COMMENT

Supply, demand and protection

By Nikos Konstandaras

It is clear that European societies are facing very serious problems, not least of which is youth unemployment and the fact that many existing jobs are threatened by globalization and illegal immigration. At the same time, there does not appear to be any serious agitation taking place that could give rise to ideas as to how these societies should go forward into the new century. So let's throw about some half-baked thoughts. Throughout Europe, the big issue is how to increase productivity without damaging the quality of life of those who are reasonably well off while at the same time improving the lot of the poor and immigrants. The leaders of Europe, in other words, must find ways to mimic Christ's miracle with the loaves and fish. But Christ pulled this off once, whereas our societies have to achieve this daily. We cannot wait for a daily miracle, we need a new social formula - something akin to the economic equivalent of the perpetual motion machine, something that will create wealth with the least possible friction. Lately, no economic theory has established itself as the successor to the those of Adam Smith, Marx and Keynes, who taught us that governments must spend (creating deficits) in order to fight unemployment and keep as many people as possible inside the cycle of work and consumption. Today, most governments have already run up huge deficits while unemployment remains at dangerous levels; in other words, they don't have much room to maneuver. At the same time, technological advances and the globalization of production have created conditions for an economic recovery which might not entail more jobs. Because the largest and usually most productive companies belong to anonymous and multitudinous (and therefore stateless) investors, we cannot expect companies to invest in job creation when the turnaround comes, as former theories would expect. And so it is up to governments to find ways to keep their populations occupied. But the rules of globalization and open markets prevent measures that would protect jobs in countries where labor is considered «expensive.» A possible solution would be a system in which unemployed university graduates and other skilled professionals in European countries could work in parts of the world where their skills would be useful and greatly productive. This does not imply permanent settlement nor a new kind of colonialism. Instead, providing skills in places where they are lacking would help the host societies make their own leaps in economic and social development. On the one hand, the Europeans would get valuable experience while their work would help create conditions that would keep people in the host country at home rather than seeking a better life in countries which are already unable to fully employ their own populations. In other words, in this way, the pressure of unemployment in Europe could be eased while also providing temporary assistance to the societies which need it most and, at the same time, reducing further illegal migration. Perhaps some new «global labor bureau» of the United Nations could supervise this «benevolent cycle. But how would this be funded, seeing as the host countries are unable to pay salaries that would attract European professionals in any significant numbers? The solution could lie in the other part of the problem caused by globalization, the fact that many jobs in Europe are at great risk. Every country needs to be able to create islands of protectionism for sectors of society that may be considered vital for social tranquility. For example, certain industries and services may need protection, or farmers may need supporting in order to keep enough people on the land to keep provincial settlements viable. This protectionism could be monitored and taxed in a way that would keep countries from abusing their right to set up «national priorities.» The money would then go into an international fund which would subsidize the work of European professionals in the countries that have invited them for their skills. In this way, the societies of both the developed and developing countries would benefit. We might even see greater bonding among the world's peoples. And all of them would find some respite in today's storms. It's just a thought...

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