domingo, 24 de abril de 2011

The debt is not a problem for the U.S.

The United States of America has issued trillions of dollars in bills, coin and bonds because its national currency, the dollar, is the international currency of interchange. Those instruments (bills, coins and bonds) are simple debt. This is something normal because of the size of the international transactions. However, there are critics that condemn this policy and assure that the debt is something negative for the United States and the rest of the world. The individual people and private institutions that assure this do not say the truth. The most of them have particular interests on the theme. They want to diminish the dollar strength as international mean of interchange to favour other currencies like the Euro and/or the Chinese currency.

The emission of money, in cash or in bonds by the United States, is for the United States internal debt and not foreign debt. It is completely different the effects of the internal debt from the foreign debt. The last constitute a factor of weakness for the economy of the countries because the foreign debt must be paid with international means of payment, it mean, with dollars of the United States of America, and not ever the countries have the sufficient amount of dollars. But for the United States of America the situation is different, because the US can issue the amount of dollars that requires its internal economy and the international economy.

  1. Value and support of the national currencies

Since the Agreements of Breton Woods, in the post war, the value and support of the national currencies of the different countries of the world was established in base to the dollar of the United States of America. In those years, in Breton Woods, the countries agreed: a) the creation of the International Monetary Fund, b) that the international reserves of the nations must be kept in dollars c) That the dollar would be the international currency of interchange, and d) that the emission of national currencies should maintain a relation with their reserves in dollars. For example, if you set that your national currency is worth in two (2) units per dollar, this mean that each national currency in circulation should be supported by a reserve of 0.50 dollars, but not ever the nations carry out this rule. In all the cases, the set of the parity regarding the dollar is an act of sovereignty of each government; this means that they can issue more or less amount of national currencies.

I don’t believe in public fiscal deficit; the governments have sovereign capacity to issue national money; which is the support? The people faith, nothing more; none currency has an own value, per se. The currencies of all the countries are simple papers without intrinsic value that are accepted by the people to make transactions in the market and the governments have the power to issue those papers. In the past, the currencies had an intrinsic value, because they were made of gold or silver. But with the apparition of the bills of paper the situation changed. At the beginning the bills had a support in gold but along the time this support was eliminated and now its support is only its credibility, its acceptance.

The currencies cannot be supported in gold for a simple reason: all the gold that exists in the world is not enough to support the big amount of money that circulates in the world.

The debt of the United States instead of to be a factor of weakness of its economy and the world economy, is a factor that reveals the strength of the US economy. The financial crises are caused by the owners of private fortunes to obtain personal benefits. They do the crisis and the governments pay the bailouts. That is the true truth.

