A Radical Proposal to Permanently Reduce the Unemployment Rate

Eliminate At Will Employment, Unemployment Insurance and Taxes Collected to Pay for Unemployment Insurance

A top former White House aide to Barack Obama sees a "titanic struggle" emerging as the Democratic incumbent confronts awful economic numbers and Republican political opposition that seems bent on defeating the guy for some reason.

Background
Two years ago, long before President Obama decided that he must have a laser like focus on the unemployment situation, I contacted the two Michigan Senators, Carl Levin and Debbie Stabenow, with a radical proposal to reduce unemployment rates. I called it Jobs for America. I also sent it directly to the President via the
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official White House website. The text of that message seems to have been largely lost on all the powers to be. Today, unemployment or JOBS is our number one priority but few of the Washington insiders have the courage to tackle this problem head on. Fortunately, it is Wall Street (notwithstanding the OSW phenomenon) that is slowly beginning to understand the real issues (see for example, the extract from the article by Mirhaydari, cited below).

It is not the Titanic (President Obamas reelection campaign) that is sinking. It is the US economy that is sinking and with it the American Dream and the lives of many in middle America, like the many who lost their lives on that fateful night when the Titanic hit the iceberg.

The upside of my contact with the Michigan Senators is the periodic updates that I have now been receiving about Inside the Beltway Activities, directly from the senators. I received one such update from Senator Levin, just yesterday (October 12, 2001, a date etched forever in American history, being the 519th anniversary of the day on which Columbus found land and a new continent), following the Senate passage of the Bill to Curb Foreign Currency Manipulation. I have taken this opportunity to forward a few simple proposals to Senator Levin and am taking the liberty of publicizing them here (with some revisions), considering the GREAT URGENCY of this matter. ****************************************************************** Dear Senator Levin: Thank you for the enclosed update and my best wishes for the enactment of this legislation. May I also suggest that you take the lead to correct some of the real reasons for the dramatic reversal in the power balance between employees and businesses, mentioned, for example, in the following article, and I quote.

