The Alternative to Welfare: Creating Jobs in the Third Sector
Adapted from The End of Work:
The Decline of the Global Labor Force and the Dawn of the Post Market Era (page 2 of 2)
By Jeremy Rifkin

The main disadvantage of a value added tax is its regressive nature. A sales tax falls disproportionately on lower income groups, especially if it is imposed on basic necessities like food, clothing, housing, and medical care. A VAT also places a greater burden on small businesses, which are less able to absorb and pass on the costs. Many countries have greatly reduced and even eliminated the regressive nature of value added taxes by exempting basic necessities and small businesses.

By enacting a value added tax of between five and seven percent on all non essential goods and services, the federal government could generate billions of dollars of additional revenue more than what would be required to finance a social wage and community service program for those willing to work in the Third Sector.

Powerful vested interests are likely to resist the idea of providing a social wage in return for community service. Yet, the alternative of leaving the problem of long term technological unemployment unattended is even more onerous. A growing underclass of permanently unemployable Americans could lead to widespread social unrest, increased violence, and the further disintegration of American society.

A Different Kind of Work

In the past, the government has often been accused of throwing large sums of money at the social economy with little of it getting to the people and communities in need. Much of the expense involved in government programs has been eaten up in the delivery of social services, with little left over to assist the impacted communities. Still, there have been notable exceptions. Volunteers in Service to America (VISTA), the Student Community Service Program, the National Senior Service Corps, the Peace Corps, the National Health Service Corps, and, more recently, AmeriCorps, are federal work programs established to promote individual service and support volunteer efforts in local communities in the United States and abroad.

Although the costs of these government-sponsored programs in community service are small, the economic returns to the community are enormous and often exceed the expenditures by many times. Dollar for dollar, government investment in work programs designed to complement and support the volunteer sector have proven to be among the most cost effective means of providing social services in local communities. Yet, despite scores of successful experiments and programs in recent years, the money given over to such programs is small compared with other governmental expenditures in the social economy.

Many Democrats have looked to government-sponsored programs to hire the unemployed and those who have slipped under the social safety net and into the permanent underclass. More recently, both Democrats and Republicans have championed the establishment of empowerment zones in the nation's inner city ghettos. These designated areas would receive special tax credits and other government benefits to help attract new business. Businesses that employ a resident of the Empowerment Zone would save up to $3,000 a year in payroll taxes. Despite the political fanfare surrounding the notion of empowering poor inner city communities, few politicians are sanguine that many new businesses are going to relocate in the urban ghettos of America, or that many new private sector jobs will be generated from the creation of empowerment zones.

The country might do better to redirect its efforts away from expensive government sponsored projects to aid the poor and quixotic attempts to stimulate economic development in inner cities and, instead, support the expansion of existing non profit service programs in impoverished communities.

Recruiting, training, and placing millions of unemployed and poverty stricken Americans in jobs in nonprofit organizations in their own neighborhoods and communities is likely to have a far greater impact, per dollar spent, than more traditional public works-oriented programs and market directed initiatives.

In the debate over how best to divide up the benefits of productivity advances brought on by the new high tech global economy, each country must ultimately grapple with an elementary question of economic justice. Put simply, does every member of society, even the poorest among us, have a right to participate in and benefit from the productivity gains of the information and communication technology revolutions? If the answer is yes, then some form of compensation will have to be made to the increasing number of unemployed whose labor will no longer be needed in the new high tech automated world of the twenty first century. Since the advances in technology are going to mean fewer and fewer jobs in the market economy, the only effective way to ensure those permanently displaced by machinery the benefits of increased productivity is to provide some kind of social income. Tying the income to service in the community would aid the growth and development of the social economy and help strengthen it across the country.

Restoring hope and rebuilding the social economy ought to become the central theme of a new partnership between the government and volunteer organizations in local communities. Feeding the poor, providing basic health care services, educating the nation's youth, building affordable housing, and preserving the environment top the list of priorities in the years ahead. Providing a social wage to millions of Americans, in return for performing meaningful work in the social economy, will benefit both the market and public sectors by increasing purchasing power and taxable income as well as reducing the crime rate and the cost of maintaining law and order.

Preparing for the decline of mass formal work in the market economy will require bold new public policy initiatives. By empowering the Third Sector, we can begin to address some of the many structural issues facing a society in transition to a high tech, automated future.