Fiction Parades As Fact in the Jobless Recovery

By Gus Tyler

Published November 14, 2003, issue of November 14, 2003.

How’s the American economy doing? “Lousy,” say the critics of the Bush regime. “Beautifully,” say the Bush backers. The critics point to the falling income of the average American household as announced by the Census Bureau. They also point to the rising number of jobless and add that, if the “discouraged” workers who have given up trying to get a job were counted as “unemployed” (which they are not), the rate of unemployment might well double.

How can this be? A common explanation is that with modern technology fewer workers are needed to turn out the same — or even more — goods than in the past. If this were the reason, there would be a simple way to fix it. We could do what was done in 1938 under the New Deal. The Fair Labor Standards Act — wage and hour law — made the 40-hour workweek the law. Up to that time, workers labored endless hours a day each week. By shortening the workweek without reducing weekly pay, workers earned more per hour, had extra income to buy and thus spurred the economy.

Suppose we were to do the same today and reduce the legal workweek to 35 hours. Would that revive the economy? The answer is: No! If employers had to pay higher hourly wages, they would have an added incentive to move their production out of the United States to lands where they could get cheap, child and slave labor — as many have been doing.

So, why didn’t corporations do the same in 1938 when the wage and hour law was passed? They did not do so because they lacked the technological means to move their operations overseas while meeting the demands of their customers for timely delivery, for high-quality production, etc.

But, in the post-World War II years, four simultaneous technological revolutions made it possible to have goods produced halfway round the world and receive quality and speedy delivery in return. These were revolutions in transportation, communication, materials handling and data processing. The result is that millions of well-paying American jobs have been and still are being exported to Third World countries. Sadly, in calculating the gross domestic product, the Department of Commerce overlooks a key factor.

The key figure in the formula for determining the GDP is sales. Who are the customers? Individuals and governmental agencies at all levels, from school districts to Uncle Sam. Right now the biggest customer is Uncle Sam. One would expect that Washington’s huge expenditures would result in enough jobs to keep the unemployment rate down to 1% or 2%. So why doesn’t that happen?

Because when an individual, a company or the country makes a purchase of a tank, a plane, a computer, a refrigerator, etc., the purchased object is not necessarily manufactured here in the United States but, as often as not, is imported from overseas. Hence, the strange phenomenon termed “the jobless recovery.”

When the Department of Commerce announced that the economy was growing at an astounding 7.2%, it made the invalid assumption that a sale to an American-based company means more work for Americans. As presently calculated, the announced GDP growth rate of 7.2% is a fiction — a fiction parading as a firm fact with governmental approval. Will this foolish fancy serve to persuade voters to back Bush in 2004? Dubiously so! All of the above is a great puzzlement for most voters. What they know is what they personally experience. And, from day to day, for added millions, life gets worse daily.



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