Economic Update: Unemployment: Cruel, Wasteful, Unnecessary

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On this week's show, Prof. Wolff criticizes unemployment - as a specifically capitalist irrationality - and advocates "re-employment" as a far better policy. Gov't jobs and worker-coop development are key means for re-employment. Very socially necessary jobs are detailed that further encourage re-employment, instead of unemployment.

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This Transcript has been edited for clarity

Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives: jobs, incomes, debts, those of our children, and our own. I’m your host, Richard Wolff.

Well, with the cataclysm of over 30 million Americans unemployed, roughly one in five—remembering that that’s actually an undercount of how bad it is—we have to talk about this cataclysm of unemployment. Today’s program is, therefore, devoted to why and how we can do better than unemployment. We don’t really need it. It is very cruel to the people who suffer it directly, just about is cruel to those who suffer it indirectly when someone close to them is unemployed. And here’s the worst of it. It’s not necessary. It’s a waste of human resources and all the means of production working people use, sitting idle. It’s a waste, but it’s also a terrible inefficiency. And it’s all about our economic system—capitalism. And that’s in a way what we have to make sure we all understand.

So let’s begin. Unemployment happens when a capitalist, an employer, finds it more profitable to fire a worker than to hire one, either doesn’t hire them in the first place, or fires them if they were already working. There it is. Unemployment is a decision made by employers to take away your job. Number two, unemployment always involves redistributing wealth. You may not have thought of it that way. Let me show you that that’s always involved. We begin by remembering what you like when you’re not unemployed—you’re working. You take things out of the economy—the things you consume—and you put things into the economy—the things you help to produce. You take, you give. When your unemployment, you continue to take, you don’t stop eating, you don’t stop drinking, you don’t stop etc. But you do stop working. You take out of the economy, but you don’t put back in, because you’re not employed. That means that part of the wealth produced by the people still working has to be redistributed. They don’t get it, you do, because you’re the unemployed person who’s taking, but not giving. How do we get that done? We redistribute wealth, for example, socially by taxing the employed people and using the money giving it to the unemployed so they can go to the store and buy what they take. And that means the people who are taxed can’t spend the money they pay in taxes. That’s how the redistribution gets done. But you also do it in your home. If one of the two members of an adult family are unemployed, the other one shares the one who still has the job. That’s another redistribution that wasn’t necessary before. But here’s the punchline—unemployment isn’t necessary. You know it’s a cruelty for the unemployed, how people feel about themselves if they can’t work, if they have to rely either on taxes, or on the sharing of a spouse, or a friend, or using up their savings—you know this story. But here’s the double irony—capitalists lose too. Because if they don’t have people working, they’re not going to make profits. So everybody loses from unemployment—the workers who are unemployed, the people still employed who have to help take care of those that are unemployed. And even the employer loses. So why does this happen, this unnecessary bad for everyone thing? It’s because capitalists have reasons to suffer the losses of unemployment in a way workers don’t. There’s nothing in it for workers, but there is something for employers. Here we go. They figured out they lose less profits laying off people than if they kept them there, because the wage they pay the worker is more than the profits they can get from having him or her there. And the minute that happens, they fire the worker. So they’re taking care of their business. But there’s another reason. It’s kind of good for capitalism to have unemployment. Yes, it’s bad to those workers aren’t making profits for some employer somewhere. But all employers know that if workers are always unemployed, it’s a kind of a discipline for the workers that they have. “Don’t you act up”, the capitalists can tell the worker, “because there’s lots of unemployed out there I can go give this job to.” In other words, capitalism for its own reasons of profiting the employer does something bad for the unemployed and even bad for the employer, because the other part of this system says, “You better do this thing.” It’s the irrationality of capitalism, the crazy system that needs to keep people unemployed even though nobody wants it. Because that’s how the system allows the employer to keep the upper hand at the workplace.

