Call for Constructive Responses To the Jobless Economy

Great Debates
1

This thread is a call for constructive responses to the jobless economy. It is not about debating whether the jobless economy exists, or whether or not it might end soon. It is not for debating the existence or importance of specific causes of the jobless economy, except insofar as they DIRECTLY related to a proposed solution.

In short, I don’t want this thread to be a simple reiteration of the debate that has occurred in other thread about the state of the economy. I don’t want to hear that we should do nothing because there’s not a problem – we’ve heard that already in other threads.

Proposed solutions can involve governmental, personal and social (but non-governmental) approaches. Frex, you may propose a government program to help the unemployed retain their homes and stay fed. Or you may propose a specific approach to job-hunting which is more productive than others, or you may propose some form of networking to help the unemployed find work or workable solutions to the problems cause by lack of money.

I also would like to place some strictures on the proposed use of training to solve joblessness. If you propose training, you must specify what short of careers should be trained for, and why such careers offer better job prospects than others. ISTM that “training” is frequently offered as a panacea by those who want to minimize social responses to the problems of unemployment.

In short, the debate is “How do we help the unemployed in an economy in which corporate hiring is stagnant despite good earnings by said corporations, and is unlikely to change?”

C’mon, we’re the Dopers, we shoud be able to come up with some good, original ideas here.

2

Two things that are practical and can be done legislatively:

1 - Figure out a way to rein in health care spending. I referenced this in the thread about permanent job losses, but I’ll link to it again here for reference: article re the bad effect the galloping cost of health care is having on business.
Obvious solution is to go to a government funded health care system, but really anything that can stop the rapid increase in health costs would be welcome. This is a huge drag on hiring.

2 - Reverse the Social Security tax. Right now, the tax is on the first 87k or something along those lines of salary. One unremarked effect of this is that it discourages hiring of lower-paid workers, while subsidizing the hiring of higher-paid workers, because the employer is liable for half of the tax. Reverse it so that some amount, like say an amount equal to the standard deduction a single person can take, is exempt, and taxes start after that, and this would automatically reduce the cost of new hires for most businesses, since most businesses don’t have a lot of workers making more than the Social Security limit, obviously.

That’s all I have, for now anyway.

3

End the nationwide terror alert system. State and local goverments are spending millions of dollars on extra security. Thus causing an increase in state and local taxes. This will also cause a backlash when school districts are trying to win property tax increases on the ballot.

It is silly for Western states to have to go on “high alert” because Mr. Ashcroft thinks “something” might be “funny” with a London to Dulles flight.

4

  1. Ban importation of products made with child or slave labor. As a matter of fact, put a “let’s get Fidel” style ban on the use of American money to buy such products period. Not going to fix the problem, but it would be a nice gesture.

  2. Drop MFA for China. They’re manipulating their currency to screw us, and it’s time we stopped doing them favors in the process.

  3. Place a caveat on free trade pacts saying that if American companies can move their jobs to a new location, Americans must be equally free to move to that location to follow the jobs.

  4. Fix the health care crisis.
    a. Enforce laws against insurance fraud.
    b. Enact laws requiring some portion of insurance investments to be put into more reliable areas than the stock market, so bubble bursts don’t have a catastrophic effect.
    c. Make malpractice a criminal matter with the ability to collect damages only after a finding of guilt. Make the penalties such that occasional screw ups are punished but not career ending. Malfeasance or habitual incompetence gets your license yanked and puts you in the poor house.
    d. Take measures to curb abuse of the system by illegal immigrants.

  5. Enforce anti-collusion laws. The free market model is based on competition.

  6. Require the government to buy goods and services domestically unless there’s no other option.

5

Some form of National Health would definitely help those of us who choose to become self-employed.

I quit a job as an independent contractor to a local courier company because of the lack of affordable insurance.

I actually like my part-time gig as an independent contractor delivering bi-weekly newspapers better than my “real job”. If National Health ever passed, I’d get 2-3 extra weekly and bi-weekly routes, try to line up courier jobs with lawyers and medical clinics, and try to hand off my hourly grind to some jobless person.

So far as Social Security taxes go, I like Pantom’s idea and would like to see it apply to both the employer and employee sides of the self-employment tax.

6

So you are saying that some of the already-extant solutions that have been proposed to the health care problem – like moving to a single-payer system – would have a strong positive effect on the economy. If we coupled that with extending health care to the unemployed – which you’d kinda have to do if you were no longer making employment the basis of health insurance – you’d be solving two social problems at once.

Would the cost of extending health insurance to the unemployed and uninsured (not all employed people have health insurance) be great enough to scotch this plan, or blunt its effectiveness in reinvigorating the economy, I wonder? I don’t know, it just seems an obvious objection.