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http://money.msn.com/investment-advice/how-to-get-even-with-wall-streetmirhaydari.aspx There's no rescue party coming. The driver of rising inequality has been a shift in the power balance between workers and businesses. Perhaps politics will eventually offer some remedy, such as the antiChina currency bill working its way through Congress with bipartisan support. ............ But the root cause won't change quickly, if ever. ............ job creation and wage growth have stalled as U.S. companies outsource, offshore and downsize to take advantage of cheap foreign labor. Now, let us craft some legislation to reverse this. Let the companies pay for what has really become an unfair trade practice - in reverse - they are finding cheap labor abroad and, to add insult to injury, also taking hard-earned American capital and American innovations and technologies, out of the country instead of creating jobs here. Let foreign capital be used to build these manufacturing plants or other white collar job centers. Even some of the TARP money was used to build factories/company quarters in China! Daimler Chrysler was never headquartered in Michigan after the (now infamous) 1998 merger of the German Daimler-Benz and the quintessential American Chrysler (Lee Iacocca famously said, If you find a better car, buy it!) corporations because German law did not permit such a shift. Like you have mentioned, Sir, in your update, we must have FREE and FAIR trade, not just FREE trade. Right now it is FREE and UNFAIR trade and currency manipulation is just one part of the problem. The remedy is simple. Here are a few suggestions going beyond the currency manipulation legislation. 1. Impose a 20% tax on all companies that take capital out of the country to build manufacturing plants and/or white collar job centers in low wage countries (as in China, India, Philippines, Thailand, Sri Lanka, Vietnam, even some European countries like Poland, Slovakia, and the list goes on).
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2. Eliminate at will employment. Provide all employees with a minimum of 6 months of (100%) wages (yes, yes, the full 100% of their wage for the same 24 weeks that was the standard period for collecting unemployment benefits) BEFORE any employer can let them go, at will. This should also eliminate the need for unemployment insurance a win also for the employer and therefore a BIGGIE for corporate America and Wall Street - and make the company more responsible and accountable for all of its decisions (hiring, production, etc.). Let the company pay for the forced not at will unemployment, with the employee getting a decent wage while looking for a new job, while she/he been sent to be home at will - of the employer alone! (A really good thing for the economy as a whole, if you ask me Sir, especially for local governments which have suffered a loss of tax revenues due to falling housing values, all created by the inability Dick and Jane living in their communities to hold a job; just go back and see that classic movie once again to understand the impact of unemployment on peoples lives!) To put it simply, in politicospeak, let us eliminate the role of BIG government in this whole mess of providing unemployment benefits and PRIVATIZE it. If there ever was a truly bipartisan idea that both Republicans and Democrats should (and can I say, would?) love, this certainly must take the prize and be the first of its kind, in my humble opinion. And Jill Soonnopaycheckeringer could benefit too! 3. Provide easy access to loans for small companies - fix problems with current failed system and ease the federal regulations. Small business should be able to borrow up to 6 months or 12 months of working capital, if they promise to hire new employees. Loans under $50,000 should be approved without the horrendous paperwork that businesses are now being asked to submit. This will greatly help struggling new start-ups and also those businesses that are suffering actually from a lack of demand while the economy improves. (Lack of demand = No Jobs = No Paycheck = Zero Spending Power!) I can come up with some more ideas but I am sure you and your staff can think of many more JOBS creating ideas and pass legislation to counter the 30+ year slide of middle America. Indeed, we need a task force to look into laws that have allowed a shift in the power balance between businesses and their employees. Your own subcommittee report on Repatriating Offshore Funds by corporations points out many glaring problems with current policies, some conceived in good faith, but now proven to be defective and injurious to society as a whole on hindsight. http://levin.senate.gov/download/repatriating-offshore-funds [PDF 691KB]
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http://news.yahoo.com/decade-difference-concert/video/president-clinton-theamerican-dream-has-been-under-assault-for-30-years-26757760.html Even former President Bill Clinton is now chiming in, see link above. We all need to pay close attention to the three compelling points made by President Clinton in this short video all representing a dramatic techno-socio-econo-political shift. 1. The explosion of Information Technology and Rapid Computerization and Robotization. This led to giant leaps in productivity and actually contributed to the elimination of many middle level jobs. These lost jobs have nothing to do with outsourcing, offshoring, or looking for cheap labor abroad. It has to do with the lack of regulation of the IT sector and its penchant for creating IT solutions without any societal impact statement. If manufacturing industries, drug companies, etc. must provide an environmental impact statement, so must the IT industry since the people whose jobs are being eliminated indiscriminately (albeit unwittingly) are also part of the environment in which we live. If we must debate the implications of stem cell research, we must also debate the implications of rampant computerization and robotization. (See also the series by Farhad Manjoo in Slate magazine on how robots are stealing jobs, even highly skilled jobs requiring many years of college level education. http://www.slate.com/articles/technology/robot_invasion/2011/09/will_robots_s teal_your_job.html ) 2. The transformation of the very idea of what a corporation is. In days gone by, a corporation had equal responsibility to its shareholders, employees,
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customers, and the community in which it operated. Now, the whole corporate philosophy puts shareholders way way above everyone else with detrimental effects that we see now. This needs to change. Corporations have even inalienable rights similar to a person. It is a fundamental change, like the suggestion of regulating the IT industry for its adverse impact on society; see http://www.slate.com/articles/news_and_politics/jurisprudence/2011/10/oscotus _what_ows_protesters_should_focus_on_at_the_supreme_court.html

3. The 30+ year sustained anti-government rant. Even countries with conservative government have not witnessed such a sustained anti-government as we are witnessing in the USA. This must STOP. This is truly unfortunate and it would be best addressed at the political level. The polarization has accelerated with the rise of unemployment and the widespread use of internet message boards and forums by the unemployed who exacerbate every minor disagreement into a major issue. The 24-hour news cycle is a part of this problem too. It is time to impose some curbs for the greater good of society, even on the 24-hour news cycle, the 24.7/365.25 business. There is no need for such fervent business activity at the cost of societal good as a whole.

