 line of credit, but complains that it has been difficult to persuade the bank to lend more.
“‘I’m being very frugal with my decisions,’ Mr. Meurer said. ‘For us to hire, we need to see a turn in the economy.’
“Many economists saw in Friday’s jobs report heartening signs that such a turn had arrived.
“For months, American businesses have expanded their production while continuing to shrink their work force. The January data – particularly the increase in manufacturing and the hours worked – suggested that employers finally felt enough confidence in expanding business opportunities to add to their payrolls.
“Health care, long a bright spot in a dismal economy, grew by 17,000 jobs. Retailing gained 42,000 jobs, and professional and business services added 44,000.
“‘We’ve seen a surge in demand for graphic designers and people who create display and advertising for the Web,’ said Pablo Rostatt, chief executive of Elance, an online job market for freelance computer programmers and other tech-related workers. ‘There’s been an increase in confidence among employers.’
“Adding to the sense that employers are finally inclined to add labor, the number of so-called involuntary part-time workers – people who cannot find full-time jobs, or whose hours have been cut – fell to 8.3 million in January, from 9.2 million.
“But even among the signs of improvement, the report presented unambiguous evidence that these remain grim days for millions of ordinary people.
“The unemployment rate reached 16.5% among African-Americans, 12.6% among Hispanics, and 28.4% among teenagers.
“‘African-Americans and Latinos continue to bear the brunt of this economic recession,’ Representative Maxine Waters, Democrat of California, said in a written statement. ‘We cannot in good conscience welcome these numbers without acknowledging the disparity that exists between the general population and communities of colour.’
“The so-called underemployment rate – which counts involuntary part-time workers along with people who have given up looking for jobs – was 16.5% in January. That amounted to an improvement from the 17.3% a month earlier, yet it was nearly double the level of three years ago.
“Those who have been out of work for six months or longer swelled to 6.3 million in January, from 6.1 million in December, the highest level since the government began tracking such data in 1948.
“‘Things are getting bad less rapidly,’ said Dean Banker, co-director for Economic and Policy Research in Washington. ‘We’re sort of hitting bottom, but there is no evidence of a robust turnaround.’”
From frail, inadequate statistics, that convey optimism that turns out misleading at best, there is all the more reason to bring back serious accountancy into our government’s books that would recognize investment in human capital, education, health, research in human capital. This had been recognized on evidence deduced from the rapid recovery of Japan and Germany from the destruction in WW II was proven to be the most productive investment governments can make. It is time to make use of that great discovery that didn’t lie and permitted the rebuilding of the world after a decade of Depression and the Second World War. President Obama must make full use of what was learned at an immense cost during the Great Depression and from the recovery of the World after WW II, or face a damning verdict from history.
In the article above, William Krehm makes important points; many changes are needed to put things right; but there is need to look even deeper:
Nearly all discussion of ‘the economy’ takes for granted that a top priority is to ‘create employment’; to achieve ‘full employment’. It is also accepted that this is necessarily the main means of distributing entitlement to the means of life-support and social needs – and that ‘economic growth’ is needed.
Recent events have brought general public awareness of the growing inequality in society; but inequality has been a feature of ‘civilisation’ from time immemorial. The rich and powerful have always exploited the ‘inferior’ majority, to benefit from a higher standard of life.
Whatever justification for this there may have been in past centuries, since the Industrial Revolution it has been increasingly easy to produce enough for everyone’s needs, and more. The problem has been not production, but distribution – and not just distribution of all of the total produced, but equitable distribution.
Research confirms the obvious: more-equal societies are happier, more peaceful, less stressed than those with extremes of wealth and poverty, even if they are not far above subsistence level.
The problem of unsold ‘surplus’ product alongside people in need – ‘Poverty in the Midst of Plenty!’ – led even before the First World War to increasingly desperate competition between industrial nations for ‘export markets’ to offload these ‘surpluses’; this was a major cause of both World Wars, and is a continuing ‘problem’, while the basic cause of this problem is the usurious nature of the way an increasing proportion of our money supply is created by the banks as they lend it out at interest, since the founding of the Bank of England in 1694. This now accounts for about 97% of the money in circulation.
Between the two World Wars, in the 1920s and ’30s, the fast-growing, worldwide movement for Social Credit was arguing that the problem lay in the nature of the debt-based financial system, and was demanding ‘National Dividends’; that is, distribution to every citizen of an unconditional, regular payment of a sum sufficient for subsistence – what is now known as a Basic, or Citizen’s, Income, an idea since promoted by the Green Party, among others.
This would free people from the necessity to seek paid employment, and allow free choice of action. Self-employment, community work, political campaigning, study, sports—or even ‘leisure’ – would be possible alternatives to ‘full’, or to ‘part-time’ employment.
This would allow the ‘economy’ to change smoothly to one which meets needs efficiently, without avoidable waste, and uses renewable energy instead of fossil fuels.
There is currently a huge volume of work needed but not being undertaken, to make all the changes needed to move to a ‘sustainable society’; the major block to it being undertaken is the need to ‘service’ the debts already created by our corrupt financial system, and to ‘find the money’ for all the changes which do not create profit enough to pay-off the loans they would need.
A money supply consisting of money entering circulation by government creating-and-spending it, replacing all the debt-based money that banks have issued, would then remain in circulation, removing the power of the banks over the ‘economy’ – and over governments – and could easily be adjusted in quantity by the action of a Monetary Authority charged with the power and duty of matching it to society’s needs, as they changed.
Such a change would remove the financial obstacles to the achievement of all the changes we need, and we could then enter the ‘leisure society’ the Trade Unions were envisioning for the future, way back in the 1960s!