Last week, China announced 26 million has gone out of job directly attributed to the economic recession in the develop world. From countries to countries, employment figures keep propping higher. Soon many countries will be looking at double digits unemployment. To better understand the magnitude of the unemployment. We can equate 26 millions as the entire population of Australia not working or about 6 times Singapore population not working. If we add all the unemployment in the rest of the world, the numbers may be just mind blogging.
Last night, US reported another set of brutal January job report. Almost 2 million jobs lost in US in the last 3 months bringing unemployment to 7.6%. There is just no end in sight to further job lost. The US economy is basically driven by domestic’s consumption. It is obvious that with job lost, consumption will decrease thus creating more jobs lost, bringing about a very vicious cycle of job losses. As consumption decreases, the world manufacturing countries will see more factories shutdown or downsize. Retrenchment is inevitable. The same vicious cycle will repeats in these countries leading to more jobs lost. If the US government fails to stimulate consumption, the unemployment rate will exacerbate further. As the recession becomes deeper and longer, there can be no escape from the dreaded depression every country trying to avoid.
With extremely bleak job scenario, the social and political costs become more uncertain but definitely leads to social unrest, chaos and increased crime rates. Young will suffer from malnutrition and illiteracy. The aged will suffer from lack of health care. Many will suffer from depression and there are already sign of increasing suicides. Corruption too will increase especially in the third world when one has to find means to feed their families. The will be increase in illegal economic migrants when people are faced with hardships. Conflicts between neighbouring countries will be inevitable. Major industrialised nations may seek trade protectionism to pacify it local constituents. Such action can snowball into trade wars. The world is definitely heading into very turbulent times.
So these are the ills of massive unemployment. But the cause of this massive unemployment is free trade and capitalism. Capitalism solely works on the market forces of supply and demand and is supposed to provide the best efficiency for the usage of capital and resources. Capitalism and free trade are supposed to bring wealth and improve the livelihood of the people. Ironically now, it has brought despair and pains to so many people. So we see the ugly side of free market and capitalism, it has failed to address the social cost to human being. Market is incapable of self regulation. Market forces may not be efficient as previously believed by the pioneering economists. Perhaps Karl Marx may be laughing in his grave this time.
If unemployment is cyclical synonymous with an economic recession, then there is hope that those jobs will be returned to workers when the economy recovers. What fearsome is when cyclical unemployment becomes a structural unemployment, as a result of a paradigm shift to a 'new economy' after this economic crisis. Many of the jobs may become redundant and job losses become permanent. High unemployment may become a new global crisis leading to trade war and conflict. Affected country really needs to be nimble to adjust to the changes and formulate strategies to solve this problem.
-----------------Living to see the world---------------------------
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