Talkin’ Full Employment

May 4th, 2013 at 8:13 am

…over at the NYT.  One of OTE’s favorite topics!

Getting good feedback on this piece–there are a growing number of folks who recognize that the market can’t always be counted on to provide an adequate quantity of employment opportunities.

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6 comments in reply to "Talkin’ Full Employment"

  1. urban legend says:

    Between the first quarter of 2000 (Clinton peak)and Q1 2007 (Bush peak), the full-time employment to population ratio dropped by the equivalent of almost 4 million jobs, median wages were virtually flat and manufacturing lost over 4 million jobs (while there were increases in construction and financial services). How many companies dropped defined-benefit pensions and required ever higher employee share of the cost of health insurance.

    The public understood something fundamental and not favorable was going on: UMich consumer sentiment in that quarter of 2001 reached 110, but could do no more than 92 when employment-to-population peaked under Bush — and even that depended on wage stagnation, more part-time employment, excessive construction and false equity from the housing bubble. In the understandable and correct desire to avoid feeding the “structural fallacy” explanation of slow recovery favored by right-wing economists (the provably false claim of jobs-skills mismatch), some progressive economists seem to avoid dealing with the endemic weakness of the early 2000s.

    My trial balloon for the underlying fundamental weakness: steady decay in public spending on infrastructure work (performed by the private sector, folks) brought on by the Proposition 13 tax revolt, Democratic Party embrace of Republican talking points on deficit spending, and Reagan’s government-is- the-problem philosophy. This left a huge employment hole. It seems from looking at estimates of infrastructure spending in the 60s and 70s as a percentage of GDP that we may have been missing as many as 5 million jobs that should have been devoted on a permanent basis to keeping our infrastructure up to modern standards. Yes, that would mean unemployment in 2000 could have dropped below 3% — so? it did that in the early 1950s, too — and kept the labor market in reasonable health after that stock and capital gains bubble popped without the need for a housing bubble.

    I would be interested in seeing some attention by the professionals devoted to this. It means thinking of infrastructure as a far more integral part of the economy than just a way to do some temporary stimulus.


  2. Smith says:

    I agree with much if not most of the piece in the Times. But allow me to voice my concern over what I disagree with, namely wage subsidies, particularly permanent subsidies. First, it’s possible to make an argument for targeted wage subsidies to help a particularly disadvantaged group without conceding it won’t come at the expense of a less advantaged group. One could target the unemployed, the long term unemployed, older workers, younger workers, depressed industries, industries competing with foreign subsidies, businesses postponing their hiring plans for a better economy. The idea appears as though you’re bribing a business to do something they normally as a temporary measure to speed recovery, counter discrimination, and weather increased globalization during a crisis. That is something quite different from adding wage subsidies as a permanent fixture to the economy. I recognize there is broad support for some type of wage subsidy, at least under current conditions and employment levels.
    http://economistsview.typepad.com/economistsview/2010/02/economists-for-wage-subsidies.html
    But wage subsidies are corporate welfare. Whether they are tax credits,
    http://en.wikipedia.org/wiki/Hiring_Incentives_to_Restore_Employment_Act
    or 100% reimbursements, they don’t necessarily add jobs. Instead, they decrease every workers value. Adding government jobs (e.g. teachers, road repair construction workers, FDA inspectors) however, (guess what) adds jobs and increases every workers’ value. This is common sense.


    • Smith says:

      “you’re bribing a business to do something they normally as a temporary measure”
      should read
      “you’re bribing a business to do something they normally wouldn’t do as a temporary measure”


    • Smith says:

      sorry, sorry, was rushing this…
      “at the expense of a less advantaged group”
      should read
      “at the expense of a less disadvantaged group”


  3. Kevin Rica says:

    Jared,

    “The concerns of Democratic policy makers shifted from working-class issues like jobs and toward the concerns of upper-income constituents, like inflation, taxes and budget balancing.”

    Astute observation!

    Don’t forget the even more important “social issues” that concern the modern Democrat Party and the body snatchers who took it from the New Dealers like myself: alternative lifestyles, whale saving, and immigration. In short, waging war on all things Archie Bunker.

    So it should come as any great surprise that the interests of the American workingman, the standard bearer of the New Deal, haven’t been protected recently.


  4. Sandwichman says:

    “But I don’t see that in our future…”

    I would be wary about succumbing to “crackpot realism,” Jared. When the only feasible solution appears inconceivable then maybe it is time to “direct the gaze,” as Walter Benjamin advised, “on nothing except the extraordinary event in which alone salvation now lies.”

    Crackpot realism was C. Wright Mills’s term for shying away from the conventionally unthinkable. Benjamin was less circumspect. He called it “bourgeois stupidity and cowardice” and attributed it to the confusion and estrangement from life of mass instincts.

    “The helpless fixation on notions of security and property deriving from past decades keeps the average citizen from perceiving the quite remarkable stabilities of an entirely new kind that underlie the present situation…. Again and again it has been shown that society’s attachment to its familiar and long-since-forfeited life is so rigid as to nullify the genuinely human application of intellect, forethought, even in dire peril.”

    What makes you think that impotent, half-hearted solutions will be more politically palatable than those you “don’t see in our future”?


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