Social Unrest, Jobs and the Economy

The riots in Baltimore, Ferguson and elsewhere  have gone off the news, so it is a good time to reflect on the subject.

The riots – past and possibly future – have many causes. One, often mentioned but little analyzed, is the state of the economy.

People who have steady, decent work do not riot. They do not have the time. They need to be at the office, store or plant the next morning. They do not want to have to call the boss to tell him they will be absent because they are under arrest.

In the same way they are not inclined to burn down stores and neighborhoods. People with jobs – and therefore with a regular supply of money – need stores to spend the money they make. Stores only become a target when looting is the only realistic way to procure the goods they offer.

The above is not meant to deny other causes and injustices. Nor is it a message to the economically disadvantaged to “go get a job.” It is meant to remind that beyond all issues of race and inequality there is the fact that good jobs are scarce and getting scarcer; and that this burden falls most heavily on those already poor.

The main cause of this scarcity is “offshoring” – the export of employment, starting with the best paid or “union type” work – to locales offering lower wages, looser work safety standards, fewer protections for the environment and a more permissive legal system. Coupled with this “export” activity is the uncontrolled importation of “cheap labor” to fill –at the lowest possible wage level – the positions that cannot be exported. Both policies put unrelenting pressure on the number of positions available as well as on wages, working conditions, availability of benefits and the payment of legitimate taxes.

As competition for the remaining jobs increases wages drop, starting with those of the least skilled. The workers with skills then compete for the jobs higher up the ladder, lowering the prevailing wage there, and so on for the higher rungs of the income pyramid. The result is the collapse of the income structure for the great majority of the population, leading to glaring inequality between the mass of the population and the remaining small minority at the top.

Lower income for the mass of citizens translates into less spending, less business, fewer jobs and lower wages, and so on. It’s a death spiral, and at some point no amount of welfare is enough to prevent a social explosion.

We do get reassuring government numbers telling us jobs are constantly being created (223,000 last month!) and that the unemployment rate is dropping (to 5.4% as of this writing). Unfortunately these statistics ignore the 93,194,000 Americans not in the official labor force – and therefore not counted in the employment statistics. If they are counted the jobless rate would be in excess of 20%.

Sending U.S. jobs to low wage countries, together with unrestricted immigration, does provide trans-national corporations involved with a temporary increase in profits. It also destroys the U.S. consumer-based economy. It will, despite all the shenanigans of the administration and Federal Reserve, result in a major economic crisis.

The crisis will produce more riots and other major disturbances.

When they happen, we should remember how we got there: by looking only at short-term profits, and systematically ignoring the obvious solutions.

Born in Poland, Jacek Popiel was educated in Africa, Canada, and the United States. He speaks five languages. His career spans military and international business development in the Soviet Union, Eastern and Western Europe, North America, and Japan. He is currently a freelance writer and political consultant. His book “Viable Energy Now,” grew out of his military and international business experience and his professional involvement with energy issues.

Comments

  1. I would have like to have recommendations to avoid such future?

  2. Frank Shannon says:

    There is only one. Restore our economy and jobs. This will take winning the battle currently in congress over new trade agreements that have gutted the middle class. Call you Congressman and Senators and have them vote against Trade Promotion Authority and The Trans-Pacific Partnership that is another of the flawed trade agreements.

    There are some more battles to restore the American dream including reforming our tax code but this initial battle (trade policy) is going our way. An early optimistic sign.

    • TPP passed to day as a bundle deal! 🙁

      • Frank Shannon says:

        After weeks of legislative jujitsu, TPA has failed to pass Congress. Today the House delayed any further attempts to pass this against the will of the people, has been deferred until July 31. This means they do not have the votes to pass it as written.

        My guess is that until they have effective controls on currency manipulation, this legislation is dead.

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