But, you know, here’s another way for me to get at it with you. Here’s something much better than unemployment. I’m going to call it re-employment. Here’s what I mean. We don’t allow unemployment. Let’s say we don’t. What it means is this. The minute a private employer doesn’t hire you or fires you, you are immediately re-employed. You are put back to work. You’re never on unemployment. We outlaw unemployment, you know, like we outlawed slavery, or we outlawed peonage, or debt prisons, or all the other horrible things of the past we got beyond. Here’s what would happen if there was never unemployment. There’d be no need to redistribute wealth or to fight over how we do that, to fight over taxes, to fight over sharing scarce output. We wouldn’t have that problem. We wouldn’t need to redistribute wealth, because they weren’t depriving anyone of a job. Number two, we wouldn’t have all the suffering, the cruelty for the people who undergo unemployment. And third, we would not be paying benefits—that’s what we call the money we give unemployed people—without getting something back from them, which is something that has earthed many of you and for good reason. And here’s another irony. We’ve already done that. What do I mean? We have already said, “We won’t have unemployment. We will have re-employment of anyone who loses their job.” We did that in the Great Depression of the 1930s. Let me be real clear. Between 1934 and 1941, those key years of the Great Depression, the federal government said to workers who were fired by their private employers, “We, the government, will put you back to work. We will re-employ you.” The government became what we call “the employer of last resort”. If the private sector either cannot or will not give you a job, if the private employers choose to fire you, we, the government, will hire you. Here’s what that achieved. Millions of workers—we estimate about 15 million—millions of workers in the 1930s did not have to turn either to the government, or to their relatives, or to the church to get benefits to survive. We didn’t need to pay unemployment benefits, because these people weren’t unemployed. They were re-employed by the government. The government hired them, and the government paid them a salary—no unemployment. And by paying them a salary, rather than giving them an unemployment benefit, here’s what they got. Those people gave back to society. The people hired by the federal government were put to work. They were given the tools and the equipment to work with. I’m going to give you two brief examples. One was called the WPA—it’s not important what the letters refer to. These were artists. What an interesting idea: to all the people who lost their job as singers, dancers, painters, sculptors, craftspeople of one kind or another, they lost their job, the government said, “Come. We’ll hire you.” They hire them. They created teams of actors, of poets, of writers, and they moved them around the United States to provide lessons and performances across the country. It was the greatest cultural production in American history. People who have never had a theater troupe in their community, had one. People who had never taught young people in the community how to paint had that. It’s spectacular. The other program the government hired people for was the Civilian Conservation Corps. They were the first people to do ecological environmental projects across America. They reforested the land. They got cleared swamps. They redesigned rivers. There were other examples. They built the national parks that many of you enjoy going to in the western part of our country. Wonderfully useful projects were produced by people who were paid. What a wonderfully better way of doing things than letting people languish on unemployment.

What the U.S. didn’t do in the Great Depression is also important. They could have put people back to work. They could have re-employed the unemployed by establishing worker co-ops, saying to unemployed people, “Here, we’re going to give you the funds and the system. Set up your own little business, your collective co-op business. You know something, you’ll give back to the society, just like if we hired you. But you’ll do something else. You’ll create a new way of doing business, a collective democratic community way of doing things.” Wow. “You teach the American people, as well as yourselves, what it’s like to run a business in a co-operative way. You, perhaps, decide to continue when this crisis passes and build a whole sector of the American economy that was worker co-ops that would allow all Americans to compare what’s that like. Maybe we would like that better than the capitalist hierarchical top–down system.” Wow. We could have had an experiment beyond all words. We would have learned a new way to produce to organize to build democracy at the workplace, which is where it’s long overdue if you think about it. We could have even short turn the bad thing of unemployment into a good thing, giving Americans real choice in, for the first time, in how to organize their economy, because it would be a choice, because they’d know what the worker co-ops that emerged out of the unemployment period what they were like, what they could do and on that basis they could make that choice.

All right. This is a real understanding that we don’t need the unemployment we have suffered. It is not the only way. And it wasn’t the only way back in American history. People sometimes ask me, “Well, why don’t people know that we had federal jobs in the Great Depression?” The reason we don’t know, that’s a problem of our education. I was struck in the early days and months of the Obama administration, back in 2009, why didn’t we have a federal jobs program then? How come a Democratic president, the power of the Democratic Party, somehow had an amnesia attack and forgot that the last time we were in a crisis like 2008—and remembered today’s is much worse—there was no discussion back in 2008 and 2009 about a federal jobs program. And there isn’t one now, which is one of the reasons why we’re having this program today. There ought to be. Otherwise, we’re not only not learning from history, we’re condemning ourselves to an unemployment that is unnecessary, wasteful, and deeply inefficient.

Okay, folks. We’ve come to the end of the first half of today’s program. Please remember to subscribe to our YouTube channel. Follow us on FacebookTwitter, and Instagram. And be sure to visit democracyatwork.info. That’s our website where you can learn more about other Democracy at Work shows, our union co-op store, and the two books we have already published: “Understanding Marxism” is one, and “Understanding Socialism” is the other. And lastly, a special thanks to our Patreon community whose invaluable support helps make this show possible. We’ll be right back with more on how we can do better than unemployment. And I’m going to provide you with a list of precisely what we, employed people, could be doing in the United States right now that would dramatically improve life in this country, compensating for the waste of unemployment with the prosperity, in real terms, that a re-employment alternative would provide. Stay with us. We’ll be right back.

