Editor's Page

Unemployment, Poverty, Hunger and Buchenwald

Buenos Aires
Buenos Aires

I used to be an Organization Development consultant and was a member of an international association of colleagues which held yearly meetings in different countries. This one was in Weimar, Germany about thirty years ago. A Danish consultant had been invited to give a talk about her specialty which was “How to Fire People Humanely”.

I remember her remarks, but the memory brings me back to a much stronger and much more important one.

We'll get back to her.

The organizers had arranged for us to visit the Buchenwald concentration camp at the end of our meeting, now a museum, located only three kilometers from town. It was a good idea to schedule that visit at the end, because it would have been difficult to concentrate on our trivial concerns after having seen and felt an example of one of the greatest, most evil human depredations in history. So, as an aside so to speak, I heartily recommend, even, if I could, demand, that you – the reader who has gotten this far – to check out the Wikipedia page here about Buchenwald. There is also a link to Barack Obama's visit to Buchenwald accompanied by Eli Wiesel and Angela Merkel.

Now back to the consulting lady's lecture on unemployment.

She explained some common sense methods, starting with “How not to fire people”: call him or her into the boss's or personnel manager's office, hand him an envelope with two months' salary, a letter of recommendation and a good luck handshake. A bread-winner would more likely go to the nearest pub to drown this blow to his ego and wallet than home to his family.

The “right” way would be give him the option of continuing to come to work during the two months, with complete freedom to dedicate his time to finding new employment; it's easier to find something while still employed than when not. The company should have at least one person responsible for helping him or her to prepare a CV, find likely employers, even supply a psychologist if possible.

That was a long time ago so the details of her talk are hazy, but they are not the reason for writing this. It was one thing she said that has stayed with me clear as a bell: “Unemployment is here to stay!”

She wasn't referring to a recession or even a depression, intrinsic elements of the capitalist system that come and go, but a gradual, inevitable growth of mechanical, computerized, robotic labor which is replacing human labor more and more, and as a process and a cause of unemployment is also here to stay. So that even the most socially aware organization could not help if there is no employment to find.

The Universal Basic Income

This is a concept according to which everyone in a particular country has the right to a basic income which would at least rescue the poor from poverty - economic and psychological. Until now it has only been taken seriously by people in countries that need it least, but ultimately rejected, until now, by their governments. But let's take the country in which I live as an example of what could happen were it tried here: Argentina. Actually all of Latin America has very high rates of poverty, whether the governments admit it or not. In Argentina over 40% of the population is poor, of which over 50% are children. These are official figures, so the truth is probably worse. At the moment much of South America is seething with protest: Chile, Ecuador, Bolivia and, of course, Venezuela. The greatest surprise was Chile which had, apparently, solved the “macroeconomic” puzzle: lower debt, stable currency, prosperous upper and upper-middle classes, a lower poverty percentage – all under the constitution written during the Pinochet military dictatorship. But the government forgot about the poor and unemployed and the people's realization that the greatest share of the economic pie was being enjoyed by a very small percentage of the population. Argentina escaped a similar fate because a presidential election was scheduled and took place. What the new government will do to survive is unknown and in any case is another story. The UBI would replace existing means-based government assistance programs such as unemployment insurance, head-of-family doles, etc., huge chunks of any government's social expenditure. The idea is to guarantee subsistence, and also to encourage enterprise and enable efforts toward improvement – enough to live on, but not to live well.

How could a basic income help to resolve this? Let's say that every legal resident adult receives 30,000 pesos a month (about 500 US$) - not in cash but in a special debit card account. Conditions are:

1. The card may only be used to purchase items from retail outlets.
2. No cash is available.
3. All the credit must have been used within 30 days.
4. Any credit left after 30 days is lost.

Children are credited with 15,000 pesos each, credited to one of the parent's or legal guardian's accounts. Therefore, a “typical” Argentine family consisting of two adults and two children would have an income of 90,000 pesos, enough to lift them out of dire poverty if they are indeed poor. Would they be satisfied? Perhaps some would, but I think that most would try to augment their income. So work would not disappear. On the contrary, homemakers – invariably women – would finally have the value of their work recognized. Artists, musicians (cultural workers) would be able to innovate and create freely without worrying about the next meal and the rent.

Why pay the rich when they don't need it?

Experience indicates that selecting those who receive aid leads to corruption. Argentina already has various economic assistance “plans”. Who decides who benefits from such plans? Often the quid pro quo is “You get the plan if you vote the right way, that is, for me and/or my party.” But there could be a built-in solution. In order to receive the benefits everyone would be obliged to apply for the above mentioned debit card. Would rich people apply? I doubt it, if only because it would be embarrassing if known. And it would certainly become known. The same applies to the middle and upper-middle classes. The number of people who receive the basic income would thus be reduced by the need to apply for the card.

Socialism? Not in the usual sense, only a social method to provide support for the provision of equal opportunity and protection of those unable to enter the labor force because of old-age, disability, or unemployment.

How to finance it

The easiest and perhaps strongest objection is that it would cost too much and be inflationary. That is true if we think of money as objects of value. But in reality money is either in the form of paper promissory notes or numbers in the cyber-ledgers of financial institutions, that is, without any intrinsic value which we do not apply to it. In this case, the promised value is always inserted directly into economic circulation because the debit card owners must spend the original balance within the month or lose it. It would constitute a huge wake-up punch in any sleeping economy, for they will spend. Thus in a sense it finances itself.

For any country to prosper economically it is necessary for the population to consume goods and services. The poor and the unemployed are poor consumers indeed, unless they become successful criminals.

If we really want to make the earth a place worth inhabiting for everyone, and help our neighbors in a practical as well as a moral manner, this kind of universal basic income, although far from solving all the social problems, is a necessary beginning.

I must admit that the connection between a concentration camp and unemployment is a frail one. The bridge between the two is a mutual memory.

Frank Thomas Smith, January 2020