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The Nearby Third World

Like global warming, a world-wide tide of unemployed and working poor people is setting the stage for superheated events. While waiting for the storm they know is coming, politicians spend time analyzing one anothers' shortcomings and looking concerned. Once robust economies teeter on the brink of recession and autocratic governments are overthrown at great human cost.

Whether installed by revolution or election, leaders face equity and poverty issues that energize political discussions and recommend increasingly strident solutions.

In nations not yet in turmoil, public and private debt figures are condemned as unsustainable. This has been leading to wage and entitlement claw-backs. In the USA and Canada, 'right to work' legislation further diminishes embattled trade unions and the specter of plant closing or relocation sits at every negotiating table..

The resulting sense of looming global threat is clearly taking its toll. The re-election of U.S. President Obama in 2012 immediately led to secession petitions in all fifty states, an outcome without precedent or plausible racist connections. (This is, after all, President Obama's second term.) Economic problems have Americans on edge. Once manageable differences of opinion have become deal-breakers.

In Canada federal debt reached $600 billion on November 24. 2012. This amounts to $20,000 for every Canadian. Provincial and municipal obligations bring this to $44,000. Per capita debt figures do not tell the whole story of course.  Not everyone works - perhaps only fifty per cent when the young, old and unemployed are subtracted – and so de facto debt burdens are doubled. Canadians paid $170 million a day to service government debt in 2010.  Assuming 15 million taxpayers, this amounted to $11 a day.

At first glance the public debt portion of the problem seems manageable enough.  Canada's finances and banking system are widely admired; and infrastructure, education, health care and national defense requirements must be financed.  Something has gone wrong however.  Public assets and human resources are no longer generating enough productive activity to sustain economies.  This is why government and personal debt figures are ballooning.  This is why once prosperous nations find themselves shrinking safety nets and dodging crumbling overpasses.

How did this predicament come to pass in an era of amazing  technologies and understandings?  An argument can be made that we are in trouble precisely because of these achievements. If fewer and fewer individuals have good jobs,  if fewer and fewer persons have most of the money, it is hard to see how ordinary well-being can survive.  This is certainly congruent with what we are seeing. Politicians worry about unemployment and public debt.  They talk about balanced budgets and fiscal restraint, but the best they ever manage looks like what American President Obama referred to as kicking the can down the road.

Fortunately not everyone has given up.  Ms. Josette Sheeran, Executive Director of the World Food Programme (WFP), believes that Third World poverty could be solved by harnessing international aid to individual and community resources. Specifically Ms. Sheeran proposes that aid programs be thought of as seed money catalyzing local economies.

Although such proposals have often been made, they are rarely implemented. Charities usually involve providing food, water and clothing to beleaguered populations. Promoting indigenous subsistence activities is difficult in large urban populations and urgent needs often take precedence and consume available resources. Such initiatives are certainly never thought of as relevant to sophisticated western economies.  However, no matter how prosperous first worlders fancy themselves - a conclusion increasingly involving triumphs of faith over reason -  they should remember that enduring prosperity must be based upon local economies. Exploiting distant populations and consuming fossil fuels as if there was no tomorrow is proving economically unsustainable, politically dangerous and environmentally catastrophic.

This suggests that resurrecting or inventing local economies in every nation is an idea whose time has come.  Localization is the only possible antidote to the toxic consequences of progress, development and globalization for most human beings.  And the need is urgent.  The torments western nations have been visiting upon third world populations are metastasizing.  An increasing proportion of North Americans and Europeans is already unemployed, marginally employed or destitute.

The most important reason for this unexpected turn of events is never talked about.  Progress and development, efficiency improvements, free trade agreements ... are inherently regressive.  After every such  improvement,  the number of jobs available for people with ordinary skills grows smaller. If this was not the case, these 'improvements' would not have occurred. Efficiency improvements and new technologies have already eliminated so many jobs that consumers can no longer sustain the growth modern economies depend upon.  Rather than calling a time out and doing some rethinking, leaders and politicians are calling for still more efficiency, automation and outsourcing.  All of these responses remove purchasing power from ordinary consumers.  All of these responses make matter worse.

Even when employments survive this onslaught, they tend to be 'dumbed down' as intelligence is incorporated in machineries and software.  Individuals lucky enough to be still employed know that their work no longer warrants a living wage. For the most part, they keep silent. They know that their employments could also be automated or outsourced if important people notice that still demanding workers are still performing simple tasks.

Having feasted upon the third world for decades, corporations and governments are now turning upon the lower and middle class in the west. The people who own these corporations and run these governments are sometimes referred to as one per-centers.

You and I know what they have in mind.  They have the same concern for you and I we have been demonstrating vis-a-vis the poor in emerging nations for decades.