viernes, 1 de abril de 2011

A concrete idea to combat the unemployment, political economy

“The economic crisis has taken its toll on the young, ILO estimates that the global youth unemployment rate rose to 12.6% in 2010.” Helen Clark, Head of the United Nations Development Programme, March 21, 2011.
1.     Overview
2.     Inexactitude of the statistics
3.     The sub employment is not revealed
4.     The intense use of technology and its effects on the employment
5.     Machine substituted the work of man
6.     What to do
7.     Demographic control
8.     The double working-day and the half working-day
9.     Global campaign of reforestation
10. Conclusion
1.      Overview
The unemployment is the worse illness of the society. The effects on their victims are of devastation. The employment is essential for the happiness. Unfortunately, the unemployment affects millions of people in the entire world. But there is other similar phenomenon: the sub employment (underemployment); this affects people that exert an economical activity but do not enjoy of a secure income neither the social benefits of the formally employed.
If you add the figures of the unemployed to the figures of the sub employed, the total amount is something really amazing, especially in the underdeveloped nations. The problem is that the figures of sub employment generally stay hidden. The official’s statistics usually do not reveal the sub employment figures.
The unemployment and the sub employment are the main cause of the poverty. So that the first measure to combat the poverty must be the creation of jobs.
But the creation of jobs requires several conditions. The jobs cannot be generated by magic. The creation of jobs responds to concrete needs of the society. An entrepreneur creates a job when he is sure of the utility of that job.
For the creation of a job it is necessary to make an investment; this means the use of financial resources and the employ of material goods, among them, resources of energy ---like petroleum--- that are every day scarcer and expensive.
One hundred years ago, the situation was different: there was abundance of material resources, especially of natural resources. For that moment, still man had not devastated the Earth wealth. The petroleum exploration was hardly beginning and the forests, rivers, lakes and oceans had not been razed.
Now, in the first years of the 21st century, the reality changed completely. Today, the limitations of natural resources are something real. The reserves of conventional petroleum have diminished in a sensible amount; hundreds of animals and plants species have disappeared; the forests, the marine resources and the reserves of water are also in critical situation in many regions of the world while man realized 2,053 nuclear detonations only between 1945 and 1988. The food is seriously threatened by the drought, the water scarcity and now by the biofuels. For example, by the year 2007, 25% of the United States corn production was for ethanol. On March 31 2011, the Food and Agricultural Organization, FAO, described as “potentially catastrophic climate impacts on food production over the long-term,” in a letter to the Convention on Climatic Change.
But while the natural resources experiment a reduction, the population grow in a constant form. It is a contradictory phenomenon that threats the humankind survival at mid term. The world is overpopulated. This means that the resources are not enough to satisfy the demand of the world population, among them, the demand of employment. You can verify it in a simple form: observe the traffic jam, the limitations in the water availability, the price of gasoline, the number of unemployed and sub employed in your community, the files in the banks, supermarkets, in the drugstores, in the bakeries, the scarcity of food and basic services. This is especially visible in the underdeveloped nations.
2.      Inexactitude of the statistics
I have serious doubts about the exactitude of the statistics of labour; I will explain why. For example, if you study the statistics of unemployment of Mexico, you will find that the level of unemployment was ---approximately--- an average of 3% ---this represent full employment--- between the years 2003 and 2008, like you can see in the table 2.  I do not believe that those figures are true because of a simple reason: during the same period, the immigration of Mexican citizens toward the United States was huge, occupying the first place among the foreign-born population, as may appreciated in the table 1.
Table 1. United States, Foreign-Born Population by Race for Countries with 750,000 or more Foreign Born: 2007. Numbers in thousands
Source: U.S. Census Bureau, 2007, American Community Survey.
For the period 2003-2008, the official statistics reveals that in the United States the unemployment was superior to 5%, this mean, superior to the Mexico’s unemployment rate; see table 2. This fact confirms that the doubt about the exactitude of the statistics is absolutely reasonable. The basic question is:  if Mexico has a level of full employment then why do the Mexicans citizens abandon their country to look employment in the United States?   A society that enjoy a high rate of employment, do not experiment a high percentage of immigration of its workers. Then, the logic conclusion is that the official unemployment figures of Mexico are not true. The figures of immigration reveal the economic disparities of the societies and especially their amount of unemployment and sub employment. 
Table 2. Unemployment, selected countries of America
Source: International Labor Organization. Laborsta, Internet.
Available in Internet in
3.      The sub employment is not revealed
The big problem is the methodology used to define the unemployment. The traditional concept consider unemployed at the people of an age superior to the 18 years that search an employ and do not get it. But the statistics do not consider as unemployed the people that exert activities in the informal economy, the self-employed, neither the people that work for formal economic activities but do not enjoy of a fixed salary neither the social benefits of the formal employed, like the workers that work per hours, or in temporary form. All them are the sub employed, that do not appear in the official statistics. The International Labour Organization has its own concept about unemployment and underemployment, adopted by the 30th International Conference of Labour Statisticians in Geneve, 1982.
Moreover of the situation of Mexico and the United States, it must be underlined the reality of other countries of Latin America, like Venezuela and Colombia where the sub employment occupy a first plane, but this is not reflected in the official statistics. This situation happens not only in America but in the rest of the world. Therefore, it is right to say that the sub employment is most grave than the unemployment, because the sub employment is a hidden fact ---officially not recognized--- of disastrous effects for the world population.
4.      The intense use of technology and its effects on the employment
The technological development has brought two contradictory phenomenons: a) the displacement of the traditional workers and b) the creation of new technological jobs. The problem is that the former has been more than the second and this has contributed to the maintenance and increase of the unemployment. In some nations the phenomenon has been more intense and in other less. For example, in the last decades, the industrialized societies have kept acceptable levels of unemployment; in change, the underdeveloped nations have been more affected by the use of new technology, displacing a most number of workers.
The industrial societies have prepared the workers for the new challenges derived of the technological development. In the underdeveloped nations this process has been slow and in minor scale. This explains the relative reduced levels of unemployment and sub employment in the industrialized nations and the major amount of both in the underdeveloped countries.
 5. The machine has substituted the work of man
