STIMULUS OR STAGNATION

It doesn’t seem to be working. rOBERT rEICH, former Labour Secretary in the Clinton administration, claims that the real unemployment figure is closer to 20%! Wow.

There is a paradox here. If the “engine” of recovery is the private sector, why has the stimulus not been reflected in more jobs? Simple. Companies in a down market can only hope to improve their financial bottom line by instituting economies and the major cost in running any company is labour cost – from, the over-paid CEO to the hard-working serf at the bottom of the feeding chart.

It is no surprise that productivity is up. “Productivity” is a code word for getting more work from fewer people. In the long run the policy is self-destructive because it erodes the energy and ambition of the people working under close to sweat shop conditions.

I don’t blame business for this. They’re in business to do business. They’re in business to show a profit. That’s at the heart of the capitalist system, which is not all bad, in spite of the greed of Wall Street. I’m waiting to see the movie sequel to “greed is good” as Hollywood gives us Gecko (played by Michael Douglas) recreated in the age of economic chaos.

Governments are not making the best use of their stimulus programs. The principal objective is to improve corporate balance sheets and in the “rising-tide-lifts-all-boats philosophy, the stimulus will filter down to the unemployed.

There is a better idea. Instead of increasing Employment Insurance, or increasing the length of time it can be paid, present employers with an opportunity to help return us to full employment. Critics of job-sharing suggest that cutting back on payroll lets the best workers thrive and the others fall by the wayside. (Of course, in a unionized situation, there is to merit clause in the laying off or rehiring of employees.)

To make the economy work; to revive retail sales; to create new consumer confidence, the jobless numbers must go down. Stimulus as it plays out does not do the job. If we can increase the number of people working, we can recover. You have already guessed where I’m heading. Government, instead of paying out billions to the unemployed, uses that money to supplement incomes. It would be a confidence-booster. By reducing the size of each worker’s work week, and replacing those lost hours with work for someone who has been laid off, will cause us to return to optimistic prosperity. I haven’t done the math, but it would seem to me that the same money paid as unemployment insurance used instead to ramp up reduced income would keep more people working and not cost government any more money that is already being spent to support the unemployed.

The hitch is of course, that it takes employment policy out of the hands of the corporations and gives it to government. So here we go again with critics of the "nanny” state bellowing their protests.

The truth is that we need government. Who else will do it?