This has been a huge mistake.  If we had been including their well-being in our calculations, the resulting strategies and protections would be available to us now that it is our turn to walk the plank. At the very least, we would have more interesting talking points and moral benchmarks than the hypocrisies available to newly unemployed first worlders with deep water mortgages.

There is no point in bemoaning lost opportunities.  All we can do is recognize that the world's poor and soon to be poor have much in common. All we can do is see what we can do among ourselves for ourselves.  The first thing to recognize is that being unemployed or marginalized is only part of the problem.  The rest of our story involves the essentially useless skills most of us acquire through marginal educations and "on-the-job" training.  As a consequence, few of our needs ... let alone our wants ... can be met through subsistence activities.  This is especially true in wealthy nations.  Fewer and fewer are able to cook food or repair gadgets -  never mind grow or manufacture them.   Fewer and fewer are able to entertain themselves or converse without electronic life support systems.

The unemployed have not only lost their jobs, they are victims of systemic failures to arrange alternatives to "regular" employment. The following describes one such alternative:

  • A simple project could improve the circumstances of marginalized populations, and invigorate national economies.
  • The strategy has three elements.  First, the unemployed add their names to lists of interested people in communities.  These lists would include their skills, facilities and tools, woodworking equipment, service station-like facilities, gardening, millinery and domestic arts. Armed with this information, the unemployed could exchange goods and services among themselves.  (This would be especially easy these days, with Internet and public databases freely available. (See my working example:
  • The second step involves governments (probably municipal governments) establishing currencies so participants could exchange products or services without barter economy restrictions.
  • A third (optional) element would involve re-purposing support programs (welfare, employment insurance ...) to support local economies.

Local economies already proliferate when times are hard.  A small town in Spain recently reintroduced the peseta, abandoned when the Euro was introduced in 2002.

Fed up with the failing euro, rebellious locals in Villamayor de Santiago have reverted to using the old currency, which was phased out a decade ago.

For a comprehensive list of local economies in America:

If western nations identified their own marginalized citizens as third world nations within, they could apply Ms. Sheeran's suggestion domestically. The results would be wonderful. The unemployed would retain skills and develop new ones in the guise of cottage industry products and services.  This could be important should main economies again offer them employment. On the other hand, if unemployment remains high or goes higher, local economies would reduce the need for welfare schemes and other safety nets.

More interestingly, local economies could transform social safety nets from demoralizing into empowering experiences. Such nations would have two economic legs to stand on, two economic engines running independently but in tandem. Governments could act as guarantors for local currencies; perhaps establishing "exchange rates" between regional and central economies.  Employment insurance, welfare and other safety net programs … could then be used to sanction and nurture value adding activities among the 10% - 20% of citizens national economies have no use for.

Such projects would invite synergistic relationships with high schools and community colleges. Educational opportunities would become more plausible and relevant. A portion of educational funding could go to researching and developing means of production appropriate to local economies.

  • Local economies could, of course, use "real money".
  • However, there would be pride of place value in local currencies.
  • By reducing the often insurmountable obstacles facing the unemployed, local economies would renew expectations of personal responsibility.
  • Local economies would welcome the retired or disabled. These individuals would often be interested in sharing their skills and experiences.
  • Artists reluctant to take up full-time work would gain a useful resource
  • Local economies could be useful for graduates lacking work experience for their resumes.
  • Local economies would adapt new technologies to individual and community needs.
  • These development would provide wholesome examples and resources for emerging nations.

Last but not least, robust local economies would invigorate central economies. Recessions occur when people curtail spending and investing because they are worried about hard times. Local economies would reduce this tendency by making unemployment less foreboding.


Finally, there are prudential and moral reasons why western governments should invest in local economies. For decades, the "fight against inflation" has been waged by adjusting employment levels. The worry is that fast growing economies will inflate beyond governments' 2% - 3% target rate. Money supplies and interest rates are therefore adjusted as required to "throttle back" or “stimulate” economies. Some people lose their jobs. Others never obtain them.

Let's say that 10%-15% unemployment (some claim 20%) is necessary to control inflation. Does this mean that these people must be harmed for the benefit of the majority? Surely all that is necessary is that they not participate in main economies. Interacting among themselves would not prevent their unemployment from doing its anti-inflationary work.

Local economies mean that the deliberately unemployed would no longer weigh on the conscience of the 80%-90% advantaged by their predicament. For the first time, governments would enjoy a morally defensible way to control inflation.

We should remember that the unemployed have only been discarded as producers. They still consume goods and services - albeit in limited ways. Since they are no longer suppliers, this means they are causing more trouble than they did while working! As long as they have any money at all, the unemployed contribute to demand-pull inflation.

Using unemployment to control inflation only begins to work when individuals become completely destitute.

This is not only immoral, it is dangerous. Poverty and hopelessness leads to political instability, social problems and, increasingly, to violence.

The alternative would be to understand the marginalized and unemployed as opportunities to resurrect communities and adapt technologies for human use.


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