Stewart Levine

*Let's get this spread all over the Internet. Someone is making complete <br />
sense. Maybe Obama will pick up on it, huh? Joel Barker*<br />
<br />
My home country of Norway has an unemployment rate of 3.2% (August 2009). The <br />
U.S. rate is 9.8% (September 2009).<br />
<br />
Why such disparity?<br />
<br />
The difference lies in the fact that in Norway, you either work or you are in <br />
training. This maximizes the productive capacity of the country and serves to <br />
maintain a flexible work force. Furthermore, the training makes it possible to <br />
pay some of the highest wages in the world. The minimum wage in Norway is <br />
$20.00 per hour, as compared with $7.25 in the United States.<br />
<br />
Norway has a social democratic government with a hair-thin plurality in <br />
Parliament. Norway also is a market economy. Could we learn something from <br />
them about employment policies, knowing they were formulated through consensus <br />
of /all/ the political parties in Norway?<br />
<br />
Let’s say the U.S. would aim for 3.2% unemployment, the same as Norway. <br />
That would lower the current rate by 6.6%. If we also import Norway’s “work or <br />
in training” program, that could put ten million unemployed Americans into <br />
training, and with a very high probability, more quickly into new jobs.<br />
<br />
The US did something quite similar at the end of World War II, when millions <br />
of Americans flooded the labor market after having served in the Armed Forces. <br />
About 2.2 million signed up for the GI Bill, passed in<br />
1944 to make the transition to civilian life easier. It is one of the most <br />
successful programs in U.S. history. The GI Bill looked at the /demand/ side, <br />
and channeled funds directly to the people who needed the money for their <br />
personal choices for education and training.<br />
<br />
It jumpstarted the American Middle Class! Higher education had mainly been for <br />
the elite; now it became an option for anyone who had served in the military. <br />
Record population growth followed (this was the start of the /baby boomers/), <br />
and subsequently many of these baby boomers were introduced to advanced <br />
education and training through the example of their parents. Thus the largest <br />
generation in U.S. history also became the best educated work force in the <br />
world.<br />
<br />
Let us review what the Bush and Obama administrations have done with regard to <br />
improving the economy in 2008 and 2009.<br />
<br />
President Bush asked for and received $700 billion to rescue the banking <br />
system and another $25 billion to rescue two of the Big Three Detroit auto <br />
makers. An economist would look at this as a supply side intervention.<br />
<br />
Supply side interventions were also largely the thinking behind the Obama <br />
Administration bill – the $787 billion went for Medicaid ($87B); energy <br />
($54B); roads, bridges and construction ($90B); modernizing the education <br />
sector ($141B); and helping workers with extended and increased unemployment <br />
payments, including some funds for training.<br />
<br />
Eighty percent of all capital is human capital. The three stimulus packages, <br />
adding up to $1.512 Trillion, barely touched investment in human capital.<br />
<br />
But investment in human capital yields the highest returns, just as it did in <br />
1946 with the GI Bill. And just as it did in Japan in 1946, when the war <br />
ravaged country looked for the best way to grow. Japan recovered from WWII by <br />
investing in the only resource they had -- their own people<br />
-- and became the second largest economy in the world.<br />
<br />
Let’s see how we */could/* deal with U.S. unemployment. After all, an <br />
unemployment rate of 9.8% is a drag on the United States economy. We could <br />
have produced $1.4 trillion more per year with those people working rather <br />
than being idle.<br />
<br />
What would an investment in 10 million unemployed Americans cost?<br />
<br />
Let’s do what the GI Bill did: Here is a voucher for you to finance any <br />
education and training that you desire and that will help you get another job. <br />
Let us make the voucher $20,000 per year for up to four years. That’s $80,000 <br />
per person -- $800 billion in total, about the same amount the bailouts of the <br />
banking and auto sector cost U.S. taxpayers.<br />
<br />
But the 10 million Americans are */people/* -- not delinquent mortgages, not <br />
brick and mortar, and not machinery.<br />
<br />
Let us be conservative and assume that they will go from zero (negative pay, <br />
actually, if they drew upon personal savings while looking for<br />
work) to average pay once the education was completed. Average hourly pay in <br />
the U.S. is approximately $20 per hour. Ten million Americans will thus earn <br />
$20 per hour X 2,000 annual hours X 10,000,000 people = $400 billion per year. <br />
Over ten years, they will have earned at least $4 trillion. From this, they <br />
will have paid some $1.4 trillion in U.S. <br />
taxes. And that is a /profit/ of $600 billion in ten years after the entire <br />
investment of $800 billion has been paid back -- with more gains to follow.<br />
<br />
*/Not/* improving unemployment already costs us $1.4 trillion per year. <br />
That is an entire current U.S. GDP over ten years. So our net return is really <br />
$14.0 trillion + $600 billion, or $14.6 trillion, for an investment of $800 <br />
billion. That is a return of 24.3 times the investment over 10 years -- a <br />
2,430% return on investment.<br />
<br />
I’ll be surprised if the three combined stimulus payments packages implemented <br />
by the Bush and Obama Administrations produce anywhere near this kind of <br />
return on their $1.512 Trillion investment.<br />
<br />
Why don’t we invest in the most important and precious resource we have<br />
-- our own people? Why don’t we admit that meaningful work is a basic human <br />
need that helps everyone when that need is met? Why don’t we focus on avoiding <br />
the demeaning and undignified misery that unemployment implies, and avoid the <br />
broken families, the increased suicide rate, the known linkages to depression <br />
and disease, and the economic catastrophe that unemployment brings?<br />
<br />
All those who have been unemployed through no fault of their own know what I <br />
am talking about. The pain of being fired or laid off is real. It is like a <br />
dagger through the heart for a proud and seasoned worker—it is the brutal <br />
force of an uncaring market that we will never forget. Why not create a market <br />
for willing learners to counteract this pain? And make the power of the market <br />
go /our/ way? The jobs people will choose to prepare for are the jobs of the <br />
future. Shifting the focus from what has been to what will come is adaptation <br />
at its finest.<br />
<br />
I don’t see a downside to a rule that says: “You either work, or you are in <br />
training.” It is the closest we come to nature’s own survival<br />
rule: If you can’t survive the way you are, mutate!<br />
<br />
It is also the best investment we can make, and it has made Norway one of the <br />
richest countries in the world. For several consecutive years, Norway, among <br />
all the countries of the world, has been chosen by the United Nations as the <br />
best country in which to live.<br />
<br />
There is grace and dignity in being able to work. And there is grace and <br />
dignity in receiving the opportunity to learn.<br />
<br />
It is almost too good to be true that study and learning are the very best <br />
ways that we can use our scarce resources when a recession is again upon us in <br />
a future year. And when it comes, it is usually during the month of October, <br />
when we are raking the dead leaves from a glorious Midwest summer.<br />
<br />
All around us nature will be preparing for survival. It will be a good time <br />
for us to follow nature’s example before the gathering storm.<br />