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CHAPTER XIV

The Road Ahead

This brings us to the end of our task. By means of a systematic and orderly method of analysis, utilizing the standard methods and procedures of the physical sciences, the true nature of the factors governing employment has been determined, and this knowledge has made it possible to identify the modifications in our existing economic organization and policies that are necessary in order to reach the long–sought goal of permanent full employment at maximum productivity. Finally a sound practical program for putting these changes into effect has been outlined, a program which will not disturb existing economic relations in any important respect, but will accomplish the desired ends fully and effectively.

This program promises no economic miracles, no “Age of Abundance”, no life of untroubled leisure. On the contrary, the outstanding characteristic of the scientific approach utilized in this work is that, unlike present–day economic thought, it recognizes that there are certain inescapable realities in the economic world: we cannot get something for nothing; we must first produce that which we wish to enjoy; we cannot have our cake and eat it too; we cannot increase the total by redistributing its parts; we have no magic method of producing without working; all these and many more. The sound thinker cannot accept proposals which conflict with these fundamental limitations, no matter how praiseworthy their motives, for he knows that they can end only in bitter disappointment. But full employment and economic stability are not visionary goals; they are reasonable and practical objectives that can be reached by relatively simple methods, once the basic principles involved are clearly understood, and the community makes the decision to give these goals the priority that is necessary.

One of the principal obstacles that stands in the way of solving economic problems is the general reluctance to confine the remedial measures to the primary purpose. Almost everyone who takes part in the formulation of plans for action has some other ax to grind, some personal interest to be served, or some pet theory to be promoted, and not infrequently more attention is paid to the furtherance of these collateral aims than to the principal objective toward which the efforts are supposed to be directed. No doubt much of this injection of extraneous issues into the situation is done by persons who are entirely sincere and honest in their convictions. The human mind is so constituted that it is easily convinced by any argument in favor of proposals that operate to the individual’s own personal advantage. So the farmer believes that the shortest road to national prosperity is “parity prices” and other “farm aid”; the businessman contends that the best route is via lower business taxes and less restrictions on enterprise; the labor unions look upon higher wages as the cureall; while the sociologists see a heavy program of spending on paternalistic projects as the Great White Way to better times. But whether the advocates of such detours from the main objective are sincere, or are just trying to take advantage of an opportunity to advance their real purposes under cover of some more generally accepted goals, the result of emphasizing the secondary issues is always the same: progress toward the primary goal is inhibited.

In all probability many persons will be critical of the program that has been developed in the preceding chapters because it fails to correct what they consider serious defects in our economic life. Those who feel that a more equitable distribution of income is the greatest need of the present day will find the program lacking because it makes no change in income distribution; those who see the continued progress of the organized labor movement as the only hope for the improvement of the lot of the working population will consider it sterile because it gives the labor unions no new advantage; those who believe that organized labor is already unduly favored will regard the plans as faulty for exactly the opposite reasons; and so on almost without end. But the goal of this study was not the curing of all economic ills. Long experience in the physical sciences indicates that such broad and complicated objectives must be reached one step at a time, not all in one jump. The specific purpose of this study, as defined at the outset, was to set up a program which would enable us to institute and maintain full productive employment. In conformity with the standard practice in the physical sciences, attention has been concentrated exclusively on this primary objective, and the program that has been developed has been deliberately shaped in such a way as to make no change in existing economic relations, except where, and to the extent, absolutely essential to the attainment of the specific goal.

This does not imply a lack of sympathy with respect to other economic aims. On the contrary, it will be conceded that there is much merit in some of these collateral objectives. But proposals for attaining such ends should stand on their own feet. If they are sound, and meet with public approval, they do not need to be mixed up with measures originated for some other purpose. If they are unsound, or unacceptable to the public, they should not be permitted to sneak in under cover of some genuinely desirable objective.

The sound method of procedure, the scientific way, is to bring about the desired results without disturbing other aspects of economic life. Then, if further improvements in the system are suggested, they can be considered and acted upon separately, without incurring the hazard that controversy over these extraneous matters will block prógress toward the goal of full productive employment, which presumably is approved by almost everyone. So the present study has divorced this primary objective from all other economic aims, no matter how desirable these may seem to the author or to others.

There will no doubt be those who object to the proposed program because it enables some employers to make a profit from the utilization of the surplus labor which they obtain at a discount. A “dole for capital” some demagogue is sure to call it. But, in fact, this employment program merely recreates the conditions which exist in normal commercial and industrial operations. Under these normal conditions, the suppliers of capital receive compensation in the form of profits for the use of this capital that makes productive employment possible. When the unbalanced purchasing power situation during a recession, or the normal effect of the survival limit, prevents an employer from securing any such payment (profits) for his services, we cease to get the services. If we count on the employers continuing their operations and providing jobs at a loss to themselves, we are expecting something for nothing, an age–old economic mirage that always ends in disillusionment.

It would be equally logical to criticize the program for proposing to pay full normal wages on the auxiliary work, rather than the mere subsistence wage that the worker would get through unemployment insurance or welfare, but it does not take a confirmed cynic to realize that there will not be as loud an outcry against this angle of the plan, even though in both cases the principle is the same: a full and equitable payment for services rendered. We must realize that the attainment of permanent prosperity necessarily involves making provision for all of the ingredients that go to make up prosperity, including both normal profits and normal wages. We cannot have peak performance when either labor or the suppliers of capital are on a starvation diet.

