UNEMPLOYMENT creates IMPOVERISHMENT PART 1

Part 1 of 2 articles from Neil Tye on this crucial topic. Part 2 will follow later today.

UNEMPLOYMENT creates IMPOVERISHMENT 

 PART 1                                                               by:  Neil Tye

EMPLOYMENT delivers WELL-BEING

‘FULL EMPLOYMENT creates WELL-BEING, ECONOMIC GROWTH and stabilises low INFLATION’ 

Preamble:

The ‘Primary Objective’ of this post (and Part 2) is to initially by-pass the current mindless chaos from Holyrood and Westminster by rejuvenating for the future, this important subject of ‘Full Employment’ for our Scottish economy. This macroeconomic policy needs to be clearly understood and debated because it has fundamental beneficial outcomes both nationally and socially. A ‘Policy of Full Employment’ has been purposely absent from our UK politics since 1974. 

When ‘Capitalist’ politicians and their economists believe in adopting an economic policy theory that will provide ‘economic stability,’ and yet compelling evidence proves that it does not, then this is the best reason why the policy and the politicians should be replaced. If the experiment and the mathematics do not agree with the theory, then the theory is wrong. This is the fundamental basis of pure science and engineering. So, why not with Politics?

It is time that minds are reawakened to absorb compelling evidence and new knowledge that destroys previously believed economic notions and spurious paradigms. Economic policies, which are based on failed policy scenarios, then regurgitated while national economies are in a state of collapse and should be confronted. 

Hopefully, this post will provide you with additional knowledge and historical evidence so that thought provoking ideas, opinions and discussion can emerge allowing inquisitive minds to query and determine the logical conclusions. My conclusion is a question and answer. Why is it, that politicians are unable to deduce, that well-being, in all its forms, is the most beneficial option for any nation? – The reason is that the ‘selfish gene’ is the governing force behind their self-interested aspirations.

Repetitive Economic Policies that fail to deliver – 1919-2022:

So, for all the politicians reading this post here are a couple of aphorisms….

‘History has a remarkable habit of repeating itself’

 ‘Those who cannot remember the past are condemned to repeat it’’

The employment policies adopted during the two following era’s (1919-1933) and (1979-2022) were and still are financially insufficient and their ‘Classical’ economists remained steadfastly conservative continually attempting to balance the national budgets, wherever possible, irrespective of the human cost. It set in motion a bizarre series of economic policy failures that featured throughout various western right-wing governments, particularly the UK and USA, for the next 100years, all in the name of capitalism, free markets, monetarism, and libertarianism that delivers and feeds financial greed for the few. 

Combined, such repetitive errors have left social and national economic implications that are seriously important to the wellbeing of our nation. Being unable to support oneself or family is without doubt the most destructive aspect of financial inequality.

At a personal level, the social extremes of both unemployment and employment are ‘Deprivation’ or ‘Wellbeing.’ However, for a government the economic residuals merely relate to the financial extremes of ‘Recession’ or ‘Growth.’ There has been little empathy shown to the deprived from all previous and current Neo-liberalist/Capitalist UK governments. 

To give this important subject the space and latitude that it rightly deserves would take a sizable book. This difficulty means that these posts will focus on the main points of the subject matter which is ‘Government Policy Principles’ of both ‘Unemployment’ and ‘Employment’ and the need for a policy of ‘Full Employment’ for an Independent Scotland. 

Unemployment – A Policy of negative consequences:

In 1662 – the first official UK literary documents concerning ‘Unemployment’ or more precisely ‘The Value of the Employed’ for the benefit of national wellbeing were scribed in 1662 by William Petty.” (1623-1687)

Petty’s first writing was the ‘Treatise of Taxes and Contributions’ written in 1662 which in part describes his concerns of the unemployed, that ….“They ought neither to be starved, nor hanged, nor given away, because they represent a resource that could be used in public employment to enrich the nation.”

