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Why God Doesn't Exist
Government relief?

    The weeks following total unemployment constitute a period of demographic attrition. Authority breaks down and it’s
    every man for himself. The strong take justice into their own hands. Mass killing of people and stealing is the order of
    the day.

    The skeptic is unconvinced. Surely, there are a few things that a government can do to alleviate the situation. It can
    create jobs if the situation gets really bad, even if this work is artificial or compulsory. Government runs up an
    emergency budget deficit and puts people to work in whatever just to get  through the impasse. Isn’t this what the New
    Deal did in the 30s to get the U.S. out of the Great Depression? Doesn’t the example of the Great Depression disprove
    my prediction?

    At first glance, the Great Depression indeed seems to prove that Man is a very resilient species, confirming the skeptic’s
    argument. Unemployment hit rock bottom and bounced back. The national economies that were most affected crashed,
    but eventually recovered. This suggests that seemingly hopeless economic collapses are merely temporary dips in a
    long trend. There will always be ups and downs, and that’s just a fact of economics. Indeed, Ebeling strongly criticizes
    Roosevelt’s New Deal saying it exacerbated an already bad situation. He argues that Roosevelt was moving towards
    Fascism and assuming dictatorial powers. Friedman blames the Federal Reserve for causing and deepening the Great
    Depression by restricting the money supply at the wrong time. The solution to crises is to get government off our backs.
    Allow market forces to act. The economy recovers and adjusts on its own without government meddling. The role of
    government should be limited to making the right amount of money available to business so that each pursuing its
    own self-interest in the classic Smithian tradition nurses the economy back to health.

    We should put the upcoming collapse in perspective. Unlike the Great Depression or the Russian Revolution, we are
    not talking about a few million peasants, workers, and soldiers who are just discontent with government, want a political
    change, and meanwhile receive foreign aid. We are talking about hundreds of millions stranded on a gigantic island
    known as Earth with food for about a thousand and with no hope of relief from extraterrestrial aliens. We are talking
    about a sudden collapse in primary production, with no government to overthrow and no reason to create a new one.
    We are talking about millions of destitute urbanites roaming the streets among armed cannibals. The Russian
    Revolution better serves as an analogy for a different aspect of what’s to come. When authority collapses, the local
    ‘patriots’ with the guns impose their (and not the government’s) version of law and order locally. If there is someone
    you’ll have to fear after a complete labor collapse is the unemployed, hungry, and armed ex-government official. He
    has just killed and eaten his wife and children and is now going after you. It is the weak minded people having blind
    trust in the old system who will disappear first.

    The Great Depression is so different from the scenario I am describing that it cannot even serve as an analogy. I’ll
    quickly run down through a few snapshots just to make my point:

    1.        In 1930s, agriculture claimed about a 10th of GDP and almost half the population was rural. There were 6 million
    farms in the 1930s. Today, despite that the population has multiplied, there are less than 2 million farms remaining,
    many of which are struggling to survive against the onslaught of large scale farming. [1] It wasn’t until after the war
    that the U.S. shifted to a service economy. [2] [3] Since then, manufacturing has suffered great attrition and today
    contributes only about 14% of U.S. GDP. This number continues to drop as we speak. Agriculture has fared even
    worse. U.S. agriculture is so efficient that it contributes to less than 1% of GDP, some of which is non-food (cotton,
    wool, hides, timber, etc.). Only about 2% of the work force is allocated to food production. Hence, when banks
    foreclosed on farms in the 30s, people moved to urban areas where they were absorbed into manufacturing and
    services, two activities that had yet to be exploited.

    Today, over 80% of the U.S. population is already urban and over 80% work in services. Unemployed workers in a
    futuristic crash would come almost exclusively from services and from the cities. There is no fourth occupational
    category in the artificial economy to move them into. We have agriculture, manufacturing, services, and …? The
    urban population cannot return to farming or manufacturing in hordes because the U.S. has already saturated the
    efficiencies of these sectors. In fact, developed nations are now working on making services more cost effective
    through outsourcing, streamlining, and the introduction of software. In his analysis of the 16th Century enclosure
    movement, Thomas More wrote that sheep were eating men. [4] [5] Today we can safely say that computers are
    zapping white collar employees.

