Tag: unemployment

Easy Useless Economics

Seth Anderson0 comment

dismissals
dismissals

Paul Krugman muses on the dismal science a bit, and the dismal scientists known as structural economists

So what’s with the obsessive push to declare our problems “structural”? And, yes, I mean obsessive. Economists have been debating this issue for several years, and the structuralistas won’t take no for an answer, no matter how much contrary evidence is presented.

The answer, I’d suggest, lies in the way claims that our problems are deep and structural offer an excuse for not acting, for doing nothing to alleviate the plight of the unemployed.

Of course, structuralistas say they are not making excuses. They say that their real point is that we should focus not on quick fixes but on the long run — although it’s usually far from clear what, exactly, the long-run policy is supposed to be, other than the fact that it involves inflicting pain on workers and the poor.

Anyway, John Maynard Keynes had these peoples’ number more than 80 years ago. “But this long run,” he wrote, “is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the sea is flat again.”

I would only add that inventing reasons not to do anything about current unemployment isn’t just cruel and wasteful, it’s bad long-run policy, too. For there is growing evidence that the corrosive effects of high unemployment will cast a shadow over the economy for many years to come. Every time some self-important politician or pundit starts going on about how deficits are a burden on the next generation, remember that the biggest problem facing young Americans today isn’t the future burden of debt — a burden, by the way, that premature spending cuts probably make worse, not better. It is, rather, the lack of jobs, which is preventing many graduates from getting started on their working lives.

So all this talk about structural unemployment isn’t about facing up to our real problems; it’s about avoiding them, and taking the easy, useless way out. And it’s time for it to stop.

(click here to continue reading Easy Useless Economics – NYTimes.com.)

I vowed I was going to stop making drive-by posts1 like these, but here’s the quandary. I know next to nothing about economics and even economic history, so I can’t dispute or amplify what Dr. Krugman asserts. However, I like his turn of phrase, and his reasoning sounds plausible. Maybe in the future, I’ll be able to use this post as a footnote to a different post?

What do I know about partying or anything else?

Footnotes:
  1. posts where I don’t add much to the discussion [↩]

Chronic Underemployment Is A Problem

Seth Anderson0 comment

Continental Illinois Bank Building
Continental Illinois Bank Building

How is the US ever going to get out of its economic doldrums when the attention of politicians and the media is so focused on Wall Street and whether the Dow Jones Industrial Average goes down a few points?

Paul Krugman discusses:

Consider one crucial measure, the ratio of employment to population. In June 2007, around 63 percent of adults were employed. In June 2009, the official end of the recession, that number was down to 59.4. As of June 2011, two years into the alleged recovery, the number was: 58.2.

These may sound like dry statistics, but they reflect a truly terrible reality. Not only are vast numbers of Americans unemployed or underemployed, for the first time since the Great Depression many American workers are facing the prospect of very-long-term — maybe permanent — unemployment. Among other things, the rise in long-term unemployment will reduce future government revenues, so we’re not even acting sensibly in purely fiscal terms. But, more important, it’s a human catastrophe.

And why should we be surprised at this catastrophe? Where was growth supposed to come from? Consumers, still burdened by the debt that they ran up during the housing bubble, aren’t ready to spend. Businesses see no reason to expand given the lack of consumer demand. And thanks to that deficit obsession, government, which could and should be supporting the economy in its time of need, has been pulling back.

(click here to continue reading The Wrong Worries – NYTimes.com.)

The government can borrow money for basically nothing (interest rates were less than 1% this week1), so why don’t we invest in our crumbling infrastructure and put people to work? Sewers, bridges, energy grids, public transit and commuter rail, even highways if we must, but do something productive!

Sidewalks Never Sleep
Sidewalks Never Sleep

More Krugman:

To turn this disaster around, a lot of people are going to have to admit, to themselves at least, that they’ve been wrong and need to change their priorities, right away.

Of course, some players won’t change. Republicans won’t stop screaming about the deficit because they weren’t sincere in the first place: Their deficit hawkery was a club with which to beat their political opponents, nothing more — as became obvious whenever any rise in taxes on the rich was suggested. And they’re not going to give up that club.

But the policy disaster of the past two years wasn’t just the result of G.O.P. obstructionism, which wouldn’t have been so effective if the policy elite — including at least some senior figures in the Obama administration — hadn’t agreed that deficit reduction, not job creation, should be our main priority. Nor should we let Ben Bernanke and his colleagues off the hook: The Fed has by no means done all it could, partly because it was more concerned with hypothetical inflation than with real unemployment, partly because it let itself be intimidated by the Ron Paul types.

Something needs to happen, and soon, before we’re all living in cardboard boxes, or afraid to walk down the street because some hungry fellow is going to rob you for your pennies so he can eat

Footnotes:
  1. I thought I heard Paul Krugman say 0.25% on Keith Olbermann’s show, but I’m not positive [↩]

Structural Unemployment is a Structure of Excuses

Seth Anderson2 Comments

Paul Krugman is skeptical about the oft-repeated claim that the current high unemployment rate is because the entire economy needs to be reconfigured and workers retrained:

The other Herzog

So all the evidence contradicts the claim that we’re mainly suffering from structural unemployment. Why, then, has this claim become so popular?

Part of the answer is that this is what always happens during periods of high unemployment — in part because pundits and analysts believe that declaring the problem deeply rooted, with no easy answers, makes them sound serious.

I’ve been looking at what self-proclaimed experts were saying about unemployment during the Great Depression; it was almost identical to what Very Serious People are saying now. Unemployment cannot be brought down rapidly, declared one 1935 analysis, because the work force is “unadaptable and untrained. It cannot respond to the opportunities which industry may offer.” A few years later, a large defense buildup finally provided a fiscal stimulus adequate to the economy’s needs — and suddenly industry was eager to employ those “unadaptable and untrained” workers.

But now, as then, powerful forces are ideologically opposed to the whole idea of government action on a sufficient scale to jump-start the economy. And that, fundamentally, is why claims that we face huge structural problems have been proliferating: they offer a reason to do nothing about the mass unemployment that is crippling our economy and our society.

So what you need to know is that there is no evidence whatsoever to back these claims. We aren’t suffering from a shortage of needed skills; we’re suffering from a lack of policy resolve. As I said, structural unemployment isn’t a real problem, it’s an excuse — a reason not to act on America’s problems at a time when action is desperately needed.

(click to continue reading Paul Krugman- Structure of Excuses – NYTimes.com.)

Worth reading the whole article if you have a moment