2 comments in reply to "No Mo YOYOs!"

  1. perplexed says:

    WITT doesn’t really apply though if the costs of the most serious economic disasters brought on by the most powerful economic actors can be imposed on the most powerless:

    Its Time to End the Output Gap Option of Sticking it to the Powerless!

    In a scenario like the one we see today, where output drops significantly from potential (& trend), this drop in income must be allocated somewhere in the economy. Since wages are “sticky” and the market for labor doesn’t have to “clear,” existing wages are kept “artificially” high while “excess” workers are given no wages at all to make up for the “gap.” Why is this the solution to what is, in reality, nothing more than a form of monopoly power? What is the rationale for sticking the entire cost of the output gap on the backs of these “unemployed” workers who are more than willing to work, usually for less than the workers now performing the same exact tasks that currently employed workers are now performing? The reality is, that the answer to this question is “because we can get away with it & there’s not a damn thing they can do about it!” Its nothing more than a power grab by those in control used to impose the entire cost on a relatively small and completely powerless group that can do nothing about it. Its high time we started discussing what the alternatives to this obscene policy are and eliminated this option altogether. Its time we fully recognized and discussed that decisions to not borrow and stimulate the economy or tax the wealthy and employed to cover the costs of this gap, are in fact pro-active decisions to impose the entire cost of this gap on a group too powerless to fight back, while protecting the incomes of other economic actors from bearing any of the costs of this reduction in output.

    Its time to recognize that, unless we have an open, bid-ask market for all jobs in the economy, we are not dealing with “market forces” of a “competitive” economy and are instead enforcing an “unregulated” monopoly that is being paid for at huge cost to small percentage of people. What exactly establishes the right of this larger group to impose this cost on the powerless? Why are these “markets” not subject to anti-trust laws?

    Its time to remove this “stick it to the powerless” option and trust in the “market” to resolve these economic problems with other, more ethical, options. The “work sharing” methods used in some economies as you discussed in an earlier post is certainly one possible solution for some markets but there are others as well. Providing benefits to those sacrificed (willing to work but unable to find jobs) by our current policies that replace all, or most, of their lost income (based on what their occupations currently pay) and paying for these through highly progressive taxes on current workers and corporations would ensure that the costs were ethically shared by all actors in the economy. As long as these workers are actively seeking employment in their field and not turning down reasonable offers to work, they would be eligible. Objections that “some might game the system” can be easily addressed by the fact that the other 91.5% are gaming it now. Higher taxes could be imposed on companies that persist in large discrepancies of applications to open jobs to encourage them to adjust wages to a point that the markets will clear, or pay the cost of maintaining their “monopoly” and protecting their “chosen few.” These policies could be phased in and out as the economy, or certain sectors, approached or departed from “full employment.”

    The fact remains that there are many, many alternatives to solving these problems and sharing these costs; almost all of which are more ethical than our current policies of imposing these costs on those most powerless to do anything to prevent it. Perhaps when the costs of maintaining this output gap are more equally shared by all economic actors in the economy, opposition to the stimulus measures needed to end it will be perceived quite differently than it is under current policies that protect most from bearing any of the costs of not acting.


  2. PeonInChief says:

    Bill Clinton opposed to YOYO economics?!? In what parallel universe?


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