On June 30, 2013, Paul Krugman writes in The New York Times:
Is life too easy for the unemployed? You may not think so, and I certainly don’t think so. But that, remarkably, is what many and perhaps most Republicans believe. And they’re acting on that belief: there’s a nationwide movement under way to punish the unemployed, based on the proposition that we can cure unemployment by making the jobless even more miserable.
So what’s going on here? Is it just cruelty? Well, the G.O.P., which believes that 47 percent of Americans are “takers” mooching off the job creators, which in many states is denying health care to the poor simply to spite President Obama, isn’t exactly overflowing with compassion. But the war on the unemployed isn’t motivated solely by cruelty; rather, it’s a case of meanspiritedness converging with bad economic analysis.
In general, modern conservatives believe that our national character is being sapped by social programs that, in the memorable words of Paul Ryan, the chairman of the House Budget Committee, “turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency.” More specifically, they believe that unemployment insurance encourages jobless workers to stay unemployed, rather than taking available jobs.
Won’t making the unemployed desperate put downward pressure on wages? And won’t lower labor costs encourage job growth? No — that’s a fallacy of composition. Cutting one worker’s wage may help save his or her job by making that worker cheaper than competing workers; but cutting everyone’s wages just reduces everyone’s income — and it worsens the burden of debt, which is one of the main forces holding the economy back.
Oh, and let’s not forget that cutting benefits to the unemployed, many of whom are living hand-to-mouth, will lead to lower overall spending — again, worsening the economic situation, and destroying more jobs.
The move to slash unemployment benefits, then, is counterproductive as well as cruel; it will swell the ranks of the unemployed even as it makes their lives ever more miserable.
Can anything be done to reverse this policy wrong turn? The people out to punish the unemployed won’t be dissuaded by rational argument; they know what they know, and no amount of evidence will change their views. My sense, however, is that the war on the unemployed has been making so much progress in part because it has been flying under the radar, with too many people unaware of what’s going on.
Well, now you know. And you should be angry.
The problem of poverty and unemployment will never be solved until conventional economists such as Paul Krugman wake up to the realization that tectonic shifts in the technologies of production are destroying and devaluing the worth of labor, as increasingly the non-human factor of production––machines, super-automation, robotics, digital computerized operations, etc.––is replacing the need for labor. This means that private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.
Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on full production and broader capital ownership accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When capital workers (productive capital owners) replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.
This results in hopeless poverty, social alienation, and economic breakdown, even though the American economy is ripe with the physical, technical, managerial, and engineering prerequisites for improving the lives of the 99 percent majority. Why? Because there is a crippling organizational malfunction that prevents making full use of the technological prowess that we have developed. The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth.
The rich are RICH because they OWN the wealth-creating productive capital assets or means of production, which is at the core of our capacity to produce products and services. Until we reverse course and provide equal opportunity for EVERY American to acquire ownership in FUTURE productive capital assets using insured capital credit, wealth and income differences will continue to dramatically widen as tectonic shifts in the technologies of production displace human labor with the non-human means of production––productive capital. Such displacement is exponentially accelerating and NO ONE in a position of “leadership” or academia is addressing this paradigm shift in how the products and services that we consume are produced, and how we can connect individuals with the property rights of ownership in the FUTURE wealth-creating productive capital assets so that they will derive income from a new source that has been, as a practical matter, the exclusive opportunity for those already wealthy.
http://www.nytimes.com/2013/07/01/opinion/krugman-the-war-on-the-unemployed.html?_r&_r=0
It seems obvious that progress in the productive capacity of capital is designed to replace the need for human labor making ‘full employment’ and ‘job creation’ a hopeless and even cruel deception as a way to accomplish equitable distribution of the increasing wealth that humanity has proven itself so capable of doing. But it is not the subject of inquiry and policy debate and the reason why this is not so is not obvious and that has never made no sense to me for decades to I appreciate Reber’s thoughts on the subject. What also is obvious but which is not unacknowledged and ignored is the fact that the distinction between land and capital has been erroneously made. The error is that the value of land and natural resources is created by the community of all people making income from its ownership wholly unearned while the value of capital that is in the form of the tools of production is created by individual effort and in principle the income from it is earned. The most valuable land and resources and its value is highly concentrated in ownership even more so than real capital. It is the value of land that belongs without any argument equally to all people so this understanding could be the beginning of correct analysis of what really is most fundamentally wrong with the system as it already has for well over a century. Time to wake up to the fact that jobs cannot be the primary source of distribution of wealth and that sharing the value we all create which inheres in the value of land and natural resources is the next most promising evolution in the accomplishment of democratic capitalism for the benefit of all as was promised.
Oh well, I screwed up in my post and said that the ‘distinction between land and capital has been erroneously made’ and of course what I meant to say is that the failure to not make the distinction between land and capital and that it is an error to conflate them has the professional and academic economic fraternity since the advent of neo-liberalism in the late 19th and early 20th centuries.