Needless to say, there are many more such issues. Sometimes, I really wish President Clinton could run for office once again. He seems to have the energy and the desire to contribute. It is a shame we cannot come up with a repeal of the terms-limit amendment for the Presidency.

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In closing, I will be happy to meet with you in person to discuss some more ideas since this is a topic very dear to me. With my best wishes. Very sincerely Dr. V. Laxmanan October 13, 2011

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How about this for a new Business Model for the 21st Century? What must a corporation stand for?

A Business must Create Employment not

Unemployment
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Senator Levins Email Update received on October 12, 2011 Above was in response to this update
Subject: Senate Passes Bill to Curb Foreign Currency Manipulation Date: Wed, 12 Oct 2011 12:57:48 -0400

U.S. Sen. Carl Levin speaks at the launch of Nicholas Shaxson's "Treasure Islands" on April 12, 2011. Dear Dr. Laxmanan: I thought you might be interested in my recent speech before the Senate regarding legislation intended to combat foreign currency manipulation, which the Senate passed on Tuesday by a vote of 63 to 35. When foreign governments, like China, manipulate their currency to gain a competitive advantage for their domestic industries, it tilts the table against American exporters and costs us good-paying jobs here at home. I believe in free trade as long as it is also fair trade, and I have long fought to end these kinds of unfair trading practices that hinder our domestic manufacturers. Despite Chinas insistence that it now allows its currency to appreciate in value, it still maintains an exchange rate system that is pegged to the U.S. dollar. Under this system, China's central bank purchases dollars with the yuan to control the exchange rate, rather than allowing the value of the yuan to float freely in
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international currency markets. As a result, U.S. products are comparatively more expensive for Chinese consumers and products from China are comparatively cheaper for U.S. consumers, thus giving an advantage to Chinese exports. This unfair currency manipulation has contributed to the huge increase in our trade deficit with China and has cost us millions of American jobs. Tuesday, July 12, 2011
US Senator Levin unveils new Stop Tax Haven Abuse Act

If we are truly serious about creating jobs and supporting the middle class, then we should start by strengthening the tools already at our disposal, and we should require the President to use those tools. With the economy yet to rebound, and millions of Americans unable to find a job, I believe we need to insist on proactive measures to ensure a fairer playing field for American manufacturing. With passage of the Currency Exchange Rate Oversight Act of 2011, the Senate has taken an important and long overdue step needed to correct this imbalance. You can view my entire speech regarding currency manipulation and the importance of this legislation on my website at [http://go.usa.gov/9iO]. Sincerely, Carl Levin

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Need An Expert Opinion on this Radical Proposal! Lets check with the 2011 Economics Nobel laureates

The futile predictions of the pointless 'science' of economics

by HYWEL WILLIAMS Last updated at 2:28 PM on 12th October 2011 Read more: http://www.dailymail.co.uk/debate/article-2048184/Economicsfutile-predictions-pointless-science.html#ixzz1afs2qRV4

Exciting news just in from Stockholm. The Royal Swedish Academy of Sciences has decided to award the 2011 Nobel prize in economics to Thomas Sargent of New York University and to Christopher Sims of Princeton. They have, apparently, labored mightily-and over many decades - on the question of how, in the words of the citation, ' economic growth and inflation are affected by temporary increases in interest rates or a tax cut.' Underwhelmed? I certainly am. Any kind of economic development involves a relationship between interest rates, taxation and inflation- and an awful lot of people have hunches or clues about how that might work out. But the idea that economics is a science that might deliver the answers to perplexed policy makers was one of the great illusions of the 20th century.
Thats not exactly an expert opinion. That is a journalists rant! Heres a more balanced and favorable view. Among their achievements, the two Nobel laureates - working separately for the most part over the years - devised tools to analyze how changes in interest rates and taxes affect growth and inflation.

