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It's the econom(ies), stupid!

On a casual browse of the Web this afternoon, I came across an interesting statistic: there are, as of last month, 9.6 million unemployed people in the United States.

More than nine and a half million people. That's three and a half times more folks than the number of people who live in Chicago. It's more than the entire population of New York City, by a margin that comfortably exceeds the combined populations of Denver and Boston. It is, in short, rather an astonishingly large number of people.

Imagine this, times 16,000

And that number is considered good news, as it's smaller than it has been in a while. (Well, at least in theory. Folks who are unemployed for a long time eventually stop being counted amongst the unemployed, as they're considered to be no longer participating in the workforce. There's some weird numerical voodoo around the "workforce participation rate" that I don't pretend to understand, but the takeaway is the number of folks who'd like to be doing something and aren't is probably higher than nine and a half million people.)

Nine and a half million people. Nine and a half million people. That's more people than the entire population of many countries. Like Sweden. And Switzerland. And Norway.

Nine and a half million people. People who want to work but can't find jobs.

So that got me thinking.

If I had nine and a half million people at my disposal, I could probably make a big pile of money. After all, Norway has a bit more than half that many people (total, including folks who are too young or too old to work), and it has a pretty decently sized economy: its GDP is 512.6 billion US dollars a year, giving it an astonishing GDP per capita comfortably north of $100,000 per person per year. (By way of comparison, the US is far wealthier but also far less efficient and way less productive; its GDP is 16.8 trillion per year, but its per capita GDP is only $53,000 and change per person per year.

Nine and a half million people. If even half of them want to work and have something they can do to create value, it should be possible for that workforce to represent half a trillion dollars a year. Even if we assume productivity that's more in line with US norms than Norwegian norms, that's a third of a trillion dollars a year, just lying there, unused. And they can't find work.

Nine and a half million people is a lot of people. It's more than a city's worth of people; it's a country's worth of people. It's trillions of dollars, lying on the ground, that nobody's picking up.

Nine and a half million people. That's more than enough--way more than enough--for an entire economy. That's enough people to represent both the production side and the demand side of...well, everything an economy produces. Somebody could start an entire economy, with its own goods, services, production, distribution--hell, with its own currency--with that number of people.

Which brings up, to my mind: Why hasn't anyone? There's arguably up to a half a trillion dollars just lying on the ground. Why hasn't anyone picked it up?

It should, it seems to me, be possible to take that nine and a half million people and just...opt out of the economy. Create a shadow economy, running alongside the "official" US economy, using all the labor that the US economy can't or won't make use of.

Wouldn't that be an interesting experiment to run.

People starting businesses, maybe using their own currency, maybe not. Employing the folks who are currently unemployed, who also become the consumers of the goods and services produced. All running independent of the US economy, much the way Norway's economy runs independent of the US economy--its own thing, geographically inside the United States but otherwise distinct from it...an economy inside an economy, like those nested Russian dolls.

It clearly wouldn't be able to scale from zero to half a trillion dollars overnight--but it wouldn't have to. Being located inside the United States means there's ample opportunity to utilize the goods and services of the "official" economy while it gathers flight velocity.

Nine and a half million people, working and living alongside the official economy, but creating their own. Sure, there would be points of overlap--presumably, they'd still pay US taxes, but that's okay.

This economy would not grow the way most economies do. For one, those nine and a half million people are distributed over the entire country...but not thinly. There are geographical concentrations (Detroit springs to mind) where the population density in this 'second economy' would be quite high. Modern telecommunication (and most significantly, the Internet) makes things easier too; it's relatively simple to connect sellers and buyers who are geographically disbursed online.

I recognize significant challenges involved with starting a parallel economy from scratch. I am also not a Libertarian; I do not believe an entirely unregulated economic system will ever produce anything but the most vicious abusing the most vulnerable. A system of regulation to prevent abuse has to be part of any viable economy, and in a parallel economy that becomes more difficult to achieve.

But still, it's hard to reduce the lure of half a trillion dollars. Half a trillion dollars, sitting there waiting to be picked up. That's a significant economy, able to support a significant number of people. That's half a football field of $100 bills, stacked to the middle of the goalposts.

Holy simoleons, that's a lot of dosh. Nine and a half million people, saying hey, forget waiting for a job to come along, let's create a brand-new economy. Seems to me it absolutely could work. What would it look like? I don't know. But wouldn't it be fascinating to find out?