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Welcome back to the second half of today’s Economic Update. In the first half, we gave you the arguments of why unemployment is a waste and re-employment is a much better alternative. In this second half, I want to go through how and why, very concretely, a re-employment program here and now is the better way to go.

So let’s begin. We could have a program, as I indicated, that combined federal employment jobs created by the federal government and worker co-ops in which the federal government provided the support, the encouragement, the funds, and then wrote contracts with such worker co-ops to produce goods and services for the United States to consume. Now we could give unemployed people a choice if we wanted to between unemployment and re-employment. And we could make the incentives built-in in the sense that what you could earn in a worker co-op or what you could earn in a federal job would be more than what you get from simply sitting unemployed. And that would make a certain sense and would allow, perhaps, for a few people to remain unemployed if that’s really what they wanted, but it would show what the society prefers and—it’s clear in my mind—most unemployed people would prefer it as well, even without the incentive, but the incentive could be applied. More important is for me to be able to go through with you, which I’m going to do now. What the re-employment could be used for? What these unemployed people could be giving back to society if they were just given the opportunity, which the unemployment system does not do?

So let’s begin. The first—and it’s the one on my mind as it is on yours—is a national mass testing program so that we can divide the American people into three groups. That’s right. Let’s use millions, if we need them, of the unemployed—we have 30+ millions, remember—to do the kind of testing quickly and nationally that we have needed for at least the last two months and still don’t have. As I am speaking, less than 2% of the American people have been tested. And why? Because it’s crucial. Let me explain. When we test everybody, we will know who’s not infected. That’s the most important group for us right now. The people who are not infected should be known, identified so that they can be trained—the unemployed among them—can be trained to be testers to do the job of testing quickly everybody that we need. Because they’re not infected—and that’s what the testers will identify—the not-infected are the ones who should be sent back to work the soonest, because they don’t endanger neither the public they interact with nor one another. And the testing, you know, has to be done continuously. A lot of folks are not understanding that. You may not have it this week, you may have it next week. The testing has to go on and then we will be safe in knowing that in these, and these, and these jobs non-infected people are there. The second group that they will identify these testers are people who are infected but have no symptoms. Those are not as safe for us as first group, but they are less likely, because they don’t have the symptoms to pass the disease, not so quick to cough, they don’t have their explosive behaviors that sometimes go with desperate people. And then the third group are the infected who need help, who need treatment or sequestering. And we will do that. That will do the job of keeping us safe and allow us to go back to work, which many people want, in a safe way. The unemployed could help. They want to work. We need what they could produce. Having these people not do that is unnecessary, wasteful, and deeply inefficient. We shouldn’t let a capitalist system deprive us this way. The unemployed want a job. We need the testing. And this capitalist system can’t put them together.

Let me go on and give you more. We have a climate change crisis. You don’t hear about it so much, because the virus, which by the way is itself part of our environment, has taken away all the headlines. But we are desperately in need of dealing with global warming, with climate change. Unemployed people could be reforesting huge parts of America. Planting trees is something that can be done with social spacing. Plus, we’ll know from the testing who’s not infected, who doesn’t have the problem, who can be put on the front lines. We need to build parks. We need to recapture the carbon that goes into the atmosphere and causes our problems with rising temperatures. We need to reduce carbon emissions. We need a mass public transportation system so that we rely less on the private automobile, which is the single largest source of air pollution in our society and burning fossil fuels and so on. We could do with the unemployed coming to work to do these things.

Here’s another example right from our present dilemma. We could use unemployed people to do what private capitalists didn’t do. They can now produce, and they can stockpile, and they can monitor test kits, masks, gloves, ventilators, beds, hospitals, ICUs. In other words, we can be prepared for the next wave of this coronavirus or any other virus or pandemic that comes. We can have the preparation, using the unemployed, created by being unprepared for this one to make sure that doesn’t happen again. That will give unemployed people very meaningful work that is very socially useful and that we badly need. Instead of wasting the resource of unemployed people, we could become safe for our children and for the generations to come.