However, Petty’s 1662 profound thoughts have been displaced. Since 1978, politicians in the rUK and Scotland have abandoned a full employment policy and preferred a policy of unemployment for the reasons of self-interest, ignorance, and irresponsibility. This policy of abandonment has left thousands of workers at the mercy of the corporate business world and the financial greed that drives their own selfish political agenda. Supportive politicians, believe that business will always provide. 

We shall see in this post that many of the policy decisions that were based on an adherence to the classical economics school of thought have led to poor and calamitous economic outcomes.

Maintaining an unemployment policy, we forfeit the social and economic value we could generate by eradicating it, while carrying its real and financial costs. It is a cancer that destroys communities.

The underlying dynamics of the capitalist system is driven by the need to profit, and this desire necessitates a tight control of the major contributors of productivity, which is the cost of labour and raw materials. Additionally, workers demand for higher wages is countered by the presence of a pool of unemployed workers called the ‘Unemployment Buffer Stock.’ 

The following statement made by the International Labour Organisation (ILO) in 2022:

‘The effects of workers unemployment and the adoption of an approach that balances macroeconomics and employment goals, while at the same time taking social impacts into account, can help to address these challenges of unemployment.’

Responding to any divisive unemployment policy framework requires a suitable alternative policy and the key that will open the door is our UK macroeconomic history. (Full Employment during 1944 to 1974)

In the UK, since 1978 the level of industrial manufacturing has reduced dramatically, and the extant labour force has also reduced. The old industrial trade unions that once supported the labour market rights for decent working conditions no longer exists and the deregulation of the labour laws has left the labour market open to abuse by corporate free marketeers. 

What was relevant in the past is no-longer relevant today because industry and production centres are now globally located. Our own UK labour intensive production-lines are no longer in existence and replaced by robotic automation. Additionally, UK corporate businesses have moved overseas for the benefits of cheaper labour costs.

Capitalists believed (and still do) that too much spending into the economy will cause rising INFLATION (the cost of living). Therefore, they prefer to believe that it must be monetarily controlled at all costs by increasing the Bank of England’s – Bank Interest Base Rate. 

The belief is that by making borrowing more expensive it will reduce spending into the economy and so reduce the product demand. In reality, the actual effect is something quite different. In a recessionary economy it causes greater Private indebtedness, bankruptcy, and then greater unemployment. This will be illuminated in the Part 2 post: (Wealth Inequality – The Real Effects). 

Full Employment during 1944 to 1974 – The ‘Golden Age of Employment’:

Today, if you are unlucky enough to be less than 64 years old, you would have been too young (only 16 years old) to have experienced the effects of this special period as an employed person in 1974. Oh, I was ‘lucky enough’!

                                1919                          UK Unemployment Graph                         2022

The graph above indicates historically our UK ‘UNEMPLOYMENT’ levels between 1919 and 2022 as a percentage of the working population (Economically Active). 

The objective here is to determine when unemployment was at its LOWEST levels thereby indicating conversely, when EMPLOYMENT was at its highest levels. Thereafter, it is a case of analysing what the duration was and what economic policies were endorsed to produce the high- level of employment, if any. 

Shown on the graph, between the green dots, there is an almost forgotten period that it is plainly visible, and it only occurred during the years 1944-1974. This period indicates a very distinctive and constant economic growth known as; ‘The Golden Age of Employment’ when the unemployment level was at an average of only 1.9% for a period of 30 years. Both the Tory and Labour governments invested heavily into the UK economy, without damaging it financially.

The policy was ‘Full Employment,’ when all the UK utility industries (water, health, railways, gas, communications, post office and energy) were all under public government ownership. Significantly, this policy also demonstrated that it had a controlling effect over the level of inflation that averaged only +3.20% annually during the 30-year period, except for a brief period when inflation was high, due to effect of the Korean War.

This is the proof that normal continual growth in an economy, at controllable levels of inflation, are the real markers and that both are a consequence of a policy of full employment. 