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Their work doesn't provide prescriptions for policymakers to solve today's crises. Rather, their achievement has been to create mathematical models that central bankers and other leaders can use to devise policy proposals. Read more: http://www.sacbee.com/2011/10/10/3973343/businesshighlights.html#ixzz1agIza9r6 Americans Thomas Sargent and Christopher Sims shared the Nobel Prize in economics on Monday for work that governments use to gauge the effect of policy, but they had no easy answers to a global crisis one called simply "this mess." Central to research the two conducted separately in the 1970s were efforts to model and quantify cause and effect in economies, including the complex interplay of state and central bank policy with the expectations of people and businesses. "Panics and crises ... what's going on in Europe now with the euro, that's all about expectations about what other people are going to do," Sargent, 68, said in an interview. Ditto here. http://www.thesudburystar.com/ArticleDisplay.aspx?e=3328923 Heres an expert view coming from a Ph. D. economist who was a student of both Nobel laureates. As he puts it, He had a front row seat to observe the development of both their researches. http://www.bloomberg.com/news/2011-10-13/nobels-give-econometrics-pioneerstheir-due-lars-peter-hansen.html The following is a summation of their lifetime work, and I quote from the above link, Using a statistical model called vector autoregressions, Sims and others proposed ways to extract meaningful shocks using identifying restrictions from economic analysis. This gave researchers the ability to measure the impacts of such shocks, including monetary ones, over multiple periods on macroeconomic time series. If we can all only understand what all this means, and especially explain this to Professors Obama, Biden, Boehner, Cantor, Romeny, Palin, not to exclude anyone from Wall Street, we can figure out how to grow the economy and retire the alarming multi-trillion dollar national debt by extract meaningful shocks and measuring their impact on macroeconomic time scales.
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Ok, current Obama policies are a total failure and that is exactly what the Nobel Economics committee has said with this prize. http://blogs.ajc.com/kyle-wingfield/2011/10/11/a-nobel-rebuke-to-obamaseconomic-policies/ Now, what do we call that assessement? Never mind, time for bipartisanship on this glorious day!

Christopher Sims (L) and Thomas Sargent were honored with the Nobel Prize for answering 'questions regarding the causal relationship between economic policy and different macroeconomic variables such as GDP, inflation, employment and investments'

Now, lets hear what the Nobel laureates themselves have to say about their work. According to Thomas Sargent, economic problems are based on politics, The difficult thing is the politics, he said in Business Week, comparing todays problems to early U.S. history when each of the 13 states were running their politics and issuing their debt individually. Current economists feel that the U.S. should adopt a plan to deal with the budget deficit while avoiding fiscal stringency in the short-run and maintaining an accommodative monetary policy. The problem is figuring out how in the real world to get these things done, Sargent said, while stating that the budget policy in the United States is very uncertain because the government cannot keep its pledges on future benefits while
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keeping taxes down. Its not clear which of the incredible promises are going to be broken first, he said. Read more: http://www.digitaljournal.com/article/312605#ixzz1agL6Fix1 After learning of the prize, Mr. Sims said that the methods he and Mr. Sargent had developed would be essential to finding our way out of the global economic crisis but that there were no easy solutions. If I had a simple answer, I would have been spreading it around the world, he said. Underneath the complex particulars of their research, however, is an often-obscured truth. Economics, at its best, is a set of ideas and methods for the improvement of society. It is not, as so often seems the case today, a set of ideological rules for asserting why we cannot face the challenges of stagnation, job loss and widening inequality. Mr. Sims and Mr. Sargent have been rightly recognized for meeting and exceeding the highest standards of their profession. Ultimately, economic decisions are political. Policy makers have the information they need. The question is their willingness to use it for the broader good. The above remarks due to Sims were taken from the opinion page of the New York Times http://www.nytimes.com/2011/10/12/opinion/a-nobel-honor-in-economics-and-achallenge.html

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