Here’s another example of what the unemployed could be doing if we re-employed them either as federal employees or as worker co-ops. We have to reorganize all production facilities: factories, offices, stores so that they are safe. This means things that are very practical. You have to reconfigure where the machines, the desks, the counters are so that we are far apart, far enough apart to be safe or at least have the option easily to translate our businesses into socially self-distancing as needed. We also need a new commitment to cleaning and disinfecting on an ongoing basis. There need to be people trained how best to do that with the least disruption of the life of a factory, or an office, or a store. The unemployed could be made to be those trained people.

Here’s another one. There always strikes me—I’m a teacher. All of these unemployed teachers from kindergarten through college, what are they doing? They could be organized to do tutoring. Millions of people need to learn, need to be educated such as school children, although they come first, but adults. Let’s have a real continuing education mentality. Let the people who are unemployed, who have skills—all kinds of skills—begin to teach them one-on-one to people. We had the social media that can allow us to do it. We have plenty of it. It just needs to be organized. Those unemployed people who have skills—which is most of them—could be in a position of teaching and sharing them with people who want to acquire them. That’s how to take the ineffective, inefficient reality of unemployment and make it a much more successful reality of re-employment.

And let me continue. We have many dilapidated homes and housing structures in this country. They need to be rebuilt, you know, for home, for our homeless population. We have infrastructure requirements: roads, harbors, riverbeds. There’s lots of work to do. The unemployed can and want to give back to the society. They prefer a job where they get paid and they do something useful to sitting with unemployment. Unemployment is an invention of capitalism. An unemployment compensation is also an invention of capitalism. Capitalism needs to fire people when it’s profitable. And it needs to have a kind of reserve army of unemployed people out there, so that all workers are well-disciplined, because they’re fearful that if they misbehave, they too, will be fired and replaced by one of those that are out there desperate for work. But don’t be fooled. Unemployment is good for capitalism and for capitalists to stay on top. It’s not good for the unemployed people. And here’s the irony—it’s not good for the capitalists either. They’re losing profits, because the people who aren’t working could be working and making profits for them. But this system has decided for them—they’d rather suffer the loss of unemployment than suffer the risk that if everybody’s working well then workers won’t be scared and they won’t be quiet about having adequate conditions, safe workplaces, a decent balance between their personal life and their job and so all of those arguments that you know well.

Here’s the bottom line of what I want to get across—unemployment is a cataclysmic waste. Unemployment today—over 30 million. We have the crisis of the virus. And this society, particularly, I’m here talking about the United States, but there are other countries that are involved too. Our capitalism failed to prepare for this virus. It wasn’t profitable for companies to produce the tests, the masks, the gloves—all of it. So they didn’t. And a government that thinks private enterprise is the beginning and end of all wisdom and wisdom didn’t come in and say honestly, “Private capitalists didn’t produce, and store, and stockpile all those things we need. So we, the government, will make up for the failures of private capitalism.” They can’t say what I just said. They can’t believe it. They can’t allow it. They are the creatures of capitalism, our political leaders, as much as the CEOs of the company. So they failed to prepare. But then they made that failure worse. They doubled down on failure by throwing thirty million people out of work on top of the risk to our health. We should have been prepared—we could have been. And we should never have followed up the crisis of the virus with unemployment. We should have responded in the way Americans at their best can. If we can’t work safely in these ways because of a virus, let’s work in these ways. But having people sit there, feeling bad, because I have no job, feeling doubly bad, because they’re crammed and cooped up into an apartment, because it isn’t safe to go out. That is imposing on people to disasters when neither of them were necessary and fundamentally neither of them is excusable.

We are living through a collapse of capitalism in the face of a virus and in the face of its own unfortunate tendency to think that unemployment is a reasonable thing for adults to do. It never was and it isn’t now. We can do better than unemployment and I’ve tried to give you as concrete and particular a way of seeing that as possible. But re-employment is more than a better alternative to unemployment. Re-employment allows us to not only give people the dignity of the job, but also to create the option of worker co-ops for Americans to experience to see, to have them foster, to be present in every community so we can decide what kind of a mix of capitalists and worker co-op enterprises we want. Re-employment is not only better than unemployment, it teaches us what it means in practical terms to do better than capitalism. Staying with capitalism now is wasteful and unnecessary too. We can do better.

Thank you all for your attention. And I look forward to speaking with you again next week.

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Showing 5 comments

  • Sonny Wiehe
    commented 2020-05-22 10:47:47 -0400
    In a Democratic Republic, the function of government is defending attacks by foreign peoples or nations, the making of laws and regulations, and enforcement of those laws and regulations. That’s it. In the U.S. all these functions are supposedly done in the context of checks and balances between the executive, legislative, and judicial branches of government. In all of these aspects of a civilized society, government represents a cost burden, not a productive asset. Always has, always will.

