Why the Power Elite Love Unemployment

So we can expect Congress and the White House to do nothing about it!


Where are the jobs? The citizens want to know, where are the jobs? If you listen to the puniditocracy on either side of the great and expanding political divide you hear the same resounding question. Where are the jobs? The conservative critics of the Obama administration blame the socialism mirage, which is only visible from the right, for killing the natural desire of corporations to hire, hire, hire to their hearts’ content. If only the taxes were lower…or even better, nonexistent…then the hiring frenzy would be on. From the left we see a government too bogged down under the weight of corporate lobbyists to dare stand up and provide a real jobs bill. Yes, we blame Obama, but mostly for refusing to engage the Republicans in meaningful political combat.

Economists like Paul Krugman have, by now, lost their discernable fingerprints due to the amount of time and energy expended hammering their keyboards in vain attempts to inject some reason, science or sanity into the debate. The recession slammed homeowners and workers who were unable or unwilling to spend, thus driving down demand. Low demand meant little investment in job creating capital (but not in capital generating investment schemes, which continue to flower). The obvious solution, according to Keynesian economists is to prime demand through job creating stimulus, mortgage restructuring, and an overhaul of our ridiculous health care system.

Wow! That sounds pretty rational. It sounds like a reasonable solution that would require some deficit spending, but leading ultimately to a reinvigorated economy. It’s so rational that I feel bad for Krugman and his peers. They probably cover their heads to hide the fist-size clumps of hair pulled from their scalps as reasonable solutions are denounced as extremist by the very extremist neo-liberals who created this calamity.

What economists often fail to include in their calculations is the influence of power on economic reality. Where are the jobs? They are in nations that allow corporations to exploit laborers (often women, young girls and children) and the environment. And they are not coming back; not without significant government intervention. Of course, this does not make sense from an economic perspective. Lower wages mean lower demand, means less profits. So why wouldn’t the corporate elite be interested in creating jobs that provide enough disposable income to increase demand? Because it’s not simply about economics. It’s about the power that is entangled in our political-economic structure.

The corporate elite have insulated themselves from the collapse of demand. Corporate profits continue to rise despite the fact that the demand base is largely crippled. So where are they getting the money to bolster their profits if not from common consumers? That’s a complicated question, which the economists are better equipped to answer than this writer. In a nutshell, however, they are getting the money from the people who do have the money—mostly from themselves. Just because the wealth and income isn’t in the hands of working people does not mean it does not exist. There is plenty of money out there, floating around. It’s just in the pockets of a freshly networked global elite. And if the elite have anything to say about it (and they do) that’s where it will stay.

This thesis suggests that unemployment cannot be understood as a universal economic bane. As this blog has pointed out in previous posts, the concept of “The Economy” is inadequate for understanding the contemporary marketplace. It’s more accurate to describe two economies¹, one composed of working people, and one composed of the corporate elite. The members of these economies do not have the same interests or goals. So to suggest that unemployment is “bad for the economy” is almost a non sequitur. Unemployment is bad for the market of working people and small businesses, but is actually beneficial to the corporate marketplace if elements of power are factored into the equation. Unemployment continues to exist, more or less neglected by the power elite, because it serves the interests of the corporate class. Furthermore, unemployment will continue to exist, more or less neglected by the power elite, so long as our state and federal governments serve the interests of this same corporate class.

In 1971, Herbert Gans wrote an article for Social Policy called “The Uses of Poverty: The Poor Pay All.” In this article, Gans offered a functional explanation for the existence of poverty. Based on the work of pioneering sociologist, Robert Merton, Gans stated that poverty exists largely because it serves a function for a number of non-poor groups, “…few phenomena are functional or dysfunctional for the society as a whole, and that most result in benefits to some groups and costs to others.” (Gans) This fits in nicely with the above stated thesis that unemployment serves positive functions in the interests of the elite.

The most obvious function of unemployment is its devaluing effect on labor. Large populations of unemployed people become a sink of desperate labor to which corporations are attracted. Large pools of the unemployed applying for scant jobs allows the corporation to acquire not just the most highly qualified applicants, but those who are willing to work for the lowest wage. Thus, workers are trapped in a bitter race to the bottom of the wage pit.

Since the level of desperation experienced by the potential worker is inversely proportional to the value of his labor, the last thing the corporate elite wants is the existence of a meaningful social safety net. Unemployment insurance may just give a job seeker the ability to keep himself afloat financially while seeking the best job for his qualifications and economic needs. This must be done away with. Universal health care liberates the worker from the possibility of financial ruin consequent to becoming sick in the United States, freeing her to seek economic opportunities without the fear of losing her dwindling and inadequate employer provided insurance (if she’s still lucky enough to have it). Medicare and Social Security lock away billions of dollars from private interests while at the same time freeing a growing sector of the population from the burdens of labor. Take away the social safety net for the old and millions more people are forced to look for work until they die or are thrown away by the corporate class.

