It was a stirring speech. US President Barack Obama promised Americans he would help them get back to work. The government will give more support to the unemployed and teachers; it will rebuild decayed infrastructure; it will give tax cuts to employees and employers alike; it will tax the super-rich. I wanted to believe his every word, but could he pull the magic rabbit out of the hat?
For his first three years in office, Obama neglected the problems of US workers because he was badly advised. His economic team was led by people, notably US Treasury Secretary Timothy Geithner and former treasury secretary Lawrence Summers, focused on banking; these advisers believed that restoring the fortunes of Wall Street was the key to creating jobs — eventually. Recently Obama has brought in people more expert on labor issues, but they have to deal with deep-rooted rot in the jobs world.
Most of the president’s listeners are only too aware that too many people are chasing too few jobs, especially good jobs. The recession has not caused this. For more than a generation, financial prosperity in Europe as in the US has not depended on a robust labor force at home; the work that corporations need can be done cheaper and often better elsewhere.
Again, the digital revolution is finally realizing an old nightmare — that machines can reduce the need for human labor; by 2006 this “replacement effect” stood at 7 percent annually in the service sector. And the viability of lifetime service to a corporation is a thing of the past. The result of these changes is that Western workers have known insecurity and the specter of uselessness for a long time.
Obama did not address these structural problems in his speech. How could he? These are the hard facts of modern capitalism, and the president’s enemies have long accused him of being a closet socialist. Obama has always rightly described himself as a centrist. For this reason, he faces the same dilemma as British Prime Minister David Cameron in centrist mode: Both are trying to trim government while stimulating the economy. The US$447 billion Obama promises to spend sounds like a lot, but there is much less actual cash being put immediately on the table; tax cuts are meant to do the heavy-lifting in job creation.
Such “cost-effective” measures do not do much to deal with the sheer scale of labor problems. Investing in construction projects achieves a big bang for the buck. However, in both Britain and the US, unemployment among unskilled young people hovers at about 22 percent; it requires a great deal of money and remedial expertise to make them competitive in the job market. The number of people suffering from involuntary under-employment now stands at about 14 percent in both countries, workers whose wealth dramatically declines when they work less. They need income support, but this too requires lots of government cash.
The US calculates unemployment in a peculiar way. Its official statistics do not include under-employment, nor are people -without work for more than six months counted. These are instead classed as “discouraged workers”; non-government economists estimate their number at 3 million to 5 million, and they are indeed discouraged, suffering from family crises, alcoholism and depression the longer they are unemployed.
The US remedy for their plight is similar to the idea behind Britain’s “big society”: leave it to churches, voluntary associations and “the community” to sort out the personal and family consequences of long-term unemployment. In practice, that means individuals are thrown back on themselves, since one real effect of the recession has been to beggar many of these civil-society institutions.
The “special relationship” has a perverse twist in the realm of labor; our two societies harbor large numbers of insecure employees whose ills have been addressed timidly by centrist governments. There are real solutions, however, to the travails of work; they are found along Europe’s northern rim — in Scandinavia, Germany and the Netherlands. These more balanced economies have avoided Anglo-American, finance-driven capitalism; their governments have protected established companies, especially small companies, providing capital for growth when banks will not lend it. Norway and Sweden have made concerted efforts to include young people in starter jobs; their youth unemployment stands at about 8 percent. The Germans put big resources into youth training schemes; the Dutch effectively supplement the wages of part-time employees. Factories in Europe’s northern rim have long explored how to deal humanely with automation. Why do we not learn from them?
The Anglo-American elite deploys a “big beast” defense against acting like northern Europeans: In Norway there is no City of London, no Apple. Which produces a paradox: Our big beasts think small about work and its discontents. Perhaps it is true that the US economy is so global and so complex that little can be done to remedy its ills at home. However, Britain is about the same size as Germany and its cultural DNA is northern European.
Much as I admire Obama, I could not help thinking after his speech that time has run out for him. He thinks his reforms will have a real effect during the 14 months before the election. However, if the past is any guide, it takes about three years for government--stimulus measures to bite in the US economy; if Obama’s proposals for public works and tax were enacted tomorrow, their modest effects would be felt during the time of US President Rick Perry. In Britain, the decay of public institutions caused by today’s big society will be British Prime Minister Edward Miliband’s problem. To short-circuit that cursed inheritance, in Britain we need to start thinking big and acting decisively about work, like our near northern neighbors.
Richard Sennett is emeritus professor of sociology at the London School of Economics.
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