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Unemployment – the greatest national security threat of all

Free trade, globalisation, national politics, national community.  What is wrong with this picture?  Simple, these four terms are not mutually complementary.  With no political imagination or ‘chutzpah’, we of the First World now lie prostrate before the ‘Masters of the Universe’ on Wall Street.  To them everything and everyone is a commodity to be traded; there is a general consensus that without these captains of industry, we the people would be destitute.  But wait!  Aren’t we the people staring destitution in the face?  The EU’s middle class and working class have been dealt a severe blow by the transformative event of the Global Financial Crisis (GFC).  In the US, the centre of Western manufacturing and innovation, those hurt the most by the GFC’s transformation are the working poor who are now poorer.  People who were on the lower socio-economic scale and aspired to be middle class have nothing to hang their dreams on.  People who were middle class and aspired to higher ranking, lost houses, cars and other symbols of ‘social mobility’. People in Australia, the ‘lucky country’ are giving up on hope after the various governments of Australia foolishly bet everything on the one horse race called China. Now that China is buying less of Australia’s unrefined commodities – the fuel of China’s boom – there is a sense that the country is about to face a long avoided financial reckoning. However, the idea of Australia being the farm and the mine to Asia has yet to pass from view since the alternatives are too hard to imagine. This is what globalisation has done. This is what our political elites have bought into and this unfortunately, is what we seem to be stuck with. Free trade is ethically superior to propping up 20th Century industries. Free trade makes money and drives innovation. But it also has no social basis for egalitarianism, no inherent fairness. It’s the markets that create demand. But what are the markets? What drives demand? People: advertising and PR companies who manipulate the public’s desire for things of little intrinsic value. Fast food, mobile phones, and the ‘common luxuries’ that everyone seems to want and want at bargain basement prices. So, what happens when political parties of all persuasions buy into this? The political class becomes co-opted by the economic class. They essentially become a ruling group, localised fractures and differences notwithstanding. The politicians, in spite of the glaring social problems that unfettered globalisation has created, will defend free trade and globalisation and convince the great unwashed – the public – that there are no alternatives. That there is no human ability to innovate politically so one can make money, even be rich and yet ensure that fairness is central to this enterprise.

This morning an expert on social issues on a local talkback radio show, tried to explain the virtues of all those ‘high-tech’, ‘high-value’ knowledge-based goods yet to be thought of, that will, in the future (which as we know is an undiscovered country), require a skilled workforce.  In the opinion of some, the prospective closing of the auto industry in Australia, largely based in the states of South Australia and Victoria, is really not that bad.  Really? The jobs that according to economists have ‘no commercial value’, generally low-skilled jobs, are being shunted off-shore to low cost countries.  The knock-on effects are naturally felt further up the chain.  Shopkeepers, who depend on ‘cashed-up’ factory workers to keep their businesses viable, are no longer needed.  Small/medium businesses that service the manufacturing hubs of developed nation-states are closing and their work is being outsourced to developing world countries. Western countries are bleeding essential services from their economies.  What remains is the hope that salvation will come with a formula to absorb the newly unemployed.  The commentariat are full of helpful suggestions.  Their new buzzword ‘Knowledge Based Industry’ is as confusing as it is patronizing.  If ‘Knowledge Based Industry’ is a term based on reality, then Western states would have naturally and seamlessly transited to this more sophisticated mode of production two or more decades ago.  Green industry?  Yes, we can produce giant fields of windmills with no discernable effect on climate change or base load power.  This quixotic exercise is wasteful in financial and human capital.  A continuation of the current state of affairs will certainly enrich poorer, lower skilled countries.  The West will certainly get cheaper manufactured goods, but conspicuous consumption on welfare payments puts a huge crimp on spending.  What economists should acknowledge is that sometimes there is social value in keeping local factories open so that people who otherwise have no hope, have employment and a chance at raising their social and income levels.  Furthermore, national leaders of all stripes must surely see the sense in providing the part of their populations that need it, access to low skilled work since at a bare minimum, these people can still contribute their taxes for the provision of government services. This would be what a socially responsible government would think. Social responsibility is the highest social, economic and political good a government can provide its citizens.

