Friday, November 7, 2008

Going down the U-tubes

by the Sandwichman

Last night, the Sandwichman was tempted to predict that the BLS unemployment report coming out this morning would be higher than economists' expectations. It was. But my unpublished prediction was just a hunch based on skepticism about the perpetual rosy scenario projections of the usual gang of idiots.

I should explain that everything the Sandwichman writes is based on a very different philosophy of unemployment than that which prevails at the Bureau of Labor Statistics, in the economics academy and on the business pages of the newspaper.

The mainstream view was nicely summarized by Ira Steward as being that there is a Goldilocks amount of unemployment -- just enough to keep workers dimly aware of the lash of hunger. Sandwichman's position is that a lot of what gets counted as employment is actually a mislabeled form of under-employment. The job of sandwich-man epitomizes (albeit anachronistically) those precarious occupations filled by people unable to obtain adequate employment. The Sandwichman embodies the idea of systemic underemployment.

Let this mornings news be notice that the unemployment crisis has arrived. Actually, it has been around for decades, nicely covered up. Over the months and years ahead it will become increasingly difficult to sweep it under the rug. My colleague, PGL, says we need "aggregate demand stimulus" and, although I applaud the sentiment, I have to ask "demand for WHAT?" Demand for more barrels of oil? Demand for tanks and missiles? Demand for arcane financial instruments? The problem with "aggregate demand" is precisely its imprecision. When the path of the economy have been so rutted by decades of aggregate demand stimulus, more stimulus is just going to follow those same ruts.

I forget how many times I've mentioned Keynes's "three ingredients of a cure" for unemployment. But I remember exactly how many times my colleague, PGL, has taken the bait and replied. Zero. My question is: what is it about today's "aggregate demand stimulus" that exempts it from Keynes's explicit acknowledgment of its limitations?


TheTrucker said...

"Demand for what" asked the Sandwich Man? And TheTrucker said, "Health Care and leisure". And neither of these things can be had by manufacturing more lip gloss or importing it from China. It can be had in large part by just delivering health insurance directly from government.

With that one bold move the part time work and true entrepreneurialism of America would be unleashed almost immediately. There are a great many who do not want full time jobs. The only reason they work full time is that they would otherwise not have reasonably priced health insurance. There are others who need the jobs.

Then you have the would be small time entrepreneurs that would probably be more productive and self fulfilled as proprietors but can't do it because of health care problem.

The most cost effective stimulus that this country could undertake would be a single payer national health insurance system like the Canadian system. I don't think the Canadians realize the economic benefits of their system because they never think about the horrible externalities of ours.

Job mobility increases wages.

Get it fixed.

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