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Regionalism: The Next Step for Globalization

by John Brian Shannon | June 7, 2016

Globalization was inevitable. Both the positives and negatives of globalization were inevitable. And we’re now moving into a more mature phase of globalization — a phase where common sense plays a much larger role.

After all, does it make more sense to import onions from thousands of miles away in Chile or Indonesia for example, or to grow them on the rooftop of your local big box grocery store?

Think of the CO2 emission savings alone as one way of many to demonstrate how unrestricted globalization works against our common good.

Globalization 3.0

Globalization 3.0 began around the year 2000 (with internet connectivity for large numbers of people and businesses) Image courtesy of www.intechopen.com Creative Commons Attribution License

For years I’ve talked-up the benefits of ‘Regionalism‘ where the largest share of goods and services are provided to consumers and business by producers and manufacturers within that economic or geographic region.

It’s not only in regards to fresh produce. With 3D printing and a regional facility ‘the latest thing’ can be manufactured in minutes, regionally, although the online order may have been received thousands of miles away — resulting in faster shipping and larger numbers of (regional) jobs, as opposed to the One Big Factory model, building ‘the latest thing’ in Shenzhen, China.

Of course it works both ways.

For Chinese consumers who want the latest Ford F-150 pickup truck, does it make sense to have one shipped from thousands of miles away in North America, or does it make more sense that Ford builds an assembly plant in China (and hires local workers) and fills orders from there?

I think there is still more growth to be milked out of globalization, but the next logical step is Regionalism which will cut costs, improve profits, and give consumers and business more and better choices. In high unemployment jurisdictions I would expect to see rates fall — perhaps dramatically, while low unemployment jurisdictions may see tiny improvements.

Although I agree with international trade agreements in principle, TPP seems excessively weighted toward corporate interests and not toward consumers or national sovereignty. For that reason I’m against it. The cloud of secrecy surrounding TPP certainly hasn’t helped. And the fact that someone of the rare and high calibre of Elizabeth Warren has doubts about it, tells me everything that I need to know about it. Full stop.

However, any trade agreement that enhances trade flows while enhancing national sovereignty and can show a distinct benefit to consumers and business alike should be aggressively pursued.

For me it isn’t about abandoning globalization, it’s about globalization reaching its full potential without destroying sovereignty, consumer trust, and entire segments of the economy.

It’s more about continuing to grow globalization (whenever that makes sense) and adding regionalism to the mix (wherever that makes more sense) and enhancing national sovereignty.

The day that Apple Computer is building iPhones in factories in every region of the world, that Ford Motor Company has assembly plants in every second country, every piece of clothing is manufactured regionally to the designer’s exact specifications, and most fresh produce is grown within 100 miles of its target consumer, that’s when we will see the maximum benefit from our investment in globalization.

We are where we are in regards to globalization and it has been a qualified success. But the potential of globalization + regionalism is one whole order of magnitude greater.

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NAFTA, TPP, or Tariff Me?

by John Brian Shannon | April 15, 2016

A long time ago when there were unicorns, there was a justifiable need for international trade agreements in order to spur trade, increase movement of capital flows and to promote movement of labour — but mainly to gain access to potentially larger markets in both developed and developing nations.

International trade agreements like NAFTA and even today’s TPP are throwbacks to a day when we didn’t have all of that. Many global economies then were practically closed markets, with few exceptions.

It’s almost the opposite these days — globalization has certainly prevailed — and it’s the rare country that isn’t buying or selling wares from around the world on a daily basis.

North Korea is a closed market, so is Japan (although it is a huge exporter) and only a handful of other nations could be considered ‘closed markets’ in any substantive sense.

In your home country you can probably buy a car, a music player, clothing, food, and almost anything else — and it likely wasn’t built, created, or grown, in your country.

Globalization has succeeded wildly and we now live in a globalized world.

How’s it working?

For the people in developed nations it has meant 25-years of inexpensive goods on store shelves — goods that were either built, created, or grown, in developing nations, which has been a real bonus for developed world consumers — and it has also benefited workers in the developing world.

Unfortunately, it also led to many high-paying jobs being sent overseas, resulting in higher unemployment and worse social ills than that in some developed nations.

Liberalized international trade has become all that it could be

Which is fine. It’s served it’s purpose and we now have open markets around the world with levelization of trade, capital, knowledge, labour, and general market equilibrium — if not market symbiosis.

