U.S. Unemployment Problem, Congress Are You Listening

By: Toby_Connor

Well, it's that time again. Every two years our senses are assaulted as politicians spew an endless stream of nonsense in the attempt to garner votes from a mostly unsophisticated American population. This year the major topic, not surprisingly, is jobs. Each and every politician would like you to believe that he or she has the cure for the persistent unemployment problem.

Of course it's all completely ridiculous. You would think these people could read a history book. Never in history has government been able to legislate productivity. Governments just misallocate capital. They tax one group of people and give the money to another group of people to dig holes. Of course, once the hole is dug or the road built, that job expires. It's not a sustainable productive use of capital.

Real productivity is entrepreneurs creating sustainable companies that satisfy a human need. AAPL is a sustainable business satisfying a human need. GOOG is a sustainable productive business. XOM is a productive business. None of these companies were legislated into being by government.

Almost without exception, real progress involves industry destruction due to mankind’s creativity. For example, when oil was discovered the whaling industry collapsed. When the automobile was invented it destroyed equine powered transportation, and so on. The emergence of each new major technological advance, throughout the history of mankind, has caused employment opportunities in some industries to utterly vanish. The industry that once provided employment becomes obsolete.

This is part of the normal and healthy sequence of human progress. Progress is a result of replacing inefficient technologies with ones that are not only new, but more efficient.Likewise, nations that refuse to allow this process of creatively inspired ‘destruction’ are found to have economies that stagnate and ultimately fail.

There is one way, and one way only, to cure our employment problem (and debt problem). It is the same cure that ultimately ended the Great Depression and serviced the gigantic debts that were incurred during World War II. That cure was the advent of two brand-new industries: plastics and electronics. These two industries created millions of jobs worldwide and spawned an economic boom from 1945 until 1966.

Now the world is back in the same position it was in 1930, and where Japan found themselves in the early 1990s. The world has created another debt bubble and we've chosen to kick the can down the road just like Roosevelt did in the ‘30s, and Japan has been doing for the last 20 years. And just like in the ‘30s, we are going to get the same result which is persistently high unemployment and generally declining global economic conditions.

What we need to do is allow human ingenuity and creative destruction to actually cure our problems. The biggest problem the US faces today is the triple threat of Social Security, Medicare, and Medicaid. These three entitlement programs have bankrupted the country, and let's be honest, there is no way any politician can possibly reform these programs, or even attempt to do so, and have a prayer of getting elected.

The cure to our problem is staring us right in the face. We don't need to reform Social Security, or government health programs. We need to make them obsolete.

Rather than plowing taxpayer dollars into an insolvent banking system (as the Japanese have been doing for 20 years), we need to allow capitalism to work and insolvent companies to go bankrupt. The taxpayer dollars that are now flowing into an endless black hole which are the financial system and government stimulus programs need to be funneled into the biotech industry. Rather than fund expensive surgeries or endless treatments that only manage symptoms, we need to discover real cures for disease, injuries and aging.

Imagine if a person with an arthritic knee, instead of a $20,000 knee replacement surgery, could simply walk into the doctor's office and receive a stem cell shot that would repair and permanently cure the disease. Or, how about a permanent cure for diabetes, heart disease, and obesity?

Yes, what I'm talking about is a complete overhaul of the global healthcare system. Yes, this is going to be creative destruction on a massive scale. Many many doctors that studied for years and years are going to be put out of business. Health insurance will become mostly a thing of the past as the modern healthcare of the future will become easily affordable by all. No different than buying an iPhone today.

Yes, some industries are going to suffer and go bankrupt, like health insurance, many doctors, and a big part of the pharmaceutical industry.

But millions and millions of jobs will be created and when we reach the stage when we actually cure diseases, especially as related to aging, we will eliminate the gigantic burden the three big government entitlement programs. If people can remain healthy and active for their entire life there will be no need for Social Security benefits and Medicare and Medicaid. These programs will become a thing of the past, as most diseases, and injuries will be quickly and easily reversed or permanently repaired.

So instead of the same old nonsense drivel we get during every election, it would be refreshing if politicians understood the real problems, and the real cures, and put in place policies that would actually have long-term benefits and accelerate the transition through these dark times and into the next Golden age.

Congress, are you listening?

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Toby Connor
Gold Scents  

GoldScents is a financial blog focused on the analysis of the stock market and the secular gold bull market.   Subscriptions to the premium service includes a daily and weekend market update emailed to subscribers.  If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions,email Toby.

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