World Economy May Lose 51 Million Jobs

January 28, 2009

The International Labor Organization (ILO), an agency of the United Nations (UN), has forecast that the best case scenario for the global economy would result in the loss of 18 million jobs in 2009 but, under the worst case scenario, job losses could reach 51 million.  As recently as October, their worst case was a loss of only 20 million jobs.  Clearly, no one really knows how bad things may get, as predictions deteriorate just as fast as present conditions. 

I believe we’re witnessing the very economic “collision” I warned of with Five Short Blasts – a collision between falling per capita consumption, a consequence of worsening over-crowding, and rising productivity – leaving rising unemployment and poverty in its wake.  “Nonsense,” some may say.  “This is just an economic down-turn, another in the long line of inevitable business cycles.” 

Perhaps.    Business cycles have certainly come and gone with regularity over the last century or so.  But there’s something different about this one. It’s the culmination of decades of attempting to hold back the tide of unemployment and poverty by propping up consumption with debt.  As business cycles came and went, there was one parameter of the economy that never stopped its exponential growth beyond all capability to deal with it – the 800 lb gorilla in the economy – population growth. 

In the last 150 years we’ve stuffed six times as many people into the same space, this little terrarium called planet earth, and somehow expected that it would have no effect on our ability to consume products and gainfully employ everyone.  It was so unbelievable that we concocted a “field of science” that we called “economics,” bestowing impressive Phd degrees on its practitioners who promised they could make it work, like Wizards of Oz, fooling us with their bags of tricks. 

And it’s not as though global unemployment took a sudden turn for the worse.  It has been rising steadily for the past few decades, in spite of what those who proclaim the benefits of globalization would have you believe.  Sure, development has flourished in places like China and India, and many have prosperred. But the fact is that dramatic increases in productivity in those countries have put many people, mostly in rural areas, safely out of view of the adoring fans of globalization, out of work. 

And with the world’s population adding a quarter of a million people every single day – a million people added to the available labor supply every single week – it’s easy to predict that matters will get worse.  Oh, sure, the Wizards of this Oz may pull a few more tricks out of their bags – setting up “bad banks,” spending on infrastructure and printing money – but the effects won’t last and we’ll be back in the same boat. 

It’s time to send the wizards and their bags of tricks packing, and it’s time for the field of economics to grow up and get serious about crafting a sustainable economic future.