No Progress Without A Little Regress.
I think I've spotted a flaw in our plans for economic recovery to which we may well be blind because it is the precise opposite of what we intuitively think needs to happen to kick start growth...
...The reasons for which, I shall explain in due course.
The flaw is this:
In the intervening period between the last recession, and this great recession, a great deal of automation of industrial processes which drive our economies has taken place, each technological advance in the automation of a process taking the place of many workers. And while it is good, when times are good, and the economy is growing, to continue this process of automation, because you free the available human workforce for other tasks, while cutting costs attendant on human employment in those areas where automation takes place... when the economy contracts, or begins to collapse, the diminution of jobs available for the human workforce decreases disproportionately, as the work, in raw terms, which takes place in our national gross domestic output remains, just not for human hands.
The Human Element
Imagine two lines made by water marks on a tidal wall One, the total work of a nation, and the other, the level of automation, under it...as the tide of total work increases the upper line increases, bringing the automated line up under it in proportion... but as the upper line of total work available recedes, the lower, automated line does not, or much slower. And the difference between these two, growing less in recession, is the human element, gradually expunged from the workplace, as companies look increasingly to automation to cut expenditure associated with human employment as a way to cope with the contraction in the economy.
You can now see, that this creates a feedback loop of economic contraction causing automation, creating a greater reliance on the state by the increasingly redundant human workforce, requiring greater taxation on business, which eats into their profit margins, and share price, which in turn causes them to automate more, making more workers redundant, greater state reliance, more taxation, etc. etc. etc.
Not only this, but the automations are carried out by large corporations, which are usually based outside the country in which this automation occurs, so the expenditure on such automation is money going out of the country, whereas, if it were paid to the equivalent workforce, would stay, and work in the community, and do more, as “sticky money” (see my idea: Economic Time), reducing the burden on the state, allowing for an easement of taxation, giving people there money in their pockets through wages to spend within that community, or within the nation at the very least.
And so it is that a possible solution emerges, based on a fundamental truth of this relationship between automation (technological advancement of industrial processes, in this case):
As the Economy grows, and improves, so automation can, and should take place, but when it contracts, the automation of processes should also contract in direct proportion.
...freeing jobs for the workforce which at the very least, eases the slide into recession, if it does not arrest it's contracting momentum altogether.
They've yet to invent the machine that bangs it's head on the wall on your behalf, or equal to the banging of a hundred men's heads on a hundred walls.
….But this is the problem, because as each business has regard only to it's own balance sheets and ledgers, over the immediate quarter, or financial year, it cannot see this process taking place, and it is not deemed to be in it's interest... and even, counter to it.
Even if they were aware of it, they could not de-automate and raise the workforce costs in it's place, as this would make the share holders asks the kind of questions that would demand those short term answers... such as are likely to end in the company director or chair person being instantly sacked “are you mad, purposely raising our outgoings, and eating away at our profits?!!!”
But until they can see this, the slide, or perpetual bouncing along the bottom will continue, or get worse.
Grass Roots Recovery
But there is a group people in industry who don't have share holders, do, or have automated, and could possible find a benefit in de-automating.....Farmers.
And here, I would suggest a start:
With Combine Harvesters, tractors, and other farm equipment costing eye watering amounts (300 thousand Euros I saw some combine harvesters going for!), which the loans they have taken out to buy them an onerous monthly sum, any extra expense, can possibly tip them over the edge, into default, or bankruptcy... such as, the cost of fuel.
Having scanned the internet for basic specifications on which to base this illustration, I see that an average field of 10 acres, would take some 40 trips end to end to harvest that whole field, the average length being between three, and five hundred metres long, taken at (mid way between these two) four hundred metres, this is 40 times 400 metres, or 16000 metres. This is nearly 10 miles of travelling to harvest this one field.
And with a fuel tank capacity of about 300 litres of fuel, and an optimistic fuel efficiency of 4mpg, it takes two and a half gallons per field (nine and a half litres) at 144.6 Euros per litre, 1373.7 Euros per field, and if the farmer has lets say, 5 fields, this cost is 6868.5 Euros to harvest his fields, on top of the repayments on the cost of the harvester, and other bills.
If this fuel cost goes up 5% due to global economic factors or just oil company greed or speculation or price fixing (it sure doesn't come down!) then it is 7211.9 Euros. Too Much??
Then if you just paid this out to local unemployed workers instead, at 50 Euros a head say, for an afternoon's work, then about 144 people have work for the day with scythes or sickles... how much of his fields could they get through, and keep that money in the local economy (perhaps coming back to him by buying his produce with the money he paid them)? In an age when people might be glad for any work they can get, for however long, and even at below minimum wage ( that hasn't changed, even though the economic factors have all changed around it... I think it should likewise expand and contract with the economy as a relative value, but that's another point for another time), this could start the process of rebuilding the economy from the ground up, wherever, and in whatever industry it could be used (incidentally, if every farmer did this, they could not only use the fuel they saved for another day, or task, but they would slow the demand for fuel, and bring down the cost per litre on the next purchase),
...By getting people back into the economy, and the money back into their households, reduce the burden on the state, and from the households, get the money back into the economy, and onward and upward!