The global aspects of unemployment

European Business Review

ISSN: 0955-534X

Article publication date: 1 August 2000




Coleman, J. (2000), "The global aspects of unemployment", European Business Review, Vol. 12 No. 4.



Emerald Group Publishing Limited

Copyright © 2000, MCB UP Limited

The global aspects of unemployment

John Coleman

Keywords Unemployment

At the moment, the world is clearly going down a cul-de-sac. Giant multinational corporations have grown out of wealth produced by mass production and oil and are assisted by company law and the new technologies. In the 19th century, Richard Cobden countered his critics who raised the question of the protection of local industry (and hence local employment) with the argument that it would be automatically protected by the cost of transport. He was probably right then. Now the cost of transport has been massively and artificially reduced by cheap and mass-produced vehicles and cheap fuel. But the net cost of these, socially and environmentally, has never been properly calculated.

In these circumstances it seems that the only answer is a massive tax on mass-produced goods. In the first instance this would seem to be very unpleasant medicine for the multinational corporations, but if the alternative is the cul-de-sac in which their customers do not have the money to buy their products then, like most unpleasant medicines, it will be good for them in the long run and will involve fundamental reorganisation of both their business and their values; it will ensure their survival. In response to questions after his recent Reith Lecture, Sir John Brown, Chairman of BP Amoco, made it plain that companies had to be concerned about their long-term interests and survival.

Exactly the same problem was created in Japan by its large balance of trade surplus which gave the Japanese a false sense of the strength of their economy. The very thing that gave them confidence was in fact undermining their market. Their customers bought their products with their reserves and failed to create their wealth themselves that should have sustained their spending power.

What are the implications of this?

The whole crazy system of vast complicated tax collection, with its exponential growth in complexity needs to be abolished at a stroke. Taxes would be collected from a very limited number of companies over a certain size, probably on a graduated scale according to their size to avoid a simple cut-off point. It would be easy to assess and collect provided the companies co-operated and for them and their shareholders it would be necessary for the long-term advantages to be made plain. For the car industry, for instance, the choice would be between paying these taxes, similar in principle to the old purchase tax, and having fields of unsold cars which they have at present.

Of course, this would make the motor-car and all the mass produced goods much more expensive but it would stimulate competition from small- and medium-sized businesses who would be relieved of the burden of taxes. This would not only mean that their purchasing power would be increased by the amount that the large companies paid in taxes but also by their own wealth creation capacity and have the incidental advantage that they would be enabled to employ vastly greater numbers of people and even perhaps recreate the old system of craftsmanship and apprenticeship at the local level. The advantage to the larger multinationals would be that a vastly increased number of potential customers would be creating wealth themselves and would therefore be able to buy a reduced quantity of their goods discriminatingly, thereby making these companies sustainable in the long term and released from the destructive effects of constantly having to cheapen their goods. Not only would the reduction in production be extremely beneficial to the environment, but it would also reverse the present trends of consumerism which will be disastrous if they spread to China, Russia, India and the developing world.

The other field in which this radical change in the system of taxation would have a beneficial effect is agriculture. The relief from taxation and the increased cost of heavy machinery would make it easier to bring about a return to human labour to produce good "organic" food. This need not mean a return to drudgery in the fields, unless greedy "capitalist" farmers tried to squeeze too much out of their labourers, thinking of them as "hands" as their Victorian ancestors did. Agriculture can offer diversity of work and job satisfaction, albeit hard work. This is indeed a separate but connected subject, but it may be mentioned that it might well provide the present public demand for better food better produced.

The fundamental problem of all human societies has always been to ensure that people at all levels created sufficient wealth to keep the social system going. The communists believed that the government should produce the goods and hand them out to the people according to the government's perception of their needs. Sensible capitalists believe that everybody should share in the work of wealth creation in the widest sense. Greedy capitalists find themselves wanting to take over all production and in the end having to give away their goods through some form of state welfare system which they encourage governments to develop and so end up going down the same cul-de-sac as communism.

Of course, the fundamental implication of this is the need to apply moral principles to the whole structure of a real "New World Order", in which corporations cannot move from one country to another in order to gain tax advantages. The alternative to doing this is "globalisation" plus global rioting.

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