OK, this too sounds like a good idea – put the premium on hiring where it belongs, on entry-level workers, rather than the $87K plus jobs. It would also make life easier for the entry-level workers since it would reduce their taxes too, I assume. Once again, the only hole I can really find in this is the effect it will have on Social Security revenues – would it raise them, reduce them, or leave them about the same. Obvously, if it results in increased hiring, it will have a built-in multiplier effect, as it would mean more workers would ultimately be paying Social Security taxes. Hmm, would it also have the effect of freezing salaries for workers, or some classes of workers, at the Social Security cut-in point, as businesses seek to minimize their tax exposure?

That’s pretty durned good for starters.

7

I’m totally behind this one. I used to work for a local government organization, and frankly they tend to regard programs like this as goodie boxes. All they really care about is the money. I guarantee you that these “homeland security” local government programs are being by local governments to offset the cost of maintaining their police, fire and emergency services depts, or to upgrade their capabilities without dipping into local tax funds. Definitely need to end this gravy train.

8

I don’t accept your premise that there is a “jobless economy”.

But if you want the economy to grow, you can significantly scale back the size of government. The Federal gov’t runs at something like 20% of GDP. Let’s get that to 15%, and see how things look from there. I don’t really care how it’s done, but one way would be to cap spending growth at 1 percentage point below the rate of GDP growth (if the GDP is growing at 3%, gov’t spending grows at no more than 2%).

9

All for it. Even the most ardent free-market capitalists tend to gag on slave labor. Let’s keep the race to the bottom from hitting the absolute bottom.

This one’s more problematical. As I understand it, the effect of this pegged currency is to subsidize the American economy, making their goods cheaper for us to buy. So we win some, we lose some here. Also, I understand that Japan is doing the exact same thing – why should we not also drop them from MFA status?

  1. Place a caveat on free trade pacts saying that if American companies can move their jobs to a new location, Americans must be equally free to move to that location to follow the jobs.
    [/quote]

I’m all for it, though I don’t know if employers in other countries would be all that interested in hiring Americans. Why would they be? And as I understand it, unemployed people in America have a higher standard of living than employed people in many Third World countries. Why would even employed Americans want to emigrate under those circumstances?

We’ve already had a concrete suggesion along these lines.

I’m not familiar with what you’re taking about. What kind of fraud, and how does it affect the economy, and to what extent?

Or maybe create a legal category for a group of mutual funds which are required by law to keep a certain amount of their assets in stable investments, which insurance funds, retirement funds, etc., can be required to carry a certain amount of THEIR assets in. Actually anyone who’s concerned about bubbles could invest in them. That could have the effect of stabilizing the stock market, not really a bad thing at all.

Possibly it’s part of the solution to the health care crisis, but I don’t see how you can reasonably hope to inact such a plan unless you have some concrete methods of dealing with doctors who are incompetent, careless, etc. The “winner take all” lawsuit system we have now at LEAST has the effect of casting a chilling effect over careless doctors, but the AMA does a pretty good job of protecting its own, and in the absence of dangerous lawsuits, I can see a lot of people getting hurt by their doctors who otherwise might not be. That will have to be addressed.

By all means. Asian gangs are known to have abused the insurance system for years. A little concentrated law enforcement is definitely called for.

Is collusion having a big effect on the economy?

The Invisible Hand helps those who help themselves, I hear.

10

Accepting your caveat about the premise …

Actually, this strikes me as a reasonable plan. Cap government spending as percentage of GDP, then let the Dems and Pubs fight it out over what monies go where. Although I have no problem with a government spending its way out of trouble – worked pretty well after the Depression – but if the jobless economy problem is not a temporary glitch but a product of new economic realities, short-term overspending is not the solution. And keeping both Dems and Pubbies from spending like drunken sailors on their chosen vices is probalby a good thing, economically.

11

Just to answer the question that came up, both the employer and employee side of the social security tax would be curtailed for the first “x” dollars of salary, whatever that might be. The idea is to make it cheaper for the employer to hire someone, so the curtailment on that side is what would have the effect of increasing hiring, all other things being equal. You’d have to do the employee side of it too, though, in order to get it passed. Obviously, the limit on the top end would have to be raised to make it revenue neutral to the system.
Actually, thinking about it, the only way to make this politically palatable to the vast majority would be to have no limit on the top end, as with Medicare. Reason why being that otherwise there would be some income bracket where the percentage of wages taken would top out, and then gradually decrease as you got over the limit. Given the math, this would probably land at right about the income level of your typical small business owner, which would probably not have a particularly stimulative effect on the economy, eh? So the best idea would be to exempt X number of dollars on the low end, get rid of the upper limit, and then lower the rate somewhat to make it revenue neutral to Social Security. If ever anything like this came about in real life, it would probably wind up being tied to reform of the SS system though, which would throw all kinds of complications into the math.