But there isn’t much more room for globalization to grow. Other than tidying-up some intellectual and property rights regulations we’ve arrived at our free trade destination. We’re already living in the globalized economy.

Where do we go from here?

There are a number of things that can strengthen our domestic economies without turning back the clock to the (almost) closed economics of the 1960’s.

Ten Ways to Make Our Country Better and Stronger – While Helping Citizens to Succeed and Live Happier Lives

The Ten Ways: Increasing Intellectual Property Rights, Increasing Government Revenue Streams, Preventing Obscene Government Debt, and Enhanced Government Services Designed to Move the Bottom Economic Quintiles Towards Middle Income Status

  1. We and our trade partners should sign a simple trade agreement to protect intellectual property rights, one that includes universal patent, trademark and copyright protections. The point is to get it done now while it is still relevant. If we wait, there’s no point in bothering with it, as all the secrets (the patents, trademarks and copyrights) will be ‘out of the box’ and in the general marketplace. (The rule must be that we don’t trade with nations that won’t sign and abide by those laws)
  2. We and every country we trade with should pass legislation to allow a simple 5% tariff on every imported and exported good — from supertankers full of oil, to consumer electronics, to clothing, to food, — in short, everything. This simple tariff would replace all other import and export taxes/tariffs/levies and related charges. Billions of dollars of goods are imported and exported every month and the tariff revenue stream can be used by the federal government; To improve productivity by funding R&D, and to improve government services and infrastructure — or used to raise national GDP and quality of life for citizens, by reducing unemployment and to lower taxes on the poor and working poor.
  3. We and our trade partners that don’t already have a national Goods and Services Tax (of 7% for example) on all retail goods, should implement one immediately. This revenue can contribute to the overall economy to improve services and infrastructure, reduce unemployment, and lower taxes on the poor and working poor, and should be shared 50/50 with states or provinces — who after all, would be the parties responsible for collecting it.
  4. We, and every country we trade with should pass legislation making deficits of more than 4% of GDP illegal, at the federal, state, and municipal level. This prevents obscene government spending and prevents the trap of eternal debt servicing costs, once interest rates rise. Which they always do.
  5. Our own country and every country that we trade with should no longer charge income tax on those who earn less than the equivalent of $25,000. per year.
  6. We and our trade partners should pass legislation to the effect that every worker has the right to a minimum of 25 weeks of full-time employment, per year. Yes, it would require a job-sharing programme managed at the state level. Some workers may receive layoff notices in order to accommodate unemployed workers. On the positive side, long-term unemployed people could then contribute to the economy (and to their own personal income!) for a minimum of 25 weeks per year. In countries like Sweden, this is common in industries that can’t keep all of their workers employed, and it is normal for two workers to share the same job for many years (6 months ‘on’ and 6 months ‘off’) so that over the course of a year, every worker in the country will have worked a minimum of 6 months. Which keeps their skills sharp, makes them eligible for automatic unemployment insurance benefits during their layoff, and lowers the welfare rate to near-zero.
  7. Most government unemployment insurance programmes around the world pay 66% of a worker’s salary during periods of unemployment, often after a significant wait and a worker’s claim can be turned down for any number of strange reasons. It’s inhuman. Workers pay into unemployment insurance — it’s not their fault that there are millions more people looking for work than there are jobs available — because their jobs have been sent overseas since globalization began. In some countries, a brilliant solution exists whereby workers can opt to pay into a private unemployment insurance programme, one that can top-up their unemployment insurance payments to 99% of their normal salary for the equivalent of 1 or 2 cents per dollar earned. The employee merely indicates how much extra unemployment insurance coverage he or she wants to purchase, and the deductions are automatically made from their wages and directed to the private unemployment insurance company. The private insurer also begins paying unemployment benefits from the first day of a worker’s lay-off. Workers no longer need subsist on 66% of their normal income while unemployed. (Imagine working in the fast-food industry, living on subsistence wages, then getting laid off due to a slowing economy, and then having to exist on only 66% of your already subsistence-level wage!) NOTE: In Sweden, both the government-run unemployment insurance plan and the private unemployment insurance plan make a respectable profit, every year. That’s how easy it is to do, when it’s done properly.
  8. Every city, town, village or county in the country should have the option to receive a free website from the federal government for as long as certain information is continuously updated by the local jurisdiction. Simply by entering the name of a jurisdiction in Google Search, anyone should be able to find the local time, weather, federal, state, city, village or municipal phone numbers and addresses, emergency services and other essential services (like Hospitals and Veterinary Clinics) and employment information for that city, town, or region. Standardization is key so that workers looking for work, or visitors to a region can quickly navigate to and access important services without a frustrating search (or fruitless search, because not all jurisdictions have their own site or mobile-friendly site — but you don’t know that until you do an hour’s searching and discover that there isn’t one!) Quick access to important phone numbers and addresses can save lives and help to increase productivity.
  9. Streamlined government websites for self-employed people to set-up and begin working in one day with a minimum of confusion, stress and red-tape.
  10. Legislation to require internet service providers to provide basic internet plans of $10. per month with low entry barriers — enough to check emails, find a job, find rental accommodation, and perhaps practice the preferred local language in hopes of finding a job. The internet is an essential service in our era, and those entering the workforce or returning to work after illness, etc. need to be able to start somewhere.