( 22 comments — Leave a comment )
Sep. 25th, 2014 03:35 am (UTC)
It would be fascinating, and I would love to be part of that experiment, provided the proper checks and balances against abuse were in place. The way the current economy is set up, the average person is set up to fail. I'd love to opt out of that and still be able to live comfortably.
Sep. 25th, 2014 04:11 am (UTC)
isn't it there already, to some degree? the drug trade, for example, doesn't exactly show up on employment stats, but it's big business. also people who barter/ work-trade/ odd-job for cash jobs (like yardwork, handyman stuff, and babysitting) to get by -- i seem to know a lot of people who exist entirely on the barter/ work-trade/ cash economy, don't pay taxes, and kind of slide past the system, simply because that is what works better for them. and that seems to me to be a kind of parallel economy. isn't it there already, to some degree? the drug trade, for example, doesn't exactly show up on employment stats, but it's big business. also people who barter/ work-trade/ odd-job for cash jobs (like yardwork, handyman stuff, and babysitting) to get by -- i seem to know a lot of people who exist entirely on the barter/ work-trade/ cash economy, don't pay taxes, and kind of slide past the system, simply because that is what works better for them. and that seems to me to be a kind of parallel economy.
Sep. 25th, 2014 06:36 pm (UTC)
What I'm thinking of is something more robust than a black market.

All economies have black markets, of course, wherever there's demand for something that's politically forbidden. A black market is a subset of an economy, but it's not really a parallel economy in the sense of what I'm thinking. (Black markets often don't even provide a living wage for most of their participants. In the book Freakonomics, the authors claim that most street-level drug dealers earn far less than minimum wage--and expose themselves to considerable risk doing it. If offered minimum-wage jobs--even menial custodial jobs--front-line drug dealers usually jump at the chance.

Odd jobs like yard work can be seen as a hidden part of the existing economy--they don't appear in "official" job statistics, but they're really just unreported temporary work. I'm thinking of a permanent economy, with production and distribution of a full range of services, all running parallel to the 'normal' economy.
Sep. 25th, 2014 07:05 am (UTC)
The one major weakness about parallel economies and alternative currency (which is part of the reason why I lean towards the negative on Bitcoin) is that it's not legal tender; people don't have to accept it. Only legal tender gives one the security that it must be accepted.
Sep. 25th, 2014 06:38 pm (UTC)
The problem with an alternative currency is, as you say, it doesn't have to be accepted, so there's a barrier to crossover between it and the larger economy around it. I don't think an alt currency is necessary for a parallel economy. It's an interesting question--would a parallel economy be better off with or without its own currency?
Sep. 25th, 2014 11:16 pm (UTC)
Ideally, the total amount of money in circulation is representative of the value of accumulated commodities (apropos money supply always needs to be increased to at least match depreciation).

Now currency and money are slightly different things. Currency is the medium used for the exchange of goods and services. Typically people use some form of legal tender, to represent trade in goods or a service that provides a commodity (or consumable).

If people don't have money, they could have an alternative currency to represent those trades. One of the more common versions is something like LETS, which is quite popular in Australia. But of course, that does suffer from lacking a time preference mechanism, which interest rates do provide.
Sep. 25th, 2014 03:58 pm (UTC)
I'm just going to say this. Companies ARE hiring. My company is hiring. But it's very difficult to find people who actually WANT to work - at least in my experience. Work at my company requires some physical labor (standing, lifting, repetitiveness, sometimes chilly or hot working conditions). It also requires sometimes long hours and weekend work. We pay good wages, but,I can't tell you how many people we've hired who've quit after only one day, or even less. Not all jobs can be desk or computer jobs and they are jobs that need doing.
Sep. 26th, 2014 03:57 am (UTC)

from what i've read, logistical difficulties are a bigger factor than desire or ability to work. for example, i don't have a car, so i can work for a company that is feasible to reach via public transit and/or willing to allow me to work remotely and/or where i'd have some other reliable method to show up in person on time. single parents often require either specific hours or scheduling flexibility because they can't afford childcare. etc. etc.

if the employees at your company generally enjoy their job, or at least don't hate it, but there are still a sizable number of people who get hired and quit on the first day, i'd wonder whether something new in the interview process could weed those people out, or whether it might make sense to try going through a temp or contract agency who could screen people more intensely and save your company the expense and bureaucratic hassle of adding and removing employees on a regular basis.

as a contractor, i generally feel motivated by the possibility of getting a full time job and inclined to work harder if that's a full time thing that i'd want...
Sep. 26th, 2014 04:05 pm (UTC)
Oh believe me, if those suggestions worked, I wouldn't have made the comment. We are extremely clear during the interview, job offer and orientation process about the conditions and expectations of the work. We also tried temp and contractor agencies.

We try to be a flexible as possible regarding needs of parents and transportation but we produce food products. They have to be produced at the demands of our customers, who are grocery stores. Consumers demand that stores be open 24/7, so we have to operate almost the same.