    2.        It helped that the masses of the Roaring 20s were still somewhat politically naïve or at best immature, and
    people on both sides of the Atlantic believed in nationalism and in demagogues. The fact that many laws were not
    yet in the books also enabled central governments to manipulate people more easily. The government was thus
    able to coordinate the distribution of emergency aid, open up soup kitchens, relocate people, etc., and transport
    or evacuate people where necessary without too much opposition.

    Today we have come a long way in our small world and learned from past mistakes. Communications are so well
    developed that governments can’t seem to keep secrets for very long when the public already hears about them
    together with expert commentary from reporters. If the government were to attempt to evacuate millions, the
    opposition would be heard from New York to San Francisco. Ironically, it will be people brought up on laissez faire
    who will make the situation worse. They will do everything in their power to prevent the government from tinkering
    with them and the economy, mistaking the events for a routine depression that market forces can correct.

    3.        In the 1930s, the government put people to work in grand public projects. These projects were not suddenly
    implemented because they had a high priority and were long overdue. The purpose of the projects was to create
    artificial labor following massive layoffs. The government wanted people to earn a minimum income with which to
    support their families.

    Today, everything is already constructed. Most grand projects (roads, forestry) are already complete and running
    efficiently. There are few towns that aren’t 20 miles from a paved road or a park that doesn’t have a full time ranger
    service. In what grand public works will a president put idle laborers to work if unemployment hits the ceiling?
    Nevertheless, traditional brute work is now performed with heavy equipment. We no longer use shovels. We use
    excavators.

    4.        In the 1930s, the president had the authority to order families into agriculture. Sharecropping alleviated the
    situation a bit because agriculture was still labor intensive. [6]

    Today, a president would first have to break the law in order to carryout massive redeployment of people to the
    country. Then, the industrial rural corporations would kick them right back because contemporary agriculture has
    little use for manual labor. We don’t pick cotton by hand anymore. Today we use machines called cotton-pickers. [7]

    5.        In the 1940s, the government increased military recruitment and ordered millions to war. Almost 12% of the
    population (16 million [8] from a total population of 140 million. [9]) participated in the effort. International conflicts
    were manpower intensive. The ripple that this economic multiplier caused in aggregate demand cannot be
    overestimated. [10] Most analysts agree that it was the war that got the U.S. economy rolling again.

    Today, armed forces are voluntary and lean. High tech has replaced soldiers. We don’t need large armies anymore.
    We just need to bring the proper mixture of forces to bear at the right place at the right time with the right weapons.
    The forces of Napoleon and his rivals numbered close to a million at a time when world population was less than a
    billion. In contrast, U.S. forces stationed in Iraq number a little over 150,000 while the global population is over 6
    billion. Hence, the government would be hard pressed to stimulate employment by creating a war. Certainly, it will
    help the military industrial complex, because killing people is still good for business, but it won’t remotely have the
    impact war had on the economy in the 40s. Nevertheless, manufacturing is disappearing as an important segment
    of the economy. The economic multiplier that can be set in motion today by stimulating the military industrial
    complex would not be remotely as impressive as the multiplier effect of World War II.

    6.        During World War II, women massively flooded the job market to fill vacancies left by men. This strategy
    enabled the U.S. to reduce unemployment to less than 2% while increasing aggregate demand in both the private
    and public sectors. The widespread induction of women into manufacturing and men into soldiering created labor
    shortages in non-war segments of the economy.

    Today, women in the U.S. already comprise half the labor force, and aggregate demand is built around this reality. [11]
    Not only would the government find it unnecessary to massively shift males to the front and housewives to the
    factories, but it would be unable to do so since that is the status quo.   

