Bailout bust: Five steps to a soft landing

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Let me put it starkly: (spending) power to the people. With governments on the verge of a possible $2.8-billion-and-growing handover to the auto sector, it has to be asked: where's the movement to go Main Street with our money?


The suddenness and scale of the huge auto industry crisis is naturally sowing political and economic confusion. But solutions must pass some reality tests - and there's a good possibility that we may be watching one of the biggest con-job corporate giveaways ever.



Bottom line: the world is in transformation mode. The car market is not going to return to what it has been. Needs and desires are changing - quickly. But the new products, like electric cars, aren't yet ready to sell. And so, no matter what, we have a huge unemployment debacle looming, one by no means exclusive to the auto sector.



No amount of government support to the Big Three will actually be able to keep auto workers employed in the same numbers, making cars and parts when demand for the end product they are producing is down by over 40 per cent.



There is no sustainable business model that can support manufacturing a product that does not have buyers. Huge layoffs are inevitable.



And if the union movement doesn't start using its noggin, it will have to take some of the blame for providing political cover for a disastrous bailout that sacrifices the many to save the skins of only the few senior and highest-paid workers who will actually retain their jobs.



There are alternatives, and these begin with the idea that governments should invest in our people's incomes instead of the ailing companies they work for.



What this calls for is public investment in employment programs and new EI regulations and payouts along with intelligent trade union negotiations around job sharing and rotating. We have a chance to make this, if not the best of times, at least not a desperate time.



We need innovative thinking to support new paid opportunities for the unemployed to gain learning and job experiences. At the same time, these people with their guaranteed paycheques will be consumers, creating markets and business opportunities for the products and services this new time demands. This in turn will support the innovation that will feed economic recovery.



It sounds counterintuitive, but the fact is, we taxpayers should not be paying people working in the manufacturing sector to keep working at their old jobs. We should be paying them to stop working for a few months. This is going to happen anyway. Remember how often taxpayers have invested in the auto sector, only to be served up layoffs and plant closures?



But decent, topped-up EI and engaging ways to use that downtime - be it through employment programs, retrofitting projects, volunteering or education and training - can reduce the personal anguish and the danger of deflation at the same time.



The innovation could go much further. We could be leveraging the extra government funds we invest in the unemployed to create significant new growth opportunities in every sector.



And if we do it right for a limited period of time, maybe a three-year plan, we will create the prosperity that either justifies these programs or means they're no longer needed.



Here's a short-list of what needs doing. Note: no government will touch these without a significant labour movement push, so progressives, start the talking.



1. Boost EI big time



This program used to be worthy of its name. Now most employees don't qualify, and if they do, the payout is so low that it's a ticket to poverty, not an insurance at all.



It needs a huge boost. On top of that, we need to ensure that EI regulations and union contracts allow job rotation so the work that's left gets spread out. It will be much easier to maintain the spending power of more people that way. It is time for solidarity; laid-off workers, not just those in unions, need this support.



2. Raise work subsidies



Think of the economic advantages if thousands of the unemployed could offer their publicly subsidized services to small and medium-sized businesses that need but cannot afford to grow their workforce. Talk about a win-win: new jobs, new skills and job experience for the laid-off, and enhanced sustainability and even growth for the companies they work for.



3. Invest in education



One of the best places to create jobs is in the public sector, and it isn't all about building roads. Educators are a great investment. They are multipliers of knowledge, opportunity and success, especially if they teach skills that people want to learn. Innovation and learning will be the foundation of our economic recovery.



4. Pump volunteerism



Allow the unemployed to qualify for topped-up EI benefits through volunteering for non-profits or charities (not in some sick workfare way). EI could be supporting individuals and their families, plus enhancing the work of civil society when it's needed most. Every single non-profit would do better if it had one or two or more responsible, committed volunteers. We need to foster these opportunities within a limited time span. Some may even prove able to pay for themselves later. In return for extra personnel, non-profits can be asked to provide free education programs in return for the help they receive from subsidized workers. Win, win, win.



5. Follow Trudeau



Let's do what Pierre Trudeau did and create a new version of Opportunities For Youth or Local Initiatives Program (OFY or LIP) that would give employment funds to groups developing new business ideas or services. Let's give the unemployed the opportunity to create value with their labour, paid for a period of time by the state. And what about Katimavik, which is still waiting for 2009 funding? Let's offer young people the opportunity for interesting work, ensuring they get the experience they need while keeping them out of the job market longer.



These approaches are about giving ourselves the shovels so we can dig our own gardens.



If we keep consumer spending alive in these ways, the people/market will decide which corporations and businesses get our dollars. That's how we'll establish a solid base for reinventing a strong new economy.

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