May Day! Our Unemployment Crisis

There may be no better day of the year than May 1 (May Day) to call attention to the plight of the unemployed…and to demand dramatic actions from our public officials to create jobs.

The Bureau of Labor Statistics reports the March U-6 unemployment rate was 15.7%. The U-6 rate includes total unemployed, plus persons unemployment no longer looking for work, plus total part time employed for economic reasons. Rates for people of color and youth are much higher. The unemployment rate during the Great Depression, by comparison, was 25%.

Fewer employed means less money in the pockets of millions of people who, as consumers, form the backbone (70%) of the US economy. Fewer dollars to spend translates to fewer purchases, fewer businesses who produce goods and services and fewer workers in those businesses. It’s a vicious circle. Conditions are dire when even Wall-Mart is having a hard time – an April 28 report says shoppers are purchasing less at the end of each month as money is running out at a faster clip.

We can thank both corporate and government policies for the rise in unemployment.

On the corporate side, the movement of corporate capital abroad has left tornado-like wreckage in community after community – including many in Ohio – as companies moved production facilities to low-wage and low-regulation nations. Investment in technology is the other major corporate cause for unemployment. Machines of all shapes, sizes and sophistication yielded more production with fewer workers. Productivity has never been higher. The number of workers needed to produce so much stuff has never been lower.

On the government sides, tax policies that favor the wealthy over everyone else has resulted in a rich-poor gap of near historic proportions. Sociologist William Domhoff in his recent update of Who Rules America documents that the richest 10% people in this country own 98.5% of all financial securities. The rich, super-rich and super-duper-rich squirrel away and speculate their riches. No matter how many Lexuses, yachts, mansions and Guccis purchased, they don’t come close to the collective purchases of middle and lower class people with the same amount of dollars in their pockets. Fewer overall consumer purchases translates to fewer workers needed in the real economy. Federal spending to bail out banks and other financial institutions in the trillions (that’s with a “t”) at the expense of homeowners and spending on unnecessary military weapons, foreign military bases and wars and occupations in an ever growing number of foreign nations are both massive misuses of funds that provide fewer jobs per dollar spent than on just about any other federal program. Compounding these causes were Federal Reserve monetary policies that scraped regulations, encouraged bank leverage, and actively promoted bank speculation using money created as debt by banks out of thin air. The resulting economic collapse caused millions of home foreclosures and pink slips to workers.

Coxey’s Army

On May Day in 1894, Jacob Coxey stepped onto the grounds of the US Capital in Washington, DC. A day earlier, this businessman and social reformer along with 500 unemployed laborers completed a march from Coxey’s home in Massillon, Ohio. “Coxey’s Army,” as it came to be known, had marched for jobs. The economic Panic of 1893 was followed by a severe depression. Coxey and his fellow marchers had waged a “petition in boots” war against unemployment, demanding a federal public works jobs program.

The means for funding the program by this “petition in boots” was unique.
– It didn’t call on the government to raise taxes.
– It didn’t advocate for shifting funds from one part of government to another.
– Nor did it call for the government to borrow the cost of the program, $500 million, from bankers – which would have to be repaid with interest – lining the pockets of the bankers.

Coxey and his Army called, instead, for the US Treasury to directly print and issue $500 million to employ 4 million people. Specifically, they proposed two bills. The first, a “Good Roads Bill,” would help farmers through $500 million issued by the federal government in legal tender notes, or greenbacks, to construct rural roads. The second, a noninterest-bearing bonds bill, would empower state and local governments to issue noninterest-bearing bonds to be used to borrow legal tender notes from the federal treasury. This money would be used to build urban libraries, schools, utility plants and marketplaces.

“Money exists not by nature but by law,” Aristotle said. Unbeknownst to most people, the colonists issued “”Continentals” and the Lincoln Administration “Greenbacks” to fund the Revolutionary and Civil wars respectively – all debt and interest free. More than 200 prominent economists during the Great Depression developed and endorsed “The Chicago Plan” – which declared that only the government should create money – to address the economic crisis.

Whatever is used as money attains its worth and credibility when it’s accepted by society. “We the people” should have ultimate democratic authority to issue and circulate money, not banks or bankers. The issuance of money should be democratized. Inflation won’t result if public money is spent on needed goods and services (as opposed to wars and financial speculation).

Unfortunately, our current money system is privatized and corporatized. Private banks and the Federal Reserve create more than 95 percent of all our money. It is created literally “out of thin air” by banks and bankers as loans (debt) for their own gain, regardless of society’s needs. Banks can loan $10 for every $1 held in reserve. We see how well they’ve done in this dictatorial money system.

Call for Nationwide Jobs Program

May Day 2011 is a fine time to (re)think and (re)commit to creating jobs. Current political fixation on deficits and debts are diversions from our unemployment crisis. Rising stock markets and corporate profits mean nothing if millions who want a job don’t have one. The corporate sector isn’t creating the jobs necessary to remedy unemployment.

A bold plan to create a public program of good paying jobs is called for. Funding for it can come from three sources.

1. Increased taxes on the wealthy.
2. Cuts in the military budget.
3. Issuing public money.

Much in progressive circles have been written on the first two options but little on the third.

US Rep. Dennis Kucinich in the last Congress introduced the National Emergency Employment Defense Act, HR 6550. Public issuance of $2.2 trillion to hire millions of people to repair our nation’s infrastructure is one of the 3 major provisions of the bill. The other two are to democratize the Federal Reserve by moving it under the authority of the Treasury Department and ending the ability of banks to create money out of thin air.

The beauty and irony of Kucinich’s bill, to be reintroduced this year, is that these three provisions would institutionalize what most of the public believes already exists – that the Federal Reserve is public, that banks only loan money that they possess, and that the government creates our money.

Encourage your Congressperson to learn about and cosponsor Kucinich’s bill when it is reintroduced this year. Ask your two US Senators to contact Rep. Kucinich about becoming a Senate sponsor. Your Senators and Congressperson need to know about this bill.

Reordering our tax and spending policies are certainly important avenues for freeing up resources for job creation and moving us toward a more sane and humane society. But don’t ignore our monetary system. Democratizing our money system is not only important to remedy unemployment. It’s critical as well in taking democratic charge of our entire economy. And without real economic justice, political justice is unattainable.