    If you want to think of it more simply, take the example of 20 people establishing civilized society on a formerly deserted island. The primary objectives of that society is the production of food and shelter. Everything else (golf, tennis, education, contemplating ones navel, etc.) is secondary. Government is not required. Government is only required when problems arise regarding defending against foreign invaders and internal strife whereby some inhabitants are infringing on the civil rights of others. The need for the primary issue of collective self defense is self explanatory. In the later case, legislators, judges, and police are appointed to address the more complicated resolution of civil right s infringement. Suffice it to say, that those functions only serve to take away from the production of food and shelter. So whereas 20 people were all formerly (and ostensibly) contributing to basic sustenance, maybe only 15 or so are now able to do it, because the “work” of government has to be done. Eventually it devolves where government “work” takes up to 80-90% of the collective group effort of providing food and shelter and maybe only 2-3 people are now able to produce everything NEEDED (not wanted) for the 20 inhabitants. Why? Because, in a nutshell, some inhabitants feel they have become more equal than others. That is where it becomes unsustainable and civilized society collapses. Civil society collapses because of the dead weight burden of government This is the premise of George Orwell’s “Animal Farm” and the full, natural cycle of revolution is beautifully laid out there by him (not coincidentally) at the culmination of WWII in 1945. I just gave you a more crude, cliff note version with my deserted island analogy.

    Notice that nowhere in the mission of a democratic, republican form of government lies a mandate for the production and distribution of goods and services. That function of society lies strictly within the private sector. The problem with the U.S. is that private sector oligarchs have usurped the legislative and regulatory power of government and vice versa. This dates back to at least our industrial revolution and was well in effect before, during, and after the Great Depression.

    Profess Wolff and Mr. Figone fail to point out any of these fallacies with government providing imaginary “jobs”. These two may want to revisit some basic history and classic literature work before pretending to provide any potential remedies for civilized, democratic, and republican society.
  • Bob Figone
    commented 2020-05-22 09:43:35 -0400
    Wow. You both missed the point of the discussion entirely. Your knowledge and understanding of the country’s recent history back to the Great Depression and the start of industrialization is your gap. This causes you to miss the importance of Re-employment by government when private employer lays you off as discussed by Richard.
  • ishi crew
    commented 2020-05-19 13:36:21 -0400
    I am currently unemployed tho i get a few ‘odd jobs’. Most of my ‘odd jobs’ are actually a form of cruelty. My background is in science and education but i losty those jobs (academic science is highly competetive and my field was unpopular so i end up fixing up rich people’s homes—-breathing lead paint for 15$/hour. Sometimes the people are ‘nice’ because i am a ‘good worker’ so they give me a free 6 pack of beer and pack of cigarettes so i will come back. They don’t like me studying science during my breaks or after work—they say drink the beer instead.) I quit these jobs after collecting a few paychecks.)

    I heard Dr Wolff on WPFW radio—he is against a basic income—-says it makes you lazy. "You will becollecting free money, wasting time reading mathematical biology, physics and economics when you could be socially productive by breating lead paint for rich people who don’t want to clean out the lead paint in their house. A mind is a good thing to waste, but strong arms are not a good thing to waste—and if they aren’t strong then you can build them up by doing hard labor. ’
  • Sonny Wiehe
    commented 2020-05-13 21:24:34 -0400
    Professor Wolff: “Unemployment is a decision by an employer to take away an employees job”.
    I take exception to this definition as inaccurate. Why? Because in some cases (certainly in the case of Covid19 emergency declarations and lock downs by Fed, State, and Local government) the employer has no choice but to layoff employees if the market demand (which may have nothing to do with actions of employer) evaporates or regulations are put in place by government that make employing employees unprofitable or, in other words, economically unsustainable.
    In my opinion, Professor Wolff needs to address this fundamental flaw in his argument before continuing with further premises he offers.

    Bottom line is the government cannot (and should never) be in a position to compete with private enterprise in a capitalist based society. Why? Because government doesn’t pay taxes and automatically has a vast edge that makes private enterprise noncompetitive. The only time government can operate fairly in system of distribution of goods and services is within a communist society. Professor Wolff intimates that democratic co-op’s is the answer. It can’t be. Democracy historically doesn’t function in a communist society becomes it quickly becomes corrupted. Wish it didn’t, but it does. Capitalistic society become corrupted as well. It just takes longer.
  • W. S. Smith
    followed this page 2020-05-11 23:18:33 -0400

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