Sep. 29th, 2014 06:46 pm (UTC)
Location is a big deal -- as someone who grew up in an upper-middle-class household and then wound up as an unemployed teenage mother, trying to hold down a job -- being able to physically GET to a job is a huge barrier to entry.

Buses are unreliable, often late, and require standing outside in the elements, not something that everyone can do. Many areas aren't well-served by bus routes, and there are a lot of issues with commuter areas like Washington, DC -- either the people are in the city and the jobs are in the suburbs, or vice versa.

I spent 17 years there, and I saw *far* too many people lose their jobs because their car broke down and the job wasn't accessible by public transport. Especially if you're a parent, you need to have reliable transportation that takes a predictable length of time to travel to and from work -- most daycares will kick a child out if the parent is late more than 3 times. If they lose childcare, they *also* lose their job.

I had to get up at 5:45 a.m. to get my daughter and I ready, drop her off at daycare when it opened at 6:30, and then RACE to the Metro to try and find a parking space before the lot filled up (I had a monthly pass, but that doesn't guarantee a spot.) I turned down higher-paying jobs to keep my 7:30-4:30 schedule, which would allow me to get back to pick Kira up before the daycare closed at 6:00.

I also turned down a promotion from legal secretary to paralegal, because it would have required me to pay for paralegal training (didn't have the money), and paralegals were salaried and expected to work irregular hours, whereas legal secretaries were hourly, got overtime if we were asked to work extra hours, and the workplace culture allowed secretaries to have a predictable schedule in order to pick up children.

I currently live in Plano, TX, a fairly affluent suburb, but we have terrible public transportation. A while ago, my daughter lost her state ID and needed to go to the DPS to get a new one. I was recovering from surgery, so I looked into what it would take for her to get a bus there. She would have had to change buses twice, in 110-degree heat, and it would have taken her *three hours each way* to get to a destination that was less than 20 minutes away by car.

Things like workplace shuttles and on-site childcare can make a huge difference in terms of job retention -- there are so few after-hours childcare options available, and since you said that you need workers to be available for evening/night shifts, are there any options for your company in terms of providing assistance with childcare and transportation for late-shift/swing-shift workers? (The buses stop running at a certain hour, for example.)

It *shouldn't* all be on your shoulders as an employer -- the government should be assessing what the needs of these potential workers are, and offering some programs to help people transition from unemployment to work. Right now, you're either unemployed, and eligible for some assistance, but if you get a job, there's a steep drop-off in program eligibility. We *need* things like evening/weekend daycare for low-income workers, but nobody is providing it.

Sep. 29th, 2014 06:46 pm (UTC)
It does sound like the physical demands of the job are a major issue, in your case. It's important to note that many people who comprise this huge unemployed population has some kind of health issue -- many people lose their jobs AND their insurance if they get sick, so a good chunk of the unemployed population isn't getting preventive health care or getting their health issues managed.

Not everyone is physically capable of a job that puts a lot of demands on their body -- it's not "avoiding working hard," it's being exhausted, in pain, or ill. (I'm sure that there are some people who are shirkers, who are physically capable of doing the type of work you require, but don't wish to, but I don't think they're in the majority.)

Then again, if someone prefers a desk job to a job that involves daily lifting and bending, I can't say that they should be forced to take any job opening, because "a job is a job" -- something with a lot of physical demands is a specific *type* of labor that not everyone is well-suited for.

Are your offices/warehouses located near large concentrations of unemployed people? If you're in the outskirts of an urban area, how do people get to work? Would something like a shuttle bus from a central location attract *and retain* more workers? What are people saying in their exit interviews? Quitting after one day sounds like they either were overly optimistic about their capabilities, or that something may not be coming across, communication-wise, about the expectations of the job.

Best of luck in your hiring -- it's a difficult situation, seeing so many people out of jobs, but needing a very specific combination of skills, physical capabilities, and *irregular-schedule availability*, which I suspect may be the biggest disincentive for workers, because it exacerbates the already-existing transportation barriers to employment access.

-- A <3
Sep. 25th, 2014 06:04 pm (UTC)
Actually, there's sort of a trend like that already, where people who can't find work are starting their own businesses in record numbers.

There are systemic and institutional road blocks. To start a business, even a lemonaid stand, there's significant inputs of capital and start up costs. In a parallel economy, you'd have to find a way to generate prime-economy income as well, before you even open. Business license, incorporation, insurance, et al.

