What Will We Gain from the Constant Increase of Unemployment, and How?
The new, balanced economy—a result of mutual guarantee among people, between them and the state, and among all the countries—will expose great surpluses and reserves, reduce inefficiency in the job market, and prevent the kinds of financial damage caused by the current system. Moreover, the anticipated dramatic increase in the number of unemployed in the world will accelerate and support the process of matching interrelations among people to the global and interconnected world.
The transition away from over-consumption and competitive, aggressive, and bloated industry, which produces far beyond what humanity requires, means that industries and services will shrink. The current race requires so much effort, funding, and attention from the entire chain of production and consumption that returning to a sane economy will be greeted with a sigh of relief.
For the cost of average wages, which the state will save through unemployment, it will be possible to finance scholarships for those ejected from the job market, as well as fund the emergency education framework to be established for recipients of the scholarships. The purpose of the emergency education system will be to equip the unemployed with practical knowledge in personal finance and life skills, and will assist their integration into a changing world that will be based on mutual guarantee.
The contraction of production during the return to functional economy will not harm the ability of the marketplace to provide for all the needs of its citizens’ sustenance. In a balanced economy, there is no need for 90% employment, nor even 50%! If only 20% of the work force were employed in agriculture, industry, and required services, it would suffice to satisfy the needs of the entire human society. Naturally, rotation among the workers and the unemployed can be applied, depending on the agreements that will be made in a society that follows the laws of mutual guarantee.
Thus, the change at hand is not a passing phase. Rather, it is a structural change in the global economy. In mutual guarantee, the symbiosis among people is complete, and those who choose to keep on working will be appreciated for their contribution to the collective well-being, and for the fact that their work enables humanity to keep evolving, existing in harmony among people, and between humanity and Nature.
The need to employ vast populations has created a colossal amount of redundant jobs, hidden unemployment, and bloating of mechanisms and bureaucracy, especially in the over-inflated public sector. A good example of such a faulty process is Greece, where the public sector is overblown and the country is on the verge of insolvency. One of the key requirements of the International Monetary Fund (IMF) of Greece is to substantially trim the size of its public sector. But Greece is only an example, albeit a rather extreme one, of a similar process that is occurring the world over.
In our current state of hidden unemployment and inefficiency, high wages inflate the expenses of the public sector, hindering the state’s ability to service its citizens. From a purely economic perspective, a person who is occupied in a job that is not beneficial to society brings more good when he is not working, even when he receives unemployment benefits.
The anticipated growth in unemployment will not harm the economy or those who have lost their jobs if the emergency plan is activated and people are paid a sustenance scholarship, provided they join the educational and social framework that provides them with basic life skills. In today’s complicated reality, they will learn how to adapt to the changes incumbent upon us by the global-integral world and become integrated in a society that lives by the principle of mutual guarantee. The expenditures saved, compared to the annual employment of such a worker, will be substantial enough to allow payment of sustenance scholarships to that person and to one additional person to provide for their basic needs. At the same time, it will teach them life skills and knowledge regarding the global and connected world, and the mutual guarantee.
For example, the average annual pay in England is £28,000 sterling (approximately $44,000 U.S.). Yet, an unemployed person aged 25 or more receives only £3,370 (approx $5,300) in unemployment benefits, adjusted to annual income. Even considering that the gap is lower in more welfare-oriented countries, the calculation is quite clear. If unemployment benefits are raised to approximately £13,000 ($20,000, roughly the average income of today’s bottom fifth in the UK), and considering the above-described price reductions that will take place in the mutual guarantee economy, the state will be able to pay scholarships to two people to join the educational framework and adapt their personal finances to life in the new world.
It is important to note that the government’s contribution to the Gross Domestic Product (GDP) is its added value, meaning the sum of payments that the government pays (or income that stems from the government).
Global unemployment will increase. It cannot be resolved with the traditional economic tools. President Obama’s The American Jobs Act [105], which focused on the U.S. job market and cost 450 billion dollars in tax incentives, was intended to boost the stalled American job market. Now, this Act joins three previous stimulus programs of different kinds that began in 2008. And as the previous programs failed, this plan is likely to fail, as well, as it was generated from the same old toolbox. The interdependence in the globally interconnected world appearing before us in this crisis necessitates different relations among us, and hence a new approach to solutions of economic problems.
Because all the industries in the connected world we live in depend on one another, unemployment will grow exponentially. The decline in income will necessarily induce a decline in consumption, and a natural transition will occur whereby industries will become proportionate to the needs of the people.
Unemployment is a natural result of the transition into proportionate consumption and the restoration of the “sanity” of the industry. That process will halt the exploitation of earth’s depleting resources and in time will increase the resources available for humanity’s use. The current inflated economic system is wasteful and causes social and environmental harm, demanding huge budgets to mend the damage. This is a vicious cycle whose toll on humanity is immense. The transition to a balanced economy will save the majority of those funds, which can then be turned toward the benefit of the public.
The financial sector, too, is blown out of proportion and is the main reason for the outbreak of the 2008 global crisis, from which the current crisis is a natural evolution. The pursuit of quick profits has become completely unrestrained, causing the financial and banking industries to inflate through reckless leveraging. By doing so, the mortgage banks and investment firms have created a sub-prime bubble, which exploded with a bang, igniting the global financial crisis. The damages from speculation and the resulting financial bubbles throughout the world amount to trillions of dollars. The effect of the loss of those trillions was felt by each of us, even if we were not aware that we were being affected.
The interdependence and the tight connections between the finance industry and the real economy caused the crisis in stock markets to spur a global recession. To succeed in the global and connected world we must sign an economic treaty and a social treaty, a mutual guarantee that will not allow such crises to occur because it will be clear to all that there we are interdependent. If we hurt others, we will be hurting ourselves.
[105] http://www.whitehouse.gov/the-press-office/2011/09/08/fact-sheet-american-jobs-act