And what of the national security threat posed by protracted high unemployment – boredom.  De-industrialised urban areas are already filled with young, angry and disenchanted people fuelled by a mixture of drugs and alcohol, left to their own devices and poorly policed.  Such areas of urban decay will impact on the wealthier suburban areas, creating what will be tantamount to urban warzones – poor against rich. Governments without vision of which there are many, will resort to brutal policing tactics to curb some of the worst of the violent crimes but will be loath to anger the ‘high-born’ economists or traders who made their fortunes by advising to sell or selling factories off-shore.  Buying back the farm is no longer considered an option in a globalised, borderless world. Political agitation may in some circumstances give rise to political violence and terrorism, not of the Osama bin Laden type, but of the violent domestic left wing terrorism the West experienced in the 1970s-80s.  Some developed countries may have outbreaks of social instability, bringing down governments. So far, the Masters of the Universe have won some significant battles, but have not yet won the war for control.  However, as the means of production (low skilled and otherwise) is shifted to less developed states, economic growth in the West will falter unless saved by an as yet unforseen technology or method of re-training the existing ‘antiquated’ labour force.  In a new cycle of history, the poorer countries that had been on the periphery of modern, post-Cold War geopolitics will take centre stage.  Armed with Western means of production sold to them by Western interests for a tidy profit, an understanding of Western social norms and conditions and with a burgeoning youth bubble, these once underprivileged societies may end up looking more like what the West used to be. It happened before when Rome accustomed and integrated the German tribes to Roman standards, only to have the German tribes visit fire on the ‘Eternal City’ with German-made Roman-style weapons.  There may be a lesson in this.

By Dr. John Bruni, Director SAGE International

ONE THOUGHT ON "Unemployment – the greatest national security threat of all"

  1. Greg Chalik on February 20, 2014 at 10:06 am said:

    I think this article can be traced to the greatest experiments of all in the last millennium, the race for the streets of gold in China.
    The problem was that this was ‘lost in translation’ as it referred to the Chinese belief “The promise of eternal bliss in cities with streets of gold is reserved for the afterlife as a reward for faith and devotion.”
    Hanging onto the promise of gold for dear life, every European royal house began to pursue a strategy of securing monopolised access to this fabled market the Romans couldn’t reach.
    From this we get Age of Discovery, Colonialism and Imperialism. It is also indirectly responsible for the Industrial Revolution as Europeans tried to think of a way to increase production to satisfy this expected rich new market (never mind Japan and other Asian markets).
    Instead what they found in India and later in Japan is poverty unlike that seen in Europe since the Dark Ages. Even today China and India have the largest number of slum dwellers with 193 million and 158 million people, respectively from the worldwide number which now stands at 827 million and is on course to grow to 889 million by 2020.
    There is a virtually limitless supply of cheap labour to satisfy the equation which sees reduced labour costs as an increased profit margin for the stock holders.
    This is not just an economic issue, but one that affects the environment, social and cultural fabrics of states, the political and diplomatic relationships, and of course cause conflicts as we have seen with the ‘Arab Spring’ which is not a movement spurred on by a desire for democracy (a foreign concept in Islam) but through the economic standards of living in the post-Cold War Islamic states where cultural values guide demography that is incompatible with the liberal economic concepts of the New World Order.
    Of course liberal economics in themselves are a great experiment in economic theory that is yet to find its proof. It is true that future rides on a horse called innovation, and innovation causes growth without which there is only decline and death.
    However, in Europe and states like Australia and Israel one innovation is produced per every 800-1000 of the population (Knowledge economy). That is a small spurt in growth produced by this innovation in theory supports 800-1000 individuals directly or indirectly.
    In China this figure is 80,000. This is why the Chinese have tried to beg, borrow or steal every bit of technology everywhere as soon as it appears. This too is a feature of the Knowledge Economy, the Knowledge Insecurity.
    Japan is the best example of where that leads. Japanese used to have corporate offices located within two blocks of every major US university campus and used industrial espionage methods to obtain leading research results for integration into domestic production as soon as they appeared. With the passing of a US anti-espionage Bill in 1996 the Japanese offices closed and Japan had to invest in domestic research facilities costing billions. It also took the extraordinary measure of requiring a domestic partner for anyone wanting to market new products in Japan which also requires registration of a new patent in Japan. Thus the number of new patents makes it seem like the Japanese are veritable geniuses per capita of population (and now South Koreans also). However, the Japanese economy continues to stagnate and birth rate to fall because in reality catching up on innovative culture after hundreds of years of borrowing takes time, and meanwhile less and less funding is available from the decreasing tax base.
    It seems to me Australia and Australians just need to worry about one thing, education. High standards of education will produce more innovative minds that do create a lower figure of innovation per capita, a measure not yet existing as an economic measure of success in the Knowledge Economy.

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