Almost nine million people aged 16-64 are ‘economically inactive’ in Britain, and few of them are independently wealthy.
And we are doing comparatively well in that department. Germany and the US are only marginally better off, other European countries are much worse. For example, youth unemployment in southern Europe is around 30-50 per cent.
The disastrous consequences are self-evident. Lower employment means a lower taxation base, which makes the governments’ social obligations impossible to fulfil.
Modern governments have no pot of money out of which they pay state pensions. Instead they run a sort of Ponzi scheme, hoping that the money paid in by some people today will be sufficient to pay for other people’s pensions tomorrow. What if it isn’t, as is increasingly appearing likely?
Other, non-economic, consequences are even worse: hordes of young jobless adults turn into a knife slashing the social fabric. Alienated, robbed of any dignity, they become a ballast on society, often a threat to it.
The burden of providing what Dr Johnson called ‘the necessaries’ falls on the state, which either has to extort more taxes out of the economy or run deficit budgets and service huge public debts ($20 trillion for the US, £2 trillion for us).
Everyone knows that mass unemployment is a deadly blight. The lapidary question asked by the pragmatic Anglo-Saxon mind is: ‘What are we going to do about it?’
Before treating a disease we must first establish its aetiology. Pandemic unemployment is caused by multiple factors. Some of them, such as a steadily deteriorating education and wide availability of welfare, have the same source: socialist politics.
Such problems are easy enough to fix in theory. In practice, they are next to impossible to fix without a tectonic shift in political Weltanschauung. That isn’t going to happen without a global catastrophe, such as the collapse of the monetary system or a devastating world war.
But at least one can think of a solution, if only in theory. Two other problems seem insoluble even in that realm: globalisation and computerisation.
Turning the whole world into effectively a single market means that labour will go where labour is cheap. Hence we all wear clothes stitched together by undernourished people, eat food produced by effectively slave labour, use energy generated by those subsisting on what we spend on restaurant tips.
And computerisation enables a chap pushing buttons on a console to do the work of a hundred men with mouths to feed. With the best will in the world (which in this world is rare), even if they all learn how to push those buttons, there aren’t enough buttons to go around.
As a result, manufacturing makes an ebbing contribution to GDP in the West (only about 10 per cent in the UK, 12 per cent in the US). And even the curves of value-added manufacturing look like a downhill slalom.
‘Conservative’ (in reality liberal) economists are ecstatic: both tendencies benefit Western consumers by reducing prices. They see nothing but positives in negative trade balances. Thus, for example, their guru Milton Friedman: “Our gain from foreign trade is what we import. Exports are the price we pay to get imports.”
The immediate monetary price, yes. But looking beyond today and even – dare one say it – beyond just today’s money, there’s an awful social, moral and, down the road, economic cost of millions unemployed.
What are we going to do about them? Are they all going to become systems analysts, computer programmers and fund managers? Somehow one doubts that.
I wish I had a ready answer, but I don’t – not without a complete reversal of modernity, which is an appealing pipe dream, but a pipe dream nonetheless. More worrying is that our ‘leaders’ don’t have a clue either.
Whatever their politics, they’re painfully aware of the problem. Yet at best they can offer only palliative measures that may delay the impending catastrophe but not thwart it.
Witness two politicians very much in the news, Donald Trump and Benoit Hamon, the Socialist candidate in France’s presidential election. Much as I detest socialists in general, and Hamon in particular, he seems to have a wider understanding of the issue, though his proposed solutions are still inadequate.
Trump wants to counter the effects of globalisation by protectionism. Manufacturers will be rewarded for having their plants in the US and punished for moving them abroad. At the same time, Trump is threatening stiff tariffs on imports.
One can understand where he’s coming from, but ultimately such measures aren’t going to work. Their immediate effect will be price increases across the board: labour will no longer be cheap.
The long-term effect will be even greater computerisation: businesses exist to make profits, and expensive labour will be even less competitive with the aforementioned buttons.
Hamon’s solution is two-fold. First, he proposes that every French adult be paid €750 a month, no questions asked. That way, he says, people won’t have to work if they don’t want to or can’t. Second, he wants to tax robots, thereby countering the effect of computerisation on employment.
Interestingly, both Hamon, who’s a communist in all but name, and Trump, who calls himself a ‘pragmatic conservative’, are proposing blatantly statist measures designed to give the state an even greater control of the economy.
This is yet another proof that teleologically all modern governments, whatever they call themselves, pull in the same direction: empowering the state at the expense of the individual. The two gentlemen will make neither America nor France ‘great again’. They will, however, make state power even greater – which is an ineluctable effect of modern politics.
Unemployment and other structural problems of modernity will persevere for as long as modernity does. Within the confines of the thought inspired by the Enlightenment there can be no solution to the problems created by the Enlightenment.