The objective of the entrepreneurs is the economic benefit, for that reason the search optimize their activities through the technology and usually do not consider the social impact of the technological changes. The objective of the governments is different. The governments look the social benefit; therefore, they must establish the rules to guarantee the employment.
It should have a balance between the aspirations of benefits of the entrepreneurs and the social need of to generate employments.
The machines must be used with rationality and justice; man must not be an enemy of the machines neither vice verse, the machines must not be enemies of man.
The machines must be employed to give happiness to the human beings and not to provoke sadness, exclusion and unemployment.
The principal task of the scientists should be to get the balance between the machine and man, and to guarantee the maintenance and creation of employments.
A technology that substitutes the work of man is not a good neither a fair creation. The main objective of man should not be to accumulate more and more money. All the owners of the machines and the most advances technologies will die and shall not keep with them neither the money, neither the machines. They should think in the human effects of their actions, the effects on the families and on the workers, and not only in the egoist desire of to obtain more and more money. At the final, that money will not be useful for them.
  1. What to do
The solution to the problem of the unemployment and the sub employment is not easy. Nevertheless, it is possible to achieve important advances. The world might reach partial success in this matter. The problem is of such magnitude that requires the action of the international agencies, the national governments of the countries, the entrepreneurs and the workers worldwide. But the main responsibility corresponds to the international agencies like United Nations and the World Bank. They should be the sponsors of a global campaign for the promotion of the employment and the preservation of the environment. I think that those should be the principal goals of those institutions, because the unemployment and the destruction of the environment are the two most graves material problems of the world. In turn, those problems have a cause: the overpopulation.
The high rate of population growth in the underdeveloped nations is responsible of the world overpopulation.
7. The demographic control
If the population growth rhythm continues like until now, to resolve the basic needs of the world society will be everyday more difficult. The first measure should be to begin a global campaign of demographic control in the underdeveloped nations. The situation is different in the industrialized nations because they experiment a contrary phenomenon known as demographic transition. This is the augment of the life expectancy of the senior people and the reduction of the birthrate.
I think that the international agencies, United Nations and the World Bank and the national governments of the underdeveloped nations should develop a Global campaign of demographic control. This is the unique form of to guarantee the next generations survival.
8. The double working-day and the half working-day
Twenty three years ago, in 1988, I wrote and published, in Spanish, an economic model to fight against the unemployment. The title of the thesis was “A concrete idea to combat the unemployment, the double working-day and the half working-day.” Available in Amazon:
The model was dedicated to the countries that suffer high levels of unemployment as consequence of the weakness of their markets, this mean, the weakness of the internal demand, by lack of income of a good part of the population, the unemployed.
It is an economic model that search to enhance the production of goods and services and to increase the level of employment, through the full use of the time of work, the productive infrastructure and the machinery. It is a new form of organization of the production and the work. The model is applicable especially in those countries where there is a productive capacity not enough used.
The core of the proposal is the legal creation of two different working-days of seven hours each one in a same day. In the most countries, the legal working-day is of eight (8) hours, but with the new proposal it would be established legally a second working-day of seven (7) hours. The workers that work in the first working-day cannot work in the second working-day. This fact guarantees the creation of new jobs that will be occupied by new workers.
The first working-day would begin at 7 am until 2 pm and the second working day would begin at 2 pm until 9 pm.
I shall explain the benefits with a single example: If 7 workers produce 7 pair of shoes in 7 hours, 7 new workers will produce 7 additional pair of shoes in the next seven hours of the second working-day. This mean that in the same day will be duplicated the jobs and the production.
Moreover of the industry, the model is applicable in the services sector; for example, in the medical and sanitary services. This would be especially useful for the underdeveloped nations that suffer serious restrictions because of the lack of medical attention.
9. Global campaign of reforestation
The other option to achieve a quick and effective creation of jobs is through the development of a Global campaign of reforestation, sponsored by United Nations and the World Bank, with the cooperation of the governments of the countries.
The Global campaign of reforestation would let to create millions of ecological employments worldwide and, in consequence, to attack the problem of the poverty and the unemployment. The other big advantage of this program is that it would let to keep the environment, because of the multiple benefits that the trees give to the people. The reforestation favors the ecological balance, the oxygen of the air, the rain, the conservation of the soils among others advantages.
To develop the Global campaign of reforestation it is not necessary to employ fossil fuels, like petroleum neither coal and this is its other great positive difference regarding other forms of creation of jobs. For example, to create one employ in the agriculture, the industry or in the tertiary sector it is necessary to use big amounts of energy. The campaign of reforestation does not need big amounts of energy.
10. Conclusions
-         There is not one or a rigid number of actions to promote the employment and to fight against the unemployment and the sub employment. I think that the human being have the duty of helping to find roads, solutions. That is what I want to do, only to help to find ways to solve this big problem that hit deeply the hearts and the life in family of the human beings in the entire world. The unemployment is something terrible, especially for the young people, that lose its hope when do not get a formal work. The same happen to the adults and to the senior citizens.
-         The international community, through the international agencies, the United Nations and the World Bank, might contribute in a decisive form to diminish the problem of the unemployment and the sub employment. I think that they might sponsor three basic campaigns: a) The Global Campaign of Demographic Control, b) The Global Campaign of Double Working-day and Half Working-day and c) The Global campaign of Reforestation, like concrete measures to combat the poverty, the unemployment and protecting the environment worldwide.
-         The Global campaign of demographic control is something essential to guarantee the survival of the next generations. The rate of population growth of the last decades is unsustainable.
-         The Double Working-day and the Half Working-day should be developed especially in those activities that require the less use of energy, like the tertiary sector of the economy; for example, in the activities to improve the quality of life of the population, like the medicine and services of health.
-         The Global Campaign of Reforestation is not only a measure of conservation of the environment but a measure of conservation of energy because its realization do not imply the use of the traditional sources of energy, petroleum neither coal.