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Ten Laws of Leadership THIS WEEK

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  • tetjie
    There is a global trend of rising unemployment while productivity continues to rise. You will see in any country that unemployment is always up some
    Message 1 of 1 , Oct 3, 2010
      There is a global trend of rising unemployment while productivity continues to rise. You will see in any country that unemployment is always up some percentage points along with GDP. Logically, the two should in fact be indirectly proportional because, supposedly, as you employ more people, you are going to increase productivity which reflects on GDP. However, rising GDP, which is supposed to create jobs, does not exactly decrease unemployment. Of course, you know that it is because of technologies. Less people, more technology, makes for efficient companies, right?

      Despite the global recession that was supposed to shake the world, rising GDP now characterizes most nations with the possible exception of those with no real governments like Somalia, Afghanistan, and the like, while unemployment has a tendency to overtake GDP. "Contributions to GDP growth: Labour input" is also falling. This means that it takes less labor to produce output. That number is somewhere between 1.5 to .5 in countries with complex business systems. They revel in the idea that they have made each person so productive that it takes less to make more.

      What are the implications of this? First, that absorption of people into the workforce is less needed to increase productivity. Second, that rising productivity which needs more customers/consumers must breed more purchasing power if it must sustain itself. Thus, the expansion of economies must provide jobs in order to sustain purchasing power. Third, that there is a clash between the goal of cost efficiency in companies and the goal of governments all over the world to lower unemployment rates.

      The third is the most dangerous. It means that there are two civilizations at war. It means that rules that government can promulgate have been limited by the legitimated methods of conducting business, businesses given legal capacity to act, juridical persons in the eyes of the law with rights and responsibilities that are less stringent than those imposed on people. For instance, people can go to jail if they promised profit and didn't fulfill them, while corporations don't have to.

      The two civilizations are at war: For the government's side, people must figure into the social mission by, in fact, making people productive, that this productivity must be based on people's ability to contribute and that government must provide enough space for these productive inputs to be absorbed the society in order to make healthy individuals that will not disrupt the social order. In direct collision with this mission, the business side as we know it, is the business of employing as few people as possible because people are high-maintenance, are prone to unpredictable disruptions, and are subject to government rules that can be restrictive and prohibitive to business ends.

      Interpreting this further, the system has made people at war with profits. This should never have been the case, but the conflict arose only because the definition of profit had become more and more restricted to mathematical measurements including financial, statistical, and monetary indicators. I will not go on to say that private property is the culprit here. I have a pretty different idea as to how private property came to be, and how private property is in fact essential to absorb labor inputs where organizing systems and people are as important as working in them.

      What is important is to upset the trend that, if it continues, will take more and more people into poverty. And to do this, we must take a step back to see how we can reconcile business with governing over people's welfare. Corporate Social Responsibility tends to do worse by rewarding mendicants rather than empowering them to create their own productive space. This, by the way, is the sum of many a capitalist naysayer's fears --- that people will soon become highly dependent on government and their welfare checks, and not work anymore. This is the scenario often used to induce contempt for the government against the shiny veneer of professionals in business. But truly, as the trend above has illustrated, it is in fact the efficiency measures of business that has cut off people from their own productive inputs and made dependents of them.

      People's needs can never be diminished: They need to eat, sleep, clothe, house, and express labor. Either we make them work for their own keep or we will supply their own keep. There's no way around it. Cutting off people from creating positive social contributions is to play God and choosing non-productivity for them. There's not even a God in any religion that makes that choice for people as much as capitalism does.

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