e_moon60 (e_moon60) wrote,

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The Right Questions: Part Three

Another segment of the notion that cutting taxes produces jobs (as before: no, it doesn't), there's the notion that eliminating jobs will produce new jobs...that is, if you increase unemployment enough, then jobs will emerge, and the economy will recover.  You would think that even the GOP could understand that if you have a lot of unemployment already, adding a million or so more people to the list will not, in fact, create new jobs.  But they're walking around with eyes wide shut and don't get it.

How was this supposed to work, anyway?  In theory,  this requires attention to the undefined term "business confidence."   What is "business confidence?"   It's whatever the businessmen arguing for particular policies say it is, which usually boils down to "whatever policies enable me to make more quick profit."  Understandable, but hardly enough to build an economic plan on, because--as has been known for millenia--what makes someone a quick profit is quite often bad for everyone else.   Sand in the sugar, water in the milk,  dumping poison into the river,  letting vermin run wild in your peanut-processing plant (as in Texas),  butchering the sick cow quickly and selling the meat...etc.  (No, I'm not saying ALL businesses are crooked...but when the profit motive alone is paramount, the temptation to do it quick and dirty is always there, and some always will.)  

But back to the topic at hand:  "business confidence" is related to a) a stable currency, b) a stable government,  c) a favorable regulatory environment (favorable to business) and those are related to a) a favorable tax policy for business and b) a manageable debt load.    Thus "business" wants to see GNP rising and national debt stable or falling.    Rising national debt concerns "business" for the same reason it concerns everyone else--go to far and the national debt can become a destabilizing influence that affects currency, the tax rate, and--if bad enough--stability at all levels.   However, "business" is unwilling to pour its own profits into lowering the debt load (especially when a business sector has benefited from policies that caused the rising debt.   You do not see the major tax-avoiding corporations--including the banks who benefited from the bailouts--offering to pay back their windfall rescues, for instance.)    So "business confidence" can be more accurately labeled "business self-interest."  Particularly when the policies "business" wants won't work.

Currently, the GOP is in love with "austerity" (not for themselves, of course.)    Austerity in this instance means cutting government jobs across the board...dumping a million or more employed persons into the pool of unemployed. Republicans have insisted that if you fire a bunch of educated and capable workers, this will improve the quality of the unemployment pool, and this higher quality unemployed worker will be more attractive to potential employers, and thus jobs will be created for them.   Uh...why?    It's not as if every unemployed person out there now is incompetent, stupid, uneducated...on the contrary, many of the unemployed were employed at good jobs because they were competent...but were laid off anyway.   There aren't good jobs waiting for smart, educated people.   There aren't good jobs because it was profitable for those companies who laid them off to lay them off...and profit rules.  

The GOP also thinks a course of good old-fashioned Depression-era austerity will be good for individuals and families....because the ordinary citizen is just too lazy, too greedy, too materialistic (the rich, by definition of the GOP, are not: they have all earned everything they made by hard, unrelenting work....so when they screw up in a big way and run a corporation into bankruptcy, they deserve a golden parachute.  The executives of Borders, for instance, whose lousy decisions and management resulted in the collapse of the other major bookstore chain and the loss of tens of thousands of jobs as their stores close...)  

According to the GOP, we ordinary citizens all need to be toughened up by adversity and learn to live frugally, get ourselves out of debt....although it's pretty clear that the two main causes of "consumer debt" (notice the attack in that very label) are a) job loss and b) a medical emergency.    Yes, some people spend themselves into a hole when their income was adequate...but most people don't, and most people get into a financial bind because of job loss or medical expense.    So here's your hardworking parent, whose kid is hit by a car and spends months in the hospital and rehab being put back together.    Now the parent is in debt all right.  Should they have "proactively" not had a kid who could be hit and cause them medical expense?   Should they, looking at their child's mangled body, said "No, just leave her alone: it would cost too much to treat that" and let her die or remain bedridden?    What happens when that parent is laid off?   How is the parent supposed to pay for the kid's treatment--pay down the debt--without an income?    

Clearly, laying off the employed in order to lower both "consumer debt" and the national debt means that neither will be paid as fast, because (among other things)  taxes won't be paid either.   And more people will be standing hungry in the streets.   And the people who are laid off will quit buying anything that don't have to have to survive today--so businesses which have so far survived will also start failing.   And they will lay off their employees, not to make a bigger profit, but because they're going under.  That small business sector, that entrepreneurship, which the GOP loves to brag on in this country (but doesn't know or give a damn about)  will go under because it depends on individual purchases from individuals who have the money to make purchases. 

So again--let's look at this "layoffs actually produce more jobs" thing again.  Just how is that supposed to work?   How is an unemployed teacher going to find work?   How is that unemployed teacher (or anyone  else) going to pay the mortgage or the rent, buy food, buy clothes for themselves or their family?  How are they going to pay down any debt they already have?   How are the they going to patronize the small businesses that serve them--get a plumber to fix that leak, an electrician to fix that short in the wiring,  a dentist to fill that cavity....if they're unemployed, that coffee shop nearby will lose its customers, that dry cleaner will lose its customers...and the cascade is a downhill slide of bad news.   

"Austerity" has been applied in other countries, where it also doesn't  work....except to make the rich richer and the middle-class take a fast trip to poverty along with the poor who are even worse off.  Take Ireland, for example.  Ireland was a boom economy, the pride of the EU at one point, having come from poverty to riches...until it pioneered bailing out bad banks.  It's been on an austerity kick for several years now, imposing "austerity" on ordinary citizens to reduce its national debt.  Result?   The interest on the national debt has doubled (canceling out savings) and unemployment is over 13% .  "Business confidence" is low.   The UK has started down the same road with Cameron's government, with the result that--against their confident predictions--the national debt is up and business confidence is down--the economy is sliding downhill.  As here, the focus is on removing services that serve the population (libraries, parks, schools, etc.)  with the assumption that "privatization" and private funds will make up for government spending. 

Er...no.   "Austerity measures" that push the population down into the muck do not result in economic growth or stability--and the only reason to think they would, is that someone told you so and you turned off your brain to believe them.  The questions to ask here are "Exactly how will laying off people create more jobs?  In detail, please.  Especially when it hasn't worked before, or elsewhere?   And how does high unemployment improve the economy?" 
Tags: economy, politics

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