This morning I gave a Keynote presentation to the Jobs Australia conference in Melbourne, which is a gathering of people who work in what I call the extra industry – the ‘unemployment industry’ – which has sprung up in the neo-liberal period to manage the unemployment that the government has deliberately created as a result of its obsession with fiscal austerity (trying to run surpluses when increased and on-going deficits are required). I take no umbrage with individuals who work in the ‘industry’ but its productivity is close to zero (you cannot search for jobs that are not there) and they have become co-opted servants of the pernicious government policy regime. The facts are clear – we have erected a massive corporate sector funded by government to manage the fiscal failure. The problem is that all these job service providers are not just shunting inanimate widgets around into so-called training schemes etc but are dealing with very disadvantaged people, which the capitalist system is excluding from the opportunity to engage in paid and productive work. The ‘unemployment sector’ is the Government’s front-line attack dog on the victims of the policy failure.



I was walking back to my office in Melbourne (where I work regularly) after the talk and thought about the great Arthur Altmeyer, who was the founding father of the US social security system, which while minimalist relative to the Welfare States that emerged in other advanced nations in the Post World War 2 period, was still founded on the fundamental principles that should guide all societies – hope and opportunity.

Arthur Altmeyer wrote in 1968 that:

What motivates people and leads them to high endeavor is not fear but hope.

His contribution to the book – Social Security Anniversary 1968 – A Third of a Century – was entitled ‘Social Security and the Human Touch’.

At a ceremony, held in Washington on August 14, 10968 which was celebrating the 33rd anniversary of the signing of the Social Security Act, various key players gathered to witness the “Department of Health, Education, and Welfare’s Award for Distinguished Public Service” being presented to Arthur J. Altmeyer, who carried the nickname “Mr. Social Security”.

One of the Keynote speakers was the US Secretary of Health, Education and Welfare, Wilbur J. Cohen who was representing the President at the time, Lyndon B. Johnson.

Cohen commented on Altmeyer’s contributions to the welfare of disadvantaged Americans in this way:

To those who declared that if men were no longer afraid to lose their jobs America would become a nation of loafers, Arthur Altmeyer replied that there was a motivating force in the lives of men that was even stronger than fear–that force, he said, was hope. A democratic society, he said, must rely on hope and incentive rather than fear and compulsion to influence the conduct and aspirations of its citizens. And I think that is a worthy note for us to remember in the issues that face us today. Social security, he taught us, replaces fear with hope. As he put it, liberty means more than freedom to starve. It means a real opportunity to make the fullest use of one’s capacity. Far from destroying individual initiative and thrift, social security, by providing a degree of protection to families against the major vicissitudes that beset them in this modern and complicated and hazardous world, releases energies because it substitutes hope for fear as the mainspring of human endeavor. In short, Arthur Altmeyer preached and practiced the idea that liberty and security are interrelated and that we cannot have one without the other. With this kind of faith that he demonstrated in man’s perfectability, with this kind of vision of democratic government …

Contrast that with the sort of narratives that come from Governments obsessed with fiscal austerity these days. Contrast that with the pernicious policy regimes that seek to punish the most disadvantaged in our societies and isolate them via nomenclature that casts them as lazy, corrupt, dishonest, and unmotivated.

In accepting the award, Altmeyer said, among other things:

…. Before I get off of the early days I want to say another thing–an important thing many people forget. Important as the Social Security Act was, it was only part of the New Deal. We recognized it as largely an income maintenance program. But we had all kinds of work and education programs going. For example, the National Youth Administration. It financed not only vocational schools, but made grants to the colleges, secondary schools, and primary schools. People have forgotten that that was a part of the picture. We had the work programs–PWA, WPA and CCC. Today I run across people who went to those CCC camps. They are proud of what they did in those days. They go and visit–when they have their vacations– the places where they planted trees, or what not, to show their children, their grandchildren, what they did for their country.

This is a highly significant point. The priority was to create jobs as the primary income source for workers and if the private sector could not create sufficient work for all, then there was only one sector left that could do the job – the government sector.

Income support for the unemployed was never meant to be a permanent state. It was just a safety net for those between work. The primary responsibility of government was clearly recognised by the Americans and other advanced Western nations to use fiscal and monetary policies in such a way there there was sufficient jobs available at all times.

How far have we moved from that ideal?

Altmeyer continued in this way (leaving out bits):

In conclusion let me say that I think we mustn’t forget that in trying to develop a more perfect income maintenance system, we should not forget we have to tackle the root causes of poverty in the sense of dependency. If we merely introduce another income maintenance system, we are just replacing one type of dependency for another type. The most important cause of dependency is a lack of jobs at adequate wages. So we must work toward full employment. We must have a permanent, long-range, nationwide public works program. We must abolish discrimination on account of race or creed, in our hearts as well as in the law. And we must provide adequate education and training to hold a job. I am sure that this Nation of ours will win this war on poverty because we are fortunate that we do have the economic resources. All we need, really, is the will and the determination to perfect our social organization to take full advantage of these resources.

All our modern politicians and policy makers and those who the policy makers have co-opted within the ‘unemployment industry’ they created should reflect on that and work out where they have gone wrong and why.

Governments should:

1. Use their resources – which in financial terms are unlimited. The currency-issuing government can purchase anything that is for sale in its own currency at any time it likes, including the labour services of the unemployed labour.

2. There should be no divide-and-conquer strategies employed or accepted to allow the government to vilify one segment of the population who happen to be at the back of the unemployment queue. As a collective we should stand with all citizens and demand from our governments that they cease attacking the welfare of the unemployed, who are in that state (overwhemlingly) because of failures by the government to run sufficient fiscal deficits.

3. We must “work towards full employment” which means there should be enough work and working hours for all those who desire it.

4. We must “have a permanent, long-range, nationwide public works program” that is well designed, scalable to contract and expand when non-government economic activity expands or contracts.

5. We must invest in our education and vocational training systems, recognising that the most effective vocational training is done within the paid work environment rather than being isolated from that environment. Education should not be a vehicle for divide-and-conquer and stratification of income groups as the current policy encourages. There is no better investment by government than in its people.

6. There may be 1-2 per cent or so of current income recipients who are unemployed and do not want to work and have worked out a way to eke out an existence on the below-poverty line unemployment benefits that the Federal government in Australia provides. But it is extremely poor policy design to introduce elaborate penal conditions for the 98 per cent to get at the 2 per cent. By introducing a Job Guarantee, the Government would have the perfect activity test. Turn up for work and you will be paid. Otherwise, if you are able to work and do not want to – then find another source of income!

Finally, the Australian government issues its own currency and can never run out of money. The Greek government uses a foreign currency and can run out of it if it cannot borrow to cover its deficit.

My presentation today

The following YouTube video is a capture of my slides today with the complete audio (unedited). It is just over 48 minutes in length. I didn’t include the question time which lasted for about 10 minutes.

One person asked me why Australia wouldn’t become like Greece if it endorsed my view of economics. I replied via a question along the lines of: Isn’t it true that Australia bears no relation to Greece? I encouraged him to answer the question in the affirmative!

Anyway, perhaps this is of interest to you.

Conclusion

Run out of time so …

That is enough for today!

(c) Copyright 2014 Bill Mitchell. All Rights Reserved.