It’s easy to look around the world to see what’s working well in other jurisdictions and write similar legislation.

Legislators in Sweden and Norway don’t have two brains nor any other super powers, that we know of. If they can manage to get these things done, so can we. And if we can’t, we’re not half as great as we imagine ourselves to be.

But we are! Therefore, all we lack is the will to act. So let us act, and help our country to leap forward by one order of magnitude.


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The Silver Bullet for the Economy

by John Brian Shannon | January 28, 2016

How balancing the economy can give us the best work/life balance.
Or is it the other way around?

U.S. work, life, balance

By legislating that every worker in the has the right to a job for a minimum of 6 months every year, we could solve inequality, poverty, and most social ills.

For those of us fortunate to be born in a Western nation, life is mostly about balance, and for our elected leaders it’s about how to achieve balance in the wider economy, and about the kinds of policies we’ll need for the future.

Thus far, our political and economic model has evolved. But let’s never forget that it wasn’t designed, it evolved. Big difference. (It might be the best Model T Ford ever built, but it’s still a Model T, if you catch my meaning)

And that’s exactly the conversation that we need to have

Here in North America, it requires only 1% of the workers (and presumably 1% of the total available investment pool) to produce enough food to feed everyone on the continent. Yet, we see major food distribution problems and it’s getting worse.

With regards to agricultural output and distribution, our North American model is the best devised but it’s far from perfect. And that is my point, instead of waging trillion dollar wars we should have continued to improve our economic model, especially in regards to the food distribution aspect.

I don’t think that we should be giving food away for free (except in emergency situations) but there are far too many Food Banks in operation for such an affluent society, and there is constant demand for more of them.

Q: And why do we have this particular symptom that I’ve singled-out for discussion?

A: There are far too many idle hands, and it’s because their jobs picked up and went to Asia — a process that began in 1973.

We could put an end to many social ills by employing every worker for a minimum of 6 months per year

By legislating mandatory job-sharing, every worker would be guaranteed a job appropriate to their particular skillset for a minimum of 25 weeks of full time employment, annually.

That means every worker has a full time job for a minimum of 6 months of every year and is then eligible to receive automatic unemployment insurance benefits during their (short) layoff period.

Mandatory job-sharing eliminates the need for ‘Welfare’

We know that long-term unemployed individuals eventually turn to welfare in order to be able to eat, have shelter, etc. once their unemployment insurance payments run out.

We also know that long-term unemployment eventually turns into substance abuse, crime, homelessness, and other social ills.

More crime = bigger policing budgets = bigger insurance claims/higher insurance rates = more citizens injured or terrorized by crime, etc… all of that are the symptoms of high and long-term unemployment, progression to welfare, and changes in the thinking of the individuals in such circumstances, including long term depression, withdrawing from society, anger, resentment, and more.

But with mandatory job-sharing the yearly unemployment rate would be 0% — that is, over the course of the year, every worker will have worked a minimum of 6 months. However, at any given point throughout the year the nominal unemployment rate would settle at 2.5%-3.0%.

With a job (and full unemployment benefits during layoff) long-term unemployment would become a thing of the past.

Keeping workers in a state of long-term unemployment brings on an OCEAN of troubles

Job-sharing is the answer.

By legislating that every healthy worker has a job for a minimum of 25 weeks annually, we could solve the worst inequality, poverty, other social ills, and dramatically and positively lower crime rates, insurance rates, policing and court costs, and enjoy a safer, more egalitarian society.

It’s so simple.

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