Unemployment statistics and the real world.
Keep in mind, even as the number of first-time claims for unemployment insurance rose again recently, that the 10% U.S. unemployment figure understates the actual number of unemployed. Even the 17% underemployment figure, which includes those who are either unemployed or who are working part-time but would like to work full-time, fails to include many of those who have lost their jobs but, because they fail to qualify for unemployment, are not being tracked. I know several such people personally; one has been unemployed for over a year.
My point? Structural unemployment is a serious economic issue. But the solution is not to funnel more unemployment benefits to the unemployed. The best thing the government can do is to reduce the barriers it has erected to a vibrant economy, including oppressive taxes, fees, paperwork, bureaucracy, and regulations that repress business productivity and raise prices. By reducing these explicit and implicit costs, there is absolutely no doubt that the private economy will be able to employ more workers as it produces more output at lower prices.
The best thing we can do as private citizens and neighbors is to treat each other right. Keep the economy moving. Put in a good day’s work. Volunteer or learn a new skill if you can’t find a job. Fill a need. Buy smart. And, finally, elect business-friendly local and national politicians. It matters.
By Sherry Jarrell
Learning from Dogs 
So if the 17.3% U6 is not good enough, what should be the proper measure of unemployment? A problem about giving a job to all who want one is that we live in a technological society: I could perhaps drive a bus, but I would have to learn (although I drive cars very well), and maybe all the positions for bus drivers would have been filled already.
Another way people can be integrated in society is by conforming their activities, or capital, towards greater productivity for overall society.
Take renewable energy: photovoltaics and windmills can feed into the grid, and should, and that should be a relatively easy type of regulation to implement. Then the problem becomes how to get finance to do so, and that is why it is crucial to prevent banks to engage in otherworldly activities.
The city of Berkeley, acting as a bank, has started to finance photovoltaics. But it should not have come to this. Banks should be banks, and money should be useful.
PA
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My own view, Patrice, is that in the ‘advanced’ nations, falling populations mean that we can never have full employment until the dropping birth rate produces a population level that matches the lower economic output that is coming along, as surely as night follows day.
Politicians never seem to recognise the power of changing demographics and how societies will look in 25 to 40 years time. That means that those parts of society that can continue to pay taxes will need to find other ways of supporting the ‘unemployed’ for many years. Big government is not an answer, however good it may or may not be, we just can’t afford it.
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Paul: I fail to understand. Falling population, presumably through aging rather than US republican induced starvation, and disruption of basic services, means that people have to work longer and more to support themselves. As an illustration, the Japanese unemployment rate (december 2009) is only 5.1%. Japan has the oldest population, this side of the Bible.
In any case the population of France is augmenting at the highest rate ever, and that of the USA close to 1% per year. Economic outputs are augmenting nearly everywhere, but for the little financial crisis hic-up (output is being smashed in a few specks such as Iceland, ireland, Baltics, and Dubai…). True. Germany’s output took a hit, but it’s just transient. Paradoxically, German unemployment took much less than a hit than the French, or, a fortiori the American. But in the not so far future, France ought to pass Germany in population. This jumble of facts disrupts theory, does not it?
OK, Germany made a point to resist unemployment. France and the USA are into creative destruction. But these are governmental policies. In other words, unemployment is everywhere a government problem.
Patrice
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Patrice and Paul,
Other countries measure their unemployment rates differently, which makes direct comparison difficult. Some “direct” their labor into jobs, essentially requiring them to get a certain skill set and to fill a certain job. This is not the kind of economic freedom that leads to sustainable productivity and growth.
The ideal level of unemployment? First, see my earlier posts on how the “natural” rate of unemployment is measured and what it leaves to be desired, looking back at where we’ve been rather than where we could go. And it doesn’t distinguish between frictional “job search” type of unemployment, which is not inherently undesirable, and structural unemployment, which is a real and serious problem. A “good enough” unemployment rate, assuming it is measured objectively, is around 4%, in my opinion.
Patrice: No one should be “given” a job. They should earn it. I think your word choice belies a fundamental difference between how you see the world, and how I see the world. In my world, people earn their way, and do not expect to be taken care of by the sweat of their neighbors and the paternalism of politicians who, apparently like you, feel they “know better” what is good for the rest of us. Just a thought.
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Sherry:
I looked back over what I said, to find the CONCEPT of being “given” jobs as a panacea. Did not. It seems to me that you are projecting on me the exact philosophy I abhor. BTW, the concept of neighbors being taken care by sweat of neighbors is not mathematically sustainable, except in a trivial way.
As a contributor more or less said in the past you seem determined to conflate several notions, such as free meals and mental superiority (a good inside joke for those who know the trial of Socrates and Athenian history).
The sad truth is that the USA is becoming the temple of plutocracy, people who neither earn it honestly, nor deserve it, nor know what to do, or even know how to fake it.
In many other countries, people work hard too, and they earn it more. Fairness. All what American plutocrats steal from their subjects, it is as much their subjects do not have to make the economy work, a job that only the People can give to the economy, not the little father of the republican party.
P
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“unemployment is worse”? Forgive me for believing that almost everything is worse than the official stats tell us. Governments do all in their power to spin the statistics; they have little credibility left.
“Greece can’t meet its obligations regarding debt”. Goodness, what a surprise. Does anyone believe ANYTHING coming out of Greece?
But the troika is giving them billions more of our money ANYWAY, even though the conditions on which the extra billions were promised have not been met. ANOTHER LIE then?
Investors in Greece (otherwise knows as lunatics on the run) are now being asked to accept a 60% haircut = in truthspeak “LOSS”. 60% is nearer to 100% than 0%, so in essence Greece is defaulting on its loans. Has anyone SAID that? No, they just talk about a “haircut”.
Frankly, I wouldn’t touch any official statistics or indeed comments whatsoever with a barge pole. The establishment are liars.
Have a good day.
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“Big government is not an answer, however good it may or may not be, we just can’t afford it.”
Will you tell Sarkozy et al or shall I? The first priority of ANY organism is to increase its size and power. The idea that any government will volutarily cut its own expenses as is bleedin’ obviously required is laughable.
I am coming round to the view that A) only a revolution is going to achieve anything (which is why NOTHING should be done to help Greece and Italy so that the revolution comes asap) and B) 30 years after the revolution we’ll be back where we started anyway thanks to Man’s 1) idiocy and 2) inability to earn from the past and 3) the tendency of nasty and stupid people to rise to power before nice ones like you, me and Patrice.
I know you are more optimistic. I am not.
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