The objective of the 1944-1974 economic model was always to jointly maintain a cyclical dual Private (corporate business) and Public (government) Labour Force that was collectively operating at the optimum level to provide growth and stabilise the rate of inflation (the cost of living). The residual effect was that ‘Full Employment’ became the beneficial outcome by accident. This was largely because the UK Government was already one of the largest employers as the ‘Public Sector’ owner of the utilities and military.

Employment – Generates Economic Development:

The individual and national consequences of employment is economic development. These principals and definitions for ‘Employment’ and ‘Economic Development’ allied to the achievement or goal of ‘Decent Work’ provides the pleasure of doing something constructive. Therefore, it must and should include the further principles and requirements of government job creation and work conditions so that people can work in an environment that is safe and harmonious. But, in short, the purpose of economic development objectively is to improve the lives of all human beings and the betterment of the greater environmental vastness around them.

Full Employment Policy – Fully Independent Scottish Nation:

A fully Independent Scottish Nation with its own Scot£ currency, Central Bank will always be able to finance ‘Full Employment’ and support those people who are unable to work. Full Employment means employment for those people who are within the classified group of ‘Economically Active.’  The scope and fiscal powers of a ‘Scottish Treasury’ is the dynamic mechanism that will drive this policy forward, financially. Adding to the nation’s ‘Gross Domestic Product’ (GDP) by generating internal production and national well-being. The economic history between 1944 and 1974 is proof that such an employment model will reinvigorate the whole of the Scottish labour market within this decade.

This is not a belief but a reality, because there is compelling evidence to support such a policy. 

The dual combination of both Public and Private Sectors forming a collective employment policy that is ‘cyclical’ and managed independently is the powerful driving force. The singular caveat is that the wage scales in the Public Employment Guarantee Scheme (EGS) must not compromise the wage levels in the Private Sector.

The Scottish Public Sector’ where government acts as the ‘employer combining both the: –

1. A Utilities Public sector employer
2. An ‘Employment Guarantee Scheme’ (EGS) Public sector employer 

The Scottish Private Sector: –

• The Private/Businesses sector (except Scottish utilities)

The EGS would be a partnership between central and local government providing voluntary and full-time employment that is inclusively open to all Scottish citizens of legal working age who want to work. This will be irrespective of labour market status, race, sex, ethic group or creed. Recipients with commitment, skills and talent could then progress to become the instructors, managers, leaders, or administrators of their own employment system.

It would provide socially beneficial project work paid at a level that would be greater than the governments minimum wage limitations but less than the Private sector average mid-low wage level which is currently (Sept. 2022) at an average of £16,000 gross per annum. 

It must be mentioned here that the Aug. 2022 Scottish Labour Force ONS statistics fail to identify and define the real meaning of ‘Unemployed’ (91,393) by defining ‘Employment’ as working more than 1 hour a week. This definition hides a considerable number of ‘Under-employed’ people and thus the actual number of potential recipients, for the EGS, will be greater.

Sheffield Hallam University research group (May 2022) estimated that the realistic number of ‘Unemployed’ in Scotland was 224,000 people based on unaccounted benefit claimants, under-employed or unemployed groups. These resources would be the future ‘unemployed’ and ‘underemployed’ persons available to be productively allocated for the Government’s public sector ‘EGS Work Force.’ 

EGS government spending into the economy creates wealth and well-being in the community. It advances the public purpose, reducing wealth inequality, improves working conditions and people’s everyday lives. Training and re-education are fundamental to the rehabilitation for the unskilled to become a skilled labour force.

It is a matter of recognising that employment at local level will provide a range of useful opportunities that could fulfil beneficial social outcomes for local community projects. As part of this policy communities can conduct their own project research surveys to assess local needs and design schemes around the projects. It could prioritise the activities that address all forms of neglect, whether for people in need, communities in despair, or an environment in peril.

A future Independent Scottish Government must consider a policy of public re-ownership of our national resources and protect their vast provisions for Scotland’s own financial benefit and utility. With these public acquisitions, government could provide near ‘Full Public Employment.’ 

End of PART 1  

Neil Tye – 08.11.22

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