12

I actually found what appears to be a good source for data on the percentage of GDP that government spending takes. I know from trying myself that the government doesn’t publish this as a table anywhere, so you have to calculate it yourself. It appears that this guy did a good job of calculating it in his blog:

I looked at the Excel file he links to and looked around, and this guy definitely did his homework.

13

I agree. I had been calling for National Health Care even befoe my job went to India. IMO it is shameful that a country as great as the United States should leave its citizens to fend for themselves or accept substandard health care. People who have been laid off generally cannot afford to pay several hundred dollars per month to continue their medical insurance through COBRA.

Just off the top of my head, I’d start this way: Employers would have the freedom to choose any insurance plan for their employees, as happens now; and all insurance plans must meet a minimum standard of coverage that is approved by Consumer groups (so as to prevent substandard coverage). When, for whatever reason, a person becomes unemployed, they would continue their coverage (as with COBRA); but the premiums would be paid by the Federal government until they are again employed. Or, they could choose to sign up with another carrier and the government would pay the premiums.

A person should be able to go to any doctor and any hospital without having to worry about affording it. Since the government is “for, by and of” the people, the government owes it to the people to provide such services to them. A healthy populace is a benefit to the government, and the government has a mandate to “support the general welfare” of its citizens.

Healthy people are more productive than unhealthy people. More productive people tend to make more money than less productive people, and therefore tend to pay more taxes. Thus, National health care is beneficial to the country.

Education
If we are to be re-educated to do other jobs than those that went overseas, then we should have access to that education. An unemployed person often cannot afford tuition. Further, they may lose some or all of their unemployment compensation if they return to school because they are “not available to work”. And, IMO, retraining a programmer to become a short-order cook does not count. If we are replacing jobs, then we need to replace them with equivalent jobs. I think it is poor resource-management to put a person who has demonstrated higher skills into an unskilled position. People who choose to look for an unskilled position, or a position that requires fewer skills than they possess are often told they are “over-qualified”.

Education benefits the country. Educated people tend to make more money than uneducated people, and thus they tend to pay more taxes. More taxes mean that there is more money to spend on programs to help the people – which results in more productive people who pay more taxes…

I also think that there should be programs that allow people to change their careers. Data analysis is being sent overseas? Hey, I’d be happy as a pilot, marine biologist, filmmaker, environmental researcher… lots of things. But I need training.

So that’s what I’d like to see: Remove the burden of worrying about health care, and create programs that allow people to train for other work and still pay for their living expenses.

14

That looks like a very good source. I know the WSJ publish the federal part of that graph every now and then, and their numbers are very similar. Having the state part added in gives a better overal view.

15

It makes their goods cheaper, but it also makes their labor cheaper. And more importantly, it does both in a way that inherently prevents American companies from competing on an even playing field. Essentially they are pumping value out of the dollar.

As for Japan, if they’re doing the same thing I’m all for yanking their status.

Maybe they wouldn’t. Maybe they would. Either way, it introduces a check and balance system to the process.

Insurance fraud occurs at both the hospital and individual level. People claiming disabilities they don’t have, doctors calling in unnecessary consults or procedures, and then billing it all to the insurance companies and/or government. The cost estimates I’ve heard tend to be in the range of several billion a year.

Yeah, maybe. Seems like adding a middleman to the process to me, but I see no problem with it.

Oh, that can easily be addressed in a criminal law system. As a matter of fact, I think the fear would be much higher if bad doctors were facing the risk of monetary loss and jail time. All my system really seeks to do is to introduce a check into the system to prevent frivolous suits, since the case would have to convince a jury first.

God yes. Clear Channel owns damn near all the radio stations in America. Print and television media are concentrated into four or five holding companies. The recording industry gets a slap on the wrist every couple years for collusionary activities that cost the public billions.

If you have three companies that own an industry, and they’re all working together, you have a monopoly. And a monopoly is a very unhealthy thing.

16

It’s interesting that almost all the messages here seek ‘solutions’ that involve putting restrictions on businesses or raising the cost of government. Think about that - businesses move labor to other countries becuase they feel they get better value in those countries. You aren’t going to ‘solve’ that problem by making it harder for business in the U.S.

Giving everyone health insurance sounds like a great idea, until you get to the point where you have to pay for it. Then you’re looking at tax increases, which makes the U.S. less competitive. The U.S. has lower unemployment than every country on the planet that has full health care coverage.

