The future begins now: So, what to do (Part I)
This is the fifth of an eight-part series on changes to employment in the future, causes of this upheaval, and some possible measures to mitigate the disruptive effects. Most of what is described is applicable to western developed countries but middle-income countries such as Guyana are in the crosshairs. The difference is timing. Further, Guyana does not possess the skills-set to prolong the onset of these changes. The country has received some service outsourcing jobs but these are low-skilled positions. It is therefore shared with the public to help focus attention on the decision-making needed to avert the imminent calamity. In past series, I described the nationalist fervour sweeping America and Europe characterized by the emergence of Donald Trump and Brexit. The increase in income inequality is causing the stagnation workers are reacting to, and overpopulation leading to climate changes along with automation displacing overpriced labour, will have future ramifications. Here we start examining possible solutions.
The sky is falling! The sky is falling! But there is no need to run if the nature of the problem is understood and proven solutions applied. The problem is overpopulation and overpriced labour. Population control has been successfully tried, check with the Chinese if guidance is needed, so I will concentrate here on bringing labour costs into equilibrium. And the best tool to accomplish this is the unfettered market. In the short-term, the solution is to return government to the position of reducing inequalities in society but not as was done under the mixed economy model.
Under that model, the government in some cases tackled inequalities by interfering with the efficient functioning of the market (establishing minimum wages, promoting labour unions, gender equality, etc), which is the cause for the disequilibrium. All forms of labour restrictions should be eliminated and replaced with legislative workers’ rights on hiring, firing, work durations, overtime pay, severance payments, etc.
Under this new role, the government would participate only after the market has done its job and made its allocations. The working poor will increase from falling world demand and threat of greater automation in production processes. That’s because, if left unfettered, the market is an efficient allocator of resources but not a fair one. In other words, full employment would exist but at lower real wages creating the higher numbers of working poor.
Larger governments are needed to provide security, population control and to be the conduit of transfer payments from the haves to the have-nots. The wages from certain jobs would be so low that transfer payments would by necessity require direct subsidies to workers in the form of monthly payments similar to those paid unemployed persons in the past. These payments are not only needed to prevent unrest but to increase the demand for goods and services.
Government programmes could be refined to be more effective without distorting the market. For example, instead of making welfare payments to poor people, such payments could be tied to social and economic objectives such as having smaller families, sending their children to school and skill training for adults. Services that are costly, such as tertiary education and health care
can be provided, starting at no cost to the participant on a graduated means-tested basis.
Governments could allow labour to relocate to where the jobs are by the issuance of temporary work permits or provisional agreements between employer and worker. In other words, unlike what Conservatives in the US are advocating, governments would play a bigger, not smaller, role in the economy by supporting measures that reduce income inequalities without distorting the market. Where will the funding come from for this bigger Against the backdrop of controversies and litigation linked to importation of commercial quantities of mostly foods that fail to meet the country’s food and drugs regulations, Acting Director of the Government Analyst Food and Drugs Department (GA/FDD) Marlan Cole says the situation warrants the stepping up of initiatives to stamp out the attempts to import items that might do untold damage to the health of the nation.
Cole made this comment even as he disclosed that the GA/FDD had embarked on a series of stakeholder awareness sessions around the country with regard to the work of the department as it relates to monitoring the importation of food, drugs, cosmetics and medical devices. Importers apart, the sessions also target regional health officers, regional environmental officers and health representatives of the municipalities across the country. Cole said it was important that public officers in the health sector be made aware of the work of the GA/FDD so that they can play their supporting roles more efficiently.
Another important target group for the sessions is importers who operate food storage bonds where large quantities of imported foods are stored. According to Cole, the department had also initiated the sensitization sessions on account of complaints from importers who claim a lack of familiarity with the work of the GA/FDD.
In recent months the GA/FDD has had to respond to a surfeit of cases in which importers have failed to satisfy the requirements under the law in the matter of importing foods. While some importers have claimed ignorance of the law, others are believed to have sought, deliberately, to circumvent the authority of the GA/FDD.
The department has made public a case in which a member of its staff may have been enticed into forging the signature of the department’s acting director in order to secure the release of imported goods through from the Customs and Trade Administration. That matter is currently engaging the attention of the police.
While Cole has persistently declined to comment on this matter it is widely believed that unscrupulous businessmen have attempted to corrupt employees of the
government role? The major source of all government revenues is taxes – a levy on a particular good, service, return or transaction. This tax regime has to be carefully crafted because if governments soak the rich, they will simply move their money elsewhere, even finding it preferable to become Russian citizens as witnessed a few years ago, when France raised taxes on its wealthy citizens.
But the rich can be soaked without targeting their income. Actually, income tax is probably the worst form of taxation as it penalizes production, and should be phased out. Governments should raise their revenues by taxing financial transactions, the life-blood of the capitalists, and through a progressive consumption or value added tax. Both would have a disproportional impact on the rich.
What about the longterm? In 1923, John Maynard Keynes, the eminent economist, wrote that in the long-term we are all dead. But planning for the period just before we all die, requires a vision of what the world would look like then. Although by then, populations will be kept at sustainable levels from a combination of natural disasters and radical population planning, the wage levels will be lower, kept in check by greater automation in production processes.
The good news is that falling wages drag the cost-of-living down with them. An engineer in Asia earning a fraction of what a similar qualified one in the US earns, lives a comfortable life because the costof-living there is comparably lower. So lower wages do not necessarily mean a lower standard-of-living, and in the long-term, costof-living levels will be brought into equilibrium with wage levels.
Equilibrium also means that wage and cost-of-living levels will be the same worldwide, thus no need for dislocation of jobs. As world equilibrium is established between wage levels and cost-of-living, the support role of government is reduced, if not eliminated. If handled correctly, the future would have little likeness to what pertains today. The world would be less populated, less polluted, and fully employed.
In the next installment, I will examine a proposal from one of the progressive European nations intended to address the mass dislocation from automation.