(Hat Tip to Tom Walker)
Dave Johnson asks: Shouldn’t High Unemployment = Less Work To Do?
Our unemployment emergency may really be about less work to do. Hale “Bonddad” Stewart writing at 538.com, Labor Force Realignment and Jobless Recoveries concludes, (click through for gazillions of charts and full explanation)
The “jobless recovery” is in fact a realignment of the US labor force. Fewer and fewer employees are needed to produce durable goods. As this situation has progressed, the durable goods workforce has decreased as well. This does not mean the US manufacturing base is in decline. If this were the case, we would see a drop in both manufacturing output and productivity. Instead both of those metrics have increased smartly over the last two decades, indicating that instead of being in decline, US manufacturing is simply doing more with less.
So it may be that machines and computers are doing more of the work that people used to have to do.
Barry Eichengreen and Kevin H. O’Rourke have been updating us on the progress of this depression by comparing it to the big one, The Great Depression. Their original post on April 6, 2009 captivated their audience, and we also ran some commentary on it here.
One thing that struck us was that we might compare the two events to the totally overlooked depression of the 1970s – The Great Stagflation. The reason why this one is missing and, perhaps, lost from official economic history is that it did not resemble the widely accepted official definition of a depression. For instance, as shown in the graph below, year over year Gross Domestic Product enjoyed an unbroken expansion during the entire period.
“What the Fuck are you doing Mccord!?” It was my platoon leader. “You need to quit worrying about these Fucking kids, and pull security!” he screamed. “Roger that, sir” I said and immediately went to a roof top to pull security. While on the roof, one of the soldiers took a picture of me, I didn’t realize that the blood of the two children was all over me.
MSNBC was, like other media outlets, with its tail between it legs begging forgiveness for the unspeakable horror show it put on yesterday.
One personality – we can’t remember who – called the story of Ms. Sherrod, “a story of redemption.”
We are not sure what that means, except it implies MSNBC was out trying to redeem themselves in the eyes of their audience for the evil they had done this woman.
The word that comes to mind for us is: Hubris, meaning extreme haughtiness or arrogance, according to the Wiki. And, we apply it to the victim in this case, not her tormentors.
For 400 hundred years, she, personally, and her people, generally, have been enslaved, raped, murdered, robbed, imprisoned and treated to indignities of such unspeakable horror as to make what was seen yesterday on MSNBC a virtual love-in. During her life, she has tried to throw off this historical burden – perhaps, believing wishes make it so – and reach out to the very perpetrators of her injuries and those of her people.
Stupid old woman. What did she expect?
From Zero Hedge, we learn that it is entirely likely all attempts by the Messiah and his gang of Wall Street predators to prop up the economy in hopes of saving endless labor from the trash-bin of history are failing fast.
The ECRI Leading Economic Index just dropped to a fresh reading of 120.6 (flat from a previously revised 121.5 as the Columbia profs scramble to create at least a neutral inflection point): this is now a -9.8 drop, and based on empirical evidence presented previously by David Rosenberg, and also confirming all the macro economic data seen in the past two months, virtually assures that the US economy is now fully in a double dip recession scenario.”It is one thing to slip to or fractionally below the zero line, but a -3.5% reading has only sent off two head-fakes in the past, while accurately foreshadowing seven recessions — with a three month lag. Keep your eye on the -10 threshold, for at that level, the economy has gone into recession … only 100% of the time (42 years of data).” We are there.
Paul deLespinasse proposes to eliminate unemployment once and for all. And, to accomplish this he is advocating a variant of the government funded employment schemes making the rounds among progressive circles these days.
Paul begins by noting that the most recent employment numbers had an interesting solution buried in the otherwise ugly data:
The private sector of the economy created 83,000 additional jobs in June, but total employment fell because 225,000 temporary census workers were let go.
The census workers had real jobs and these were additional jobs that reduced unemployment. They demonstrate that there are two possible ways to reduce unemployment, not just one.
The government has been trying to reduce unemployment by “stimulating” the economy so that private employers would become willing and able to put more people to work. But it is unclear how well this strategy has worked.
The alternative is for government itself to hire the unemployed and put them to doing useful things. This is what the Census Bureau did, and back during the Great Depression this is what the WPA and other government programs did.
Based on his insight, Paul imagines quite a number of things government might pay people to do. It would, he argues, be possible for the government to provide a job for everyone who is willing and able for less than the total cost of last year’s Obama stimulus program:
If all 14.6 million currently unemployed took such government jobs, and if on top of minimum wages the government paid $400 per month towards medical insurance for each employee, it would cost about $24 billion per month, or $289 billion per year, not including administrative costs.
The newly minted government workers would be paid minimum wages of $7.25 per hour for a 40 hour work week.
Paul makes the reasonable argument that this approach to the unemployment problem is superior to the one currently pursued by the Messiah’s administration. Obama is trying to stimulate businesses to hire the unemployed, but has seen little visible results for his massive deficit spending. Paul compares what Obama is trying to do to filling up a pool by seeding the clouds and hoping for rain.
If we have a pool we want to fill with water, does it make more sense to turn on a faucet and fill it up, or to hire pilots to seed the clouds and try to make it rain? Cloud-seeding, like our current approach to dealing with unemployment, would be discredited “trickle down” theory with a vengeance!
Why not go with a straightforward approach whose costs and results are measurable, which has worked in the past, and which could put a total end to unemployment rather than just reducing it?
We agree! There is no reason to pay people not to work, while providing massive incentives to companies to hire them. Where we disagree with Paul is on his insistence that this ineffective system should be replaced by millions of minimum wage workers performing what passes for necessary work only in the minds of progressives. If there are important public work projects to be undertaken, workers should be employed at wages consistent with the value of their labor power, i.e., the average hourly wage for the country.
Public projects of importance to all of us, such as roads, bridges, water and sewer reconstruction, education, etc., should be undertaken as serious endeavors and not simply as make-work activities to employ otherwise unemployable members of our communities. These things are far too important to use as busy work, and people are far too important to waste their time and effort on activities of no significant economic value – like chiseling statues into mountains.
However, if the intent is to actually reduce unemployment, we have solution that doesn’t cost a dime, and requires no administrative overhead:
Just reduce hours of work, and keep reducing them until there is no unemployment left.
This way, Washington isn’t engaged in filling pools by seeding clouds OR turning on faucets – if we want to spend time in the water, the beach is already there waiting for us.