Sep. 25th, 2014 06:39 pm (UTC)
Yep. And one necessary component of a parallel economy might be that source of capital. Without it, bootstrapping a new economy becomes exceptionally difficult.
Sep. 29th, 2014 06:48 pm (UTC)
*nods* The costs associated with incorporation and licensing are a big barrier to entrepreneurial ventures. I am wondering if we could use something like a tax credit that is paid in advance, like venture capital, to cover the bureaucratic costs of starting and running a small business in its first year.

-- A <3
Sep. 29th, 2014 07:40 pm (UTC)
Presumably, a parallel economy might not need conventional incorporation (though that and other oversight becomes an issue to be solved--a parallel structure of business registration and licensure, perhaps? Cheap up front, with costs paid later? Though that leaves the door open to scammers and abusers who register, exploit, and move on, I suppose).
Sep. 25th, 2014 11:23 pm (UTC)
Just finished Upton Sinclair's I, Candidate, and How I Got Licked, his blow-by-blow of losing the 1934 governor's race in California. He got a good share of the votes running on a platform of "production for use" (as opposed to "production for profit"). He wanted to lease and rent idle factories and farmlands for for-use, not-for-sale production to feed, clothe and house the unemployed; establish formal barters so farmers could have their rotting crops canned as long as they weren't sold, etc. It's fascinating reading.

The reaction against him is likewise fascinating. That's the thing about alternative currencies and for-use production; they threaten the main business of the money creators and exchanges. Do that, and you invite their wrath and condemnation. The bank monopoly on money creation is just that, a monopoly, and like every good monopoly must be protected from non-profitable use, even if that use could better the lives of perhaps millions.
Sep. 29th, 2014 06:48 pm (UTC)
That sounds FASCINATING -- I will have to pick that up! Thank you for the recommendation!

-- A <3
Sep. 29th, 2014 08:25 pm (UTC)
See reply to Tacit below for yet another!
Sep. 29th, 2014 07:40 pm (UTC)
That sounds like a book that should go on my reading list.
Sep. 29th, 2014 08:24 pm (UTC)
I you're interested primarily in Sinclair's EPIC program, yes. A good dose of Sinclair is invigorating.

If, however, you are more interested in money and the effects it had even then on political campaigns, I would recommend Greg Mitchell's 1992 day-by-day rundown of Sinclair's entry and the race that followed: literally day-by-day; the book is organized day by day. Mitchell's book has the advantage of time, and includes some of the major behind-the-scenes players using some brand new slandering techniques against Sinclair and EPIC, stuff that the candidate may have heard about but had no idea who was behind.
Sep. 26th, 2014 04:06 am (UTC)

i'd assume that the biggest problem is scale.

it's not difficult to have a shared vision and no real "enforcement" of an agreement when it's a relatively small network of people who are connected to each other in a more literal way. but the larger that group grows, the greater the likelihood of a random bad apple who skillfully exploits vulnerable people / social engineers / etc.

at that point, you need some kind of monitoring system and some kind of system to deal with the exploits... and good ideas tend to travel faster than profit, so a good system could gain wider-scale popularity long before the organizer(s) had the necessary capital to deal with the new problems that arise.

you could put a cap on participants, but a big value in currency is in having a large group of people who participate and believe in whichever system...

none of this is to say that i philosophically disagree... i regularly work for barter / trade rather than cashdollars, both with friends and strangers. i strongly prefer to work that way unless i'm in desperate need of cashdollars... it's usually a significantly better deal for everyone involved and doesn't constitute a threat to my tax 'contribution' (i have gotten a somewhat substantial refund every year of my adult life, and still would even if barter was translated to cashdollars...)

Sep. 27th, 2014 10:40 pm (UTC)
Back in the early 1900s, there were a lot of people predicting that in a century, society would become so completely automated that only a small portion of the employable population - maybe something on the order of 10-25% - would actually have a job, and those people wouldn't even need the 60-75 hour workweeks that were extremely common back then. Significantly reducing the population wouldn't change the percentages much. Most people would get some minimal level of free stuff if they weren't being directly supported by a worker, and the unemployed would need to spend their excessive free time amusing themselves with parlor games.

Of course, they didn't predict stuff like rising standards of living using up more resources and making everything more expensive, being significantly disadvantaged in some areas of life if you don't have access to things like computers and cell phones, and western society's spreading (and stubborn clinging to) the "work ethic" concept where if you're not regularly working, you're a crappy excuse of a human being.

Still, sometimes I wonder if we might be partway there in some respects (though we'll probably never completely get there unless all of the current resource issues are somehow dealt with). In that case, high unemployment would be natural consequence of the way things are - but the only reason why it's not higher is because our social structures resist things becoming that way - because they aren't set up to deal with it, and most people don't want it to be.
( 22 comments — Leave a comment )