The era of 5% unemployment is a distant memory. A glance at figures provided by the Bureau of Labor denotes familiar peaks and valleys; the spikes of joblessness in ’75 and ’82, the dot-com bubble of the 90’s, and today’s sobering new economic reality which questions the viability of the five day work week. This discontent has spawned a “tea-party”, an incoherent “occupation”, and sown the seeds for future discontent and social upheaval. Government’s attempts to maintain acceptable levels of unemployment while pacifying a multitude of special interest factions have failed. These wrongheaded measures may provide sugar highs for the Dow, and create a false sense of wealth, but do nothing to address the fundamental ills of spending beyond our means, and trading below our potential.
One way to maintain low levels of unemployment is by “inaugurating self-liquidating public works to provide employment for all surplus labor, at all times.”[Wikipedia] This was the expressed intent of FDR’s 11 billion dollar Works Progress Administration. These projects may have suited the threadbare 30’s, and may have a place in today’s economy, but these are short-term remedies that provide momentary relief through capital infusions, but do not address the long-term viability of work. Over time, we have seen a widening rift between the Government, (with its delirious pensions and benefits) and the realities of the private sector. Presently, our American bureaucracy, with its various boards of overseers, attending crews of consultants, legions of quality control agents, trouble-shooters, assistants and employees has grown unsustainable. Various government “safety nets” ( entitlements, regulations and laws) designed to insure the people’s security are precariously sustained by taxation and the indiscriminate printing of money. It is important to note this process is replicated by state and local governments. If this exasperating redundancy is not enough, remember, we’ve yet to even broach the topic of unions, with their pensions, benefits and work rules! For every municipal worker you encounter, Police, Fire, Teachers, the taxpayers are providing pensions and benefits for scores of their retired colleagues. These commitments are maintained through fees, fines and taxes, revenue raising measures not available to small businesses. “We find that while the average U.S. federal government employee makes $14,632 more in direct cash income than their private sector counterpart, at $74,436 versus $59,804, the extremely generous benefits with which they are also compensated boosts their real income margin by $26,632 over the average private sector income earner, putting their total compensation at $114,436 versus $87,804.”1. If business operated at this level of compensation, devastating inflation would surely ensue, crippling exports while expanding the ranks of those on the dole.
The only explanation for this shortfall is that politicians made promises that they could not keep, hamstringing their successors to untenable bargains, as they kicked the can further down the road, offering assistance to an ever increasing pool of dependents. In essence, promises made to one generation, become a burden to the next, as political assurances are plentiful but funds finite.
1 Town Hall Finance – Political Calculations | Jul 29, 2013