Think about the distortions this will cause. First, if you’re going to force business to pay for that health care coverage, you are going to eliminate a lot of low-paying jobs overnight. On the other hand, if you publically fund that health insurance, you’re going to cause businesses to pull health insurance for those who get it from their companies. So the ranks of publically-funded health care employees will swell.

When people see a ‘problem’ in that business finds it too expensive to operate in America, why does their solution always seem to involve making it MORE expensive to do business in America? If you want real solutions, how about we start by looking at the morass of regulations U.S. businesses have to put up with, and try to reduce them? How about reducing corporate tax rates? Reducing the size of government so that the employees pay less taxes, and therefore have the same takehome pay at lower salaries?

It would be productive to think about why Americans are worth more money than other workers around the world. They are worth more money because,

[ul]
[li]More capital is invested in them by business than anywhere else in the world, other than in a few smaller economies like Hong Kong. [/li][li]They benefit from the best infrastructure in the world. Access to energy, transportation, goods and services, and education. [/li][li]The live in an environment of comparatively low taxes and low regulations, making it more attractive for businesses to set up in their country than in say, Germany.[/li][li]They work harder. The average number of vacation days is much lower than in Europe. They work long hours, and they work hard. [/li][li]They live in a country which practices mostly free trade, allowing them to sell their advantages to the world.[/li][/ul]

Be wary of any ‘solution’ that messes with these advantages. Raise cost on business, lower productivity of workers, tax them more, place more regulation on business, restrict trade, and you will hurt employment.

Europe does many of the things people are suggesting in this thread. The average unemployment rate in the EU is much higher than the U.S. The unemployment rate in France and Germany is almost double what it is in the U.S. I would not seek to emulate their ‘solution’ to the jobs problem.

But I have to finish by saying that 5.6% unemployment does NOT define a ‘jobless economy’. In fact, it’s lower than the post-WWII average for the U.S., and not much higher than what would be considered full employment. The jobs situation in the U.S. is actually very good. For the reasons I stated above. Don’t screw with them to fix a problem that doesn’t exist.

17

There is nothing that prohibits Americans from moving to China or India to take up work. They go through regulations just like the company that is trying to out-source.

And, Sam Stone, I completely disagree with your characterization that Americans work the hardest and longest. Have you been to South Asia or India? Middle-management works long hours 6-7 days a week and it borders on exploitation. The out-sourced jobs that people here complain about go to employees that bust their balls. I don’t know enough about the conditions in Europe but I do know that the invisible protections that workers have in the US economy is non-existent for many Asian countries.

18

Did you actually read the FT article I linked to about health care above, Sam? It says GM spends an amount equivalent to half the UK’s health budget on insurance for its workers.
If you can imagine government health care being more expensive than that remarkable expense (remember, that’s at one company here in the US), or if you can imagine GM being taxed for a government program at a rate equivalent to half the UK health budget, well, you’ve got a better imagination than I do.
The problem here in the US, having seen it close up through my wife, who’s an MD, is that we have a crazy-quilt system whose victims are twofold: people without insurance and companies like GM that provide insurance for their workers. People without insurance go without or pay very high rates when they go for care. GM pays, through its insurance and through the taxes it pays, both for the care of its employees and for that of people not in its employ. The whole system, and that’s a very loose use of the word, believe me, spawns a massive private bureaucracy whose only purpose in life is to check, re-check, and re-check again for fraud, waste, questionable procedures and questionable drugs. That bureaucracy is replicated over and over at every private health insurance provider. And, of course, it’s paid for by companies like GM.
Meantime, employees of large corporations get the best care, with that level decreasing as the size of the company that employs you decreases. That is a huge disincentive to work for a smaller company, which is precisely the opposite of what you would want to encourage if you want growth, since most growth occurs through smaller companies, not larger ones. That growth has got to be hampered by the fact that the current US healthcare system encourages the best people to work for as large an employer as they can.
You couldn’t come up with a more expensive, inefficient, economically counterproductive way to deliver health care if you tried.

19

I would rather the government purchase goods and services for the lowest price, regardless of where they originate, and pass the tax savings onto us.

20

[QUOTE=Evil Captor]
All for it. Even the most ardent free-market capitalists tend to gag on slave labor. Let’s keep the race to the bottom from hitting the absolute bottom.

[QUOTE]

No, actually some ardent free-market capitalists accept that, while child labour does indeed suck the big one; unless a credible alternative can be presented, child labour is indeed the lesser of two evils.

In fact, we believe that the way to end child labour is to trade more with those countries so that we can pus their GDP up high enough to stop this practise. All a trade sanction is going to do to these countries is to make the families even poorer, neccesitating even more child labour just to survive.