by the Sandwichman
Brad DeLong worries and worries about the "jobless recovery"
The "jobless recovery" is an oxymoron. It also stands the lump-of-labor fallacy on its head. Instead of a "fixed amount of work to be done" there is a growing amount of work to be done by a fixed number of workers. Well, the remedy is obvious -- or would be obvious but for the precision-engineered blinkers worn by almost all economists these days: "So long as there is one man who seeks employment and cannot find it, the hours of work are too long." Who said that? Why the great Keynesian himself, John Maynard!
Wait! No! That was Samuel Gompers. What Keynes said was:
"The full employment policy by means of investment is only one particular application of an intellectual theorem. You can produce the result as well by consuming more or working less. Personally I regard the investment policy as first aid... Less work is the ultimate solution."
So, the first Obama stimulus was first aid. Let's assume the patient is stabilized. The economy is no longer "falling off a cliff". WHAT WOULD KEYNES DO?
Jobless or work less?
Last week 565,000 people filed first time jobless claims. Although this is the smallest number since January 2009, it is hardly cause for celebration. The unemployment claims data is highly volatile, and numbers reported during holiday weeks are especially poor indicators of employment trends. More telling is the number of continuing unemployment claims, which hit yet another record high of 6,883,000.
While many economists think that the economy is experiencing a labor market shock which will correct sooner or later, data on the duration of unemployment paints a different picture. Problems with the labor market have been brewing for decades.
Read more here:
"So long as there is one man who seeks employment and cannot find it..."
"So long as there is one man who seeks unemployment and cannot find it..."
oops! thanks Martin.
Well the lower rung people like my flatmate who still has a job in Goldman Sachs is working like a maniac coming home at 11pm EVERY night (no exaggeration). Of course, this overtime is unpaid since they're designated as an "analyst". Yeah, nice one, GS. Simple math shows that with an average bonus of $700,000 per staff member, they could afford to increase their lower end staff levels by 10x if they could ever forgo such unwarranted rewards. My flatmat's actual bonus will probably be about $2000-2500. So if that's the standard, go figure how much the psychopaths at the top are granting themselves per person...
Unemployment in a society that is already producing enough ( and it’s not hard to put up an argument that we are producing far too much) is a sign of good news. It tells us that the economic problem has been solved – or is at least well on the way to being solved. We have developed the technology and know-how to look after everyone with relative ease.
Instead of celebrating this extraordinary occurrence we mostly wring our hands saying, “woe is us – there is not enough work.” But how can there be such a thing as not enough work? There is only as much work as needs to be done. Either we are producing enough to satisfy all our requirements, in which case we don’t need to do any more work, or we aren’t producing enough, in which case we do need to do more. When all the work that needs to be done has been done, it is nothing short of madness to say we are in trouble. At that point the sensible thing to do would be to have a well earned rest.
So from me a big yes to less work as the solution to unemployment – and the less work the better.
With global warming i think actually people need to be working more---on that problem. its a crisis. Regarding the 'lump of labor fallacy' (which, as an expert, i assume is not referring to cancer) I think rather than trying to beat a dead horse in the hope of convincing people, re-framing the issue maybe the way to. For example, if we convince the general public at large that god doesn't exist, and that evolution either does or doesn't occur, then they will surely see that the lump of labor fallacy follows as a corrolary of the general theorem (eg it-from-bit or no-free-lunch theorem).
the best proposal regarding global warming (assuming its true---it actually was cool last nite so there is a counterpoint) turning the sun off for a few minutes each day, or more, might solve the problem i recently read.
the issue is who controls the light switch---the top 1%? bottom 50?
Working less implies raising the hourly rate so that the workers can live well enough not to act like the Goldman Sachs slave described by Daro. So to avoid the "jobless recovery", increase wages.
Yes, increase the wages indeed. As Mary Steward (Ira's wife) said: "decreasing the hours increases the pay." How that works is that a generalized reduction in hours lowers unemployment and leads to productivity improvements.
There is one catch, though, and it is a tricky one. If you make a compensating wage increase a prerequisite for any hours reduction whatsoever then they won't happen. Employers are more comfortable with (small) wage increases than they are with systematic hours reductions. So they'll trade a small wage increase for longer hours, if necessary. And then they can take it back later.
I think raising wages is just one way of dealing with the introduction of less work. To my mind it rings a little of a belief that working less is a lowering of living standards which needs to be compensated for. To me the whole idea is that working less is a raising of living standards that can stand on its own. So maybe the idea is not necessarily adjusting pay, but rather living a simpler life which can also be a richer life. A simpler lifestyle is badly needed in the industrialized West for environmental as well as spiritual and mental well-being reasons.
Another solution is mentioned in one of my favorite essays on the subject – Wealth Versus Money by Alan Watts;-
“If all you had to barter with was your physical or mental energy in work that is now done by machines, the problem would then be what will you do for a living and how will the manufacturer find customers for his tons of butter and sausages?
The sole rational solution would be for the community as a whole to issue itself credit for the work done by the machines. This would enable their products to be fairly distributed and their owners and managers to be fairly paid …and all the while the increasing wealth would be coming from the energy of the machines…”
I sort of agree with Michael Berney if he is actually advocating a guaranteed minimum income arrangement. I should have thought of that as well as the "increase wages" option. Just slow, I guess.
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