The Great Recession decimated millions and millions of jobs, leaving countless numbers of hard-working Americans without incomes or prospects. Created by the financial industry meltdown in 2008, more than eight million jobs vaporized in its wake sending the U.S. economy into a long-term swoon with the official unemployment rate stuck indefinitely at about 9 percent. The high unemployment rate represents millions and millions of largely forgotten people unable to earn a livelihood, support a family, or otherwise participate in the American Dream. This translates to lots of home foreclosures and folks moving in with friends and relatives to ride out the economic storm, surviving any way they can.
Ezra Klein of the Washington Post describes the persistent high unemployment rate in the second year of the recovery as an “absolute, unmitigated catastrophe,” comprising “millions and millions of people who are suffering unnecessarily.” He goes on to say that these folks will have “lower lifetime earnings, more depression and suicide, more arrests and divorce.” Their children will suffer, too, “with lower earnings over the course of their entire lifetimes.”
More than six million people have been unemployed for 27 weeks or longer, and the average worker has been jobless for 37 weeks, creating something that Nobel Prize economist Paul Krugman describes as a “permanent underclass of the jobless,” referring to this group as “America’s forgotten millions.” According to Arun Gupta, a founding editor of The Indypendent, we are facing a jobless future where the market cannot provide for the 25-30 million unemployed or underemployed.
A 75 Percent Solution?
The extent of the crisis might not be apparent to everyone because the U.S. economy seems to be working reasonably well for about 75 percent of the available workforce. The "other" 25 percent consists of the unemployed (e.g., those who are collecting unemployment benefits), the underemployed (e.g., those forced to work part-time when they need full-time employment), the non-employed (those who have dropped out of the employment market and are no longer counted as unemployed), and the working poor (e.g., the vast underclass of all those people working full-time dead-end very low-paying jobs while trying to support families).
For some of us, this 75 percent "success" rate is simply not good enough! Considering the tepid pace of economic recovery (and the enormity of the 2008 crash), this condition is expected to be with us for many years. Not only does there exist a moral imperative to address this situation and to help our fellow citizens participate fully in the great American adventure, there is also an economic urgency to solve this problem as well.
The "other" 25 percent of the workforce represents a huge "drag" on the overall economy, impacting all of us regardless of our respective places on the income scale. Because of diminished or nonexistent incomes, millions and millions of folks need government support (which drains government treasuries), while the government is starved of tax revenues from these same non-tax paying millions (which, of course, leads to spiraling deficits and draconian cuts in services).
The economy has experienced some job growth in recent months, creating the illusory hope that economic “recovery” will soon return all the jobs lost during the meltdown. Keep in mind that the economy needs to create between 125,000 and 150,000 jobs every month just to absorb all the new job seekers associated with U.S. population growth. For example, the reported job growth of 244,000 jobs in April means that only about 100,000 of the more than eight million lost jobs were recovered. At this rate, it will take many years to replace all the jobs that vanished during the Great Recession.
The Slate’s Annie Lowrey reports that the jobs being added “for the most part aren’t great ones.” Just 14 percent of February’s 200,000 new jobs were in high-wage industries, while half of them came from low-wage industries. Consider, too, the findings of the National Employment Law Project (NELP), as reported by the Washington Post’s Harold Meyerson, that “40 percent of the jobs lost in the recession came from higher-wage industries,” and are now being replaced mainly by lower-wage jobs (e.g., retail clerks, cashiers, food preparers).
Specifically, jobs paying an average of $19.05 to $31.40 per hour are being replaced by those paying an average of $9.03 to $12.91 per hour, as reported by former Labor Secretary Robert Reich. This cut in pay represents a considerable drop in the average American standard of living. Swapping higher paying jobs for lower paying jobs also has the effect of reducing the overall spending capability of the American consumer. So, even as we are very gradually becoming re-employed, we are becoming poorer as a nation. This means that as time goes on there is going to be less and less money (per capita) to grow the economy and create new (good) jobs, causing the “recovery” to proceed very very slowly and haltingly.
Adds Andy Kroll, reporter for Mother Jones magazine, citing recent NELP analysis, “The biggest growth in private-sector job creation in the past year occurred in positions in the low-wage retail, administrative, and food service sectors of the economy. The hardest hit industries in terms of employment now are finance, manufacturing, and especially construction, which was decimated when the housing bubble burst in 2007 and has yet to recover. Meanwhile, NELP found that hiring for temporary administrative and waste-management jobs, health-care jobs, and of course those fast-food restaurants has surged.”