Now that corporations are liberated from local economies by technologies that allow instantaneous communication, easy travel and information technologies that allow corporate leaders to run their factories from anywhere in the world, this pool is rather a global ocean. If the people of one nation decide to protect their workers through legislation, then corporations simply pack their bags and move to a more amenable third world country that is more “business friendly.” Free trade agreements, like that being negotiated with South Korea, can best be understood as strategies for increasing the pool of unemployed or exploitable labor available to corporate interests.

The fortunate worker who acquires a job is more likely to be a passive producer if she understands that there’s a long line of people willing to replace her, and few opportunities for a better position elsewhere. The choice is stark. Submit to working for less than the value of your labor, or face economic destruction. Any working person understands the consequences of this nasty little mechanism. While worker’s wages have stagnated over the last thirty years, GDP has largely increased. This indicates that workers are producing more and more, but receiving little if any reward. So where does the benefit of this increased productivity go? As the graph at left indicates, the benefits in the form of income are housed in the coffers of corporations and the super wealthy. (For the source of this and other alarming graphs, click the graph itself)

As working people are excluded from the benefits of the marketplace, are marginalized and disempowered, so too are unions. The neo-con war against unions has been largely successful. Private sector unions have been crippled while public sector unions are engaged in a battle for survival. As Think Progress reports, the collapse of unions corresponds directly with the collapse of the middle class. (Again, click the graph to see the original source). In our contemporary world of money politics, a self-sustaining middle class and a strong union structure are frighteningly effective checks against unrestrained corporate power. The corporate elite cannot allow such a great alliance to stand. So unions are busted by corporate lap-dog politicians while corporate media paints unions as inimical to the middle class.

With the fall of the unions we see a concurrent attack against community organizing and voter registration efforts. Let’s face it, organized communities and blocks of unemployed and impoverished voters are the last things the corporate elite want to see. So groups like ACORN must be destroyed for doing nothing more than empowering the poor. Laws must be put into effect to make it more difficult to register to vote. Voting districts must be redrawn to mute the interests of the commons.

What about small businesses? We hear a great deal about the plight of small businesses, with nothing actually being done to save them but for inadequate tax cuts here and there. Small businesses are not insulated from the collapse of demand. Demand is key to their existence. Yet, when demand declines, so does the value of the business and desire to invest in such enterprise. Again, this could be understood as bad for the economy, but one might analyze how weakening small business benefits the corporate class. As small businesses fold or are forced to sell out to larger interests while prospective entrepreneurs refuse to take the risk of entering a dull market, corporations benefit from a decrease in competition. There’s nothing that corporations hate more about capitalism than competition. The corporate elite are interested in consolidation, conglomeratization and monopoly, not competition.

Fortunately, there is one place for a young man or young woman to find stable work, income and experience—the military. While corporations off-shore production and accumulate wealth, and any attempt at establishing a government jobs programs is derided as socialism, the military becomes a de facto WPA…and yet is not considered socialist. It’s not considered socialism because the Military Industrial Complex is largely a giant corporate welfare program; and corporate welfare, unlike welfare for poor people, is not socialism according to the very corporations that benefit from this dole. The de facto Military Works Progress Administration is an amazing hybrid born of the unholy union between corporate and government elite. As American corporations expand globally, they require a greater military presence to ensure access to markets and protect/acquire vital resources such as oil. The very dispossessed workers suffering from global expansion must then exert their labors, and spill their blood, to enforce corporate globalization. These globalized corporations will then turn around and further exploit the workers and soldiers into participating in this bloody, iniquitous market. It’s brilliant and sinister!

Despite the fact that the number one concern of the American people is jobs, politicians in both parties are largely silent on the prospects of actually creating jobs beyond their own rhetorical renunciations of the other. Can anyone reading this blog name a single, solid piece of legislation designed specifically for job creation? Yes, there is the ubiquitous propaganda about how lowering taxes will create jobs—it won’t, or how monetary policy can be used to stimulate jobs—it can’t, or the necessity of fiscal consolidation to awaken the magical Confidence Fairies to produce jobs—yeah, right. Everything from health care reform to extending the Bush Tax Cuts is premised on the promise of creating jobs. So far, every single claim has proven empty. Meanwhile, our so called representatives expend most of their time and energy on debating the debt, taxes, abortion, entitlements, even the penises of their colleagues when such matters come to attention. With regard to jobs, however, all we hear is cricket songs.

Jobs are created when institutions exchange currency for labor…period. There is no other formula. Corporations, as the dominant hiring institutions, are unwilling to create such exchanges not because they are insecure, as conservatives insist, or suffering from a lack of demand, as liberals argue, but because they benefit from high unemployment. If corporations are unwilling to hire, then some other institution must step up and perform that function. Keynes suggested that the only institution capable of such a task is the government. But what happens when the government serves the interests of the very corporations who benefit from high unemployment? Look around…there’s your answer. ______________________

  1. It might be more accurate still to describe multiple economies, but such would unnecessarily complicate the theme of this essay.




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