With this preliminary explanation, the conclusions of this work can be summarized in the following recommendations. It should be understood that what must be accomplished in order to provide jobs for the unemployed workers is simply to lower the survival limit an appropriate amount. There are many different kinds of economic actions that can be taken for this purpose, and the recommendations that are being offered here are not the only possible means of reaching the goal; they merely represent a selection from among the various possibilities, a combination of measures that will accomplish the objective efiiciently, and without undesirable collateral effects. Adoption of these measures will enable the permanent full utilization of the nation’s productive resources at the maximum rate of production that is possible at the prevailing level of human ability and technological knowledge.

RECOMMENDATIONS

l. Increase norxnal employment to maximum levels by

 
 

a. Transforming existing government employment agencies from passive clearing houses to active employment promotion organizations.

b. Subsidizing increased mobility of the labor force.

c. Absorbing the expense of retraining and otherwise protecting the economic status of workers displaced by technological improvements.

d. Training surplus workers to qualify for available jobs.

e. Removing obstacles in the way of employment of substandard workers.

2. Minimize seasonal employment fluctuations by

 
 

a. Encouraging stabilization of labor requirements by individual producers.

b. Removing the legal and contractual obstacles that now impede such stabilization.

3. Apply countercyclical fiscal and monetary policies to off set any deflationary effect on employment that may develop by reason of the business cycle.

4. Reduce the survival limit applying to business enterprises in general by

 
 

a. Restricting the ability of corporations to incur fixed interest indebtedness.

b. Making all business taxes claims against current
earnings only.

5.After all expedients for increasing normal employment have been exhausted, offer the remaining surplus labor to private employers, for any purpose constituting a genuine addition to total employment, at a discount sufficient to make the use of this labor on the extra work profitable. Reimburse the employ ers in the amount of the discount from the employment fund created by diverting to the new program the unemployment taxes that will no longer be needed for their original purposes.

6. Promote secondary employment by

 
 

a. Removing existing obstacles such as earning limits for Social Security recipients, union restrictions, etc.

b. Locating individuals who are willing to accept fulltime work, but have not been seeking employment, and placing them in jobs.

c. Initiating a program to create more seasonal and other part–time jobs, and to find workers to fill them.

These measures will eliminate the basic cause of unemployment, and will enable guaranteeing full–time primary employment. Their ability to accomplish this objective can easily be verified without any disturbance of normal economic life, as they are not far–reaching and radical changes, but mild correctives which strengthen the existing system rather than reconstructing it. We do not have to wait for an extreme emergency before putting these proposals to the acid test. Even under presumably “normal” conditions there are several million persons seeking work, and millions more who would be willing to work if jobs could be found more readily. At the moment, the number of unemployed individuals is substantially greater than normal. The proposed program can demonstrate its efficiency by finding jobs for these workers, and the definite guarantee can follow when its feasibility is clear.

Unlike the proposals which involve increased government control over industry, or other basic changes in the existing economic system, this program will do its job quietly and unobtrusively. In fact, few persons will even be aware that it is in effect, except insofar as they realize that securing employment is no longer a problem. Furthermore, there will be no net cost to the taxpayer; whatever expenditures are necessary to carry out the program will be offset by additional sources, or potential sources, of government revenue that are created by the program. In practice, it will probably not be necessary to call upon these added revenue sources, as even with all of the proposed expenditures for labor discounts, employment promotion, education and training, the total costs should still be less than the current outlay for unemployment compensation and for that portion of the current welfare expense which originates by reason of unemployment. As indicated in the summary, it is suggested that the present unemployment taxes be maintained for the time being, gradually diverting more and more of the funds to the new program as unemployment diminishes. This will minimize the need for additional appropriations, and will be a very smooth way of making the transition to the new system.

The only serious threat to successful operation of the program, the only thing that could prevent it from accomplishing the theoretically feasible goal of providing full employment at no cost to the taxpayers, is bureaucratic inefficiency: the well–known tendency of government agencies to settle down into a comfortable routine rather than putting forth the effort and initiative that are required for efficient operation of any complex undertaking. But even at worst, what we will get from the plan is full employment at some cost, and this cost should certainly be substantially less than the present expenditures for maintaining the unemployed workers in idleness. We can have all of the many tangible and intangible benefits of guaranteed full employment without any additional cost, even if the optimum results are not obtained.

Furthermore, we can hardly justify rejecting any proposed program on the ground that government agencies are not capable of handling it efficiently as long as the only alternatives are other, far less satisfactory, measures that must also be carried out by government agencies. If government is inefficient, this is all the more reason for adopting policies such as those herein recommended, which rely upon government action only to a minimum degree. Whatever inefficiencies there may be in the operation of the proposed discount plan will at least have the merit of being very conspicuous, so that we can easily recognize them and thereby put ourselves in a position to apply some pressure toward correction.

In essence, what the present study has disclosed is that all that is needed in order to achieve a stable economy with permanent full primary employment is to make a few minor adjustments of the economic mechanism. There is nothing basically wrong with the existing system; on the contrary, the analysis shows that the impressive results that it has achieved in practice are a direct result of the sound principles on which it operates. Rather than being an aimless jumble of confused and unrelated entities, as painted by its detractors, the existing American economic organization has emerged from the analysis as a closely integrated mechanism, largely automatic, capable of fine adjustment, and governed by fixed and undeviating principles. It is not the creaking and outmoded machine that its opponents visualize, a loosp–jointed conglomeration of indefinite and extremely changeable relations that “just grew” without any rule or order, but a highly efficient operation that is readily responsive to intelligent control.


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