The Modest Proposal
Despite the catastrophic level of the 2008 economic calamity and the obscene levels of financial industry recklessness that enabled it to occur, the government’s response has been surprisingly timid. Apparently, our elected officials are incapable of challenging the barons of Wall Street to enact any sort of legitimate financial reform or to restore the various types of oversight that have been systematically discarded during the past 30 years. Apparently, they feel the game is better when there are no referees on the playing field.
Without having any realistic expectation that the cavalry (i.e., the government) would respond to rescue the American people from further abuses by the folks controlling the financial power, I decided to create a “funds transfer mechanism” that uses existing financial industry architecture. I spent many many months analyzing the financial crash and its aftermath, particularly the mechanics of the meltdown and the resulting long-term hardship foisted upon ordinary Americans. I created a plan that utilizes the financial power of Wall Street to create jobs on Main Street, titled A Modest Proposal to Save the American Economy: Entrepreneurial Blitzkrieg as Job Creation Vehicle. The alternative, of course, is to wait (and wait and wait ... and wait) until the economy "heals" itself, and hope that all lost jobs eventually return.
The goal of the “Modest Proposal” is to generate interest in a purely private sector solution to the high unemployment problem and to create a “critical mass” of interest among investors, entrepreneurs, public officials, and all flavors of professionals. The plan introduces the concept of the Entrepreneurial Blitzkrieg, the only credible solution available to resolve the projected long-term high unemployment rate (8% to 10% indefinitely). The premise of the Entrepreneurial Blitzkrieg is the simultaneous creation of many many new business ventures to flood the economy with new jobs, new incomes, and new consumer spending – enough to accelerate the American economy's return to full employment. The gasoline that fuels the Entrepreneurial Blitzkrieg is the venture-backed security (VBS), a new financial instrument based on pooling together many new business ventures into one large securitized investment bundle that minimizes entrepreneurial risk and maximizes investor returns.
Why should anyone care about the “Modest Proposal”? Well, for one thing, American citizens historically tend to care about the well-being of their fellow Americans and the plight of those suffering because of economic vicissitudes beyond their control. If implemented, the “Modest Proposal” would transfer huge amounts of investment funding to entrepreneurs via a non-political non-partisan entirely Free Market mechanism. What this means is that waves of new businesses would be created to soak up all the many millions of folks who are unemployed, thus giving them a chance to get back to having a life (and, of course, re-booting the U.S. economy for the betterment of us all).
Again, why should anyone care? Three obvious reasons: (1) The new businesses and jobs will create a huge number of new customers for existing businesses, enhancing the job security and financial well-being of those people currently employed. (2) The tsunami of new business creation will enable those folks currently unemployed to re-enter the workforce as productive members of society, with incomes that allow them to pay for food, shelter, clothing, and whatever else they need. (3) Entrepreneurs will benefit from the availability of investment funding, enabling them to launch their own businesses or participate in startup enterprises.
One might argue that the "Modest Proposal" is based somewhat on cynicism, as it proposes to hand a new form of financial nitroglycerin to the same folks who crashed the economy in 2008. The plan might also be viewed as a Robin Hood solution, perhaps simply way too naive with its ideal of empowering the American proletariat via new business creation as funded by Wall Street’s financial giants.
Nonetheless, the approach described in the proposal uses existing financial industry architecture to transfer enormous sums of investment funding from those who have it (Wall Street) to those who need it (Main Street) – without requiring government tax incentives or subsidies (or waiting for them to be established). This is an entrepreneurial mechanism that perhaps even Ayn Rand (gasp!) would embrace (as well as the cantankerous rabble who call themselves the Tea Party).
Ultimately, the entrepreneurial blitzkrieg was cooked up in response to a moral imperative to take action (independent of government dithering) to empower the financially disenfranchised. My proposal uses entrepreneurship on a massive scale to tackle the ongoing high unemployment problem, which has left millions and millions of Americans grasping at the last vestiges of the American Dream.
Long-term unemployment is at record levels and the pace of the tepid "recovery" from the Great Recession will require years to return the country to full employment. High unemployment means that millions of people struggle daily to find adequate food and shelter, losing homes to foreclosure, and enduring ongoing emotional despair. This is an unacceptable scenario! In the mean time, government coffers are depleted while straining to address the extreme hardship, and tax revenues are greatly diminished because so many jobless folks cannot pay taxes.
By embracing the concepts contained in the "Modest Proposal" and re-empowering the "lost" 25 percent of the workforce through massive job creation, the economy receives a turbo-boost creating a "rising tide" of economic activity that lifts all sectors. The entrepreneurial blitzkrieg puts more money in play, provides real incomes for job seekers, generates more revenue and profit for business entities, and makes the American Dream once again a reality for every American citizen.