• We are all Keynesian puppets We are all Keynesian puppets Articles in Barron’s, Oct. 5, 2009, report that the last national household survey from which the current 9.8 percent unemployment rate is derived indicated a 785,000 decline in employment.
• We are all Keynesian puppets
We are all Keynesian puppets
Articles in Barron’s, Oct. 5, 2009, report that the last national household survey from which the current 9.8 percent unemployment rate is derived indicated a 785,000 decline in employment. One of the largest job drops during a postwar recession.
More troubling, the workforce had a 521,000 dropout of people looking for work leading to a larger 17 percent overall unemployment rate inclusive of: Those officially unemployed, those working part-time, and those that have given up trying to find work All adds up to 26 million unemployed with September being the 21st month of job shrinkage.
Later that week the Labor Department released data where 6.3 unemployed workers are competing for each job opening. In the previous 2001 recession 2.8 workers competed for each job as the economy was attempting another jobless recovery. Hawai‘i’s unemployment rate is at a 31-year high with 46,900 unemployed. More bad news statistics of the dire predicament if you are looking for work. Indeed the economy is in a state of emergency.
From what I am observing is whoever is in political power does not have a solution to the business cycle scourge of capitalism. What politicians do is throw stimulant billions at the unemployed problem hoping it will go away in a few months. History tells them that the recessions in past years last 13 months in average duration. Thus by the time the monies flow through the bureaucracy the economy is growing again, and the politicians can take credit for the recovery. Not this time. Trying to make job gains look good, last month’s progress report on the president’s economic plan was substantially overstated by receivers of the monies.
I am not a critic of our free market system but enough is enough. No one has any positive future or security living through a job crisis time after time. The ubiquitous business cycle is a fact of capitalism and the unemployment that follows must be approached with solutions versus theories. Moreover if we are going to be faced with speculative bubble disasters every few years as many prominent economists predict we must take actions at the local level to provide jobs.
I know the trauma experienced by the individuals and families having to cope with economic downturns. I lived on a rural farm during the great depression of the ‘30s, much too young to be aware of the national suffering going on at the time. My parents moved in the late ‘30s to the neighboring village. I do not know the reasons for the change but it was traumatic. My father was a farm laborer working only during good weather. I remember that first long winter in the village there as having huge snow storms. My father could not find work for months. To this day whenever I hear or read of the unemployed I have a vivid flashback of him sitting by the kitchen table bent over with his face in his hands hour after hour. He was severely depressed not knowing how he was to provide for the family, and not knowing what lay in the future.
My first job out of high school was on a railroad. It is one industry most affected by the business cycle. I experienced several jobless recessions and finally decided to go back to school hoping to find a more stable career. I learned a little about economics and business cycles. My economic professor’s explanation was that the business cycle occurs as a result of inventory buildups and imbalances. That could explain the shorter recessions but what about the depression in the ‘30s? What about the recent bubbles? There are numerous economic theories attempting to explain: the Austrian business cycle theory of wasteful mal-investment; the Keynesian school of macro aggregate demand; the monetarist school of money supply; and so on. The economists promote these theories to whatever political party is in power but don’t have a pragmatic solution to unemployment. Count on more tax monies being spent as a solution as we are now all Keynesian puppets.
Unemployment events are so numerous that the Unemployment Insurance (UI) Program created in 1935 is now 70 years in existence. Huge state agencies run by thousands of bureaucrats collect taxes from employers and pay out benefits to the unemployed on an on-going cycle. Solution-just pay poverty subsistence until the problem goes away? What are the alternatives for those out of work on Kaua‘i? We cannot rely on the Federal or State governments to solve the problem. Right?
We need to take better advantage of our resources: land, water, sun, wind, ocean, by private enterprise. Somehow the major acres of land owned by large trusts sitting idle should be leased and made productive .How about our ex-AOL guru applying tech transfer to his 40,000 idle acres? Perhaps an extreme action by the Mayor using emergency powers is needed. The county can issue Build America bonds established by the stimulus act to raise seed monies. The monies can be used to facilitate reverse mergers with companies already listed on U.S. stock exchanges. Further working capital can be raised by secondary offering of shares. Chinese entrepreneurs are using this approach to raise capital with the backing of their government agencies. Once the infrastructure is setup it can be used again and again.
A Nobel Prize in economics was recently awarded to Elinor Ostrom for research on managing common resources. Her research finds that forests, fisheries, and grazing lands can be managed successfully by people who use them versus somebody in Washington attempting to manage centrally. Her work on common pool resources emphasizes how humans interact with ecosystems to maintain long-term sustainable resource yields. Let’s get our locals employed using our common lands. The Ma‘o Organic Farms ‘aina projects are an example of what can be done. In downtown distressed Detroit local supportive agencies have created a tech hotspot. TechTown located on former GM property is home to 90 new companies. The high tech park center is on target to grow 400 additional companies in the next three years. We can learn from their successes.
Ron Holte, Kapa‘a