    7.        In the 30s and early 40s, there were crucial inventions yet to be developed and popularized. Cars were luxury
    items. Few had refrigerators, dishwashers, and radios. Microwaves, TVs, and computers hadn’t been invented. After
    the war, manufacturers were able to stimulate the post war economy by making household appliances available to
    the common man.

    Today, designers only make improvements to existing products, especially to ‘necessary’ artifacts. If we buy high-
    resolution plasma TVs today it is only to spoil ourselves and not like in the 50s because you were the first one with
    a TV on the block. In a period of economic and political austerity, the purchase of a plasma TV or a third car is
    postponed. There are not many more features that manufacturers can build into necessary articles (stoves,
    microwaves, refrigerators, etc.) that can induce consumers to buy products ad infinitum. Hence, neither government
    nor the manufacturing sector has a powerful way to stimulate aggregate demand of industrial products by inciting a
    large scale buying like the one that occurred after the war.

    8.        From the 30s to the 50s, it was the 20 and 30 year olds who married and bought household items. Their goal in
    life was to form families.

    The youth of today have no jobs or families nor interest in forming families. They impatiently wait for the old people
    to die so they can take over their jobs (and houses). Meanwhile, those who have jobs and earn money (the old)
    don’t need a fourth TV while those that need a 1st TV (the young) don’t have jobs or money or sufficient disposable
    income to buy one. The typical family of today is fast becoming the bachelor. This bachelor or divorcé stays and
    watches TV at mom’s.

    9.        In the 30s and 40s, many service industries were just developing. There was little consumer credit and people
    bought with their savings.

    Today services such as banking, tourism, health, insurance, and fast food are fine tuned to the point where little can
    be improved. People buy with credit and run up the tab. In an uncertain economy, people consume fewer services or
    declare bankruptcy. They eat at home and travel less. A service is like a luxury item. It would be nice to have a
    professional shave, but when the economy runs sluggishly, you sharpen a knife and do it yourself in front of the
    mirror or just create a new fashion trend by leaving your chin alone. In a downward spiraling service economy,
    services go up in smoke in a manner quite different than goods. With goods, you have something tangible. Service
    is a world of make-believe. The only tangible inside a package from a service company is the bill. Government is
    powerless to create an artificial demand for services like it created an artificial demand for war material and equipment.
    A government has actually little power to stimulate a service economy more than lower the interest rate or give
    handouts to the masses.

    10.        In the 40s, people bought houses with their savings and on tight credits.

    Today, people finance houses at distorted prices and use their equities to make more purchases. The government
    can only lower the interest rate to zero. After that, credit companies have no reason to lend. Deflation is a more
    dangerous animal than inflation.

    11.        In the 40s, international commerce was a small part of Gross World Product (GWP). If one economy went under
    this had comparatively little effect on others. Nationalistic policies such as protectionism were designed to help local
    corporations (i.e., protectionism).

    In a global economy, the tariffs or bans imposed by one affects the production of another. Today’s global economy
    is more integrated and interdependent. Exports comprise 16% of the world’s GWP and is the fastest growing segment
    of the world economy. [12]  The day exports are maximized for all countries, we will have attained our greatest level of
    efficiency possible. At that point, what one country does will severely affect its neighbors.

    These are just a few of the factors that differ markedly from 70 years ago. A sudden joblessness would take on
    different dimensions today. If the economy were to collapse, the entire service pyramid would come tumbling down.
    So what would a U.S. president do in a modern day Great Depression? What tools do governments officials dispose
    of nowadays to put people back to work?

    The answer is that the U.S. Government of today has been relegated to having the role of a cheerleader. It encourages
    people to go out, borrow money, and buy something just to keep the economy going.

    How about the rest of the economies of the world?

    Well, they just try to imitate the U.S. A perfectly tuned global economy is like the United States or Japan of today, but
    without any other country on the planet to sell its goods and services to.

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    Last modified 03/01/08


        Copyright © by Nila Gaede 2008
"I thought the
Government sent the
army to help us!"