Unemployment

[Politico]

Is this thread some sort of early April Fool's Joke? I did not get the memo that we have burnt the Constitution and should now turn into the Union of Soviet Socialist States of America, let alone the United States of Zimbabwe. That is basically what most of these ideas amount to. I am beginning to wonder if some of you have ever worked a real job, let alone know anything intellectually rigorous about economics.

The only reasonable ideas are the Georgia Works project, more tax cuts/credits for the self-employed, withdrawing from Iraq/Afghanistan, and legalization of drugs/prostitution. The first two ideas are realistic and possible while legalization of drugs/prostitution is not politically feasible right now (at least not nationwide). In addition, withdrawing from Iraq/Afghanistan would actually create unemployment as many returned soldiers would be jobless. It is hard to say if the benefits of that action would outweigh the costs, but it is probably inevitable within the next year or two.

The process of people deleveraging is something that cannot be sped up by government without inflicting undue taxation and/or inflation upon those who did not over-leverage themselves. The benefits would not outweigh the costs in this case, especially when one considers the message it would send to everybody (i.e., government will "bail you out" anytime you are irresponsible. This will, of course, force everybody to ask them self why they should bother being responsible in the future. It does not take an economist to see what it would ultimately lead to down the road).

If the nation were a person, then we broke our leg after playing a risky game that gave us a rush (the game being the housing bubble with the broken leg being the bursting of the bubble). It will take time, but the broken leg will heal. Poisonous prescriptions that kill the patient or make the patient even more ill are not going to speed up the process. Indeed, such actions may actually kill the patient at worst, or throw them into a coma at best. Think about it.

[Politico]

That's a poor analogy, Politico.  The game is capitalism, and you propose to just continue playing it.  What we're proposing is switching from lawn darts to croquette.

What you're really proposing is switching from America to North Korea. Everybody who loves freedom will oppose you every step of the way.

[Politico]

I'm afraid that's just laughably wrong. You can't redistribute work like that.

If it is technically possible is arguably.
But you will agree with me that the way work is distributed today is anything but rational, and that, if possible, we should organize it in another way. Not?

Also, talking about the capitalist economy's goal makes no sense. What happens in a free market is the result of agents in that market trying to satisfy their preferences.

The fact that we produce for a market is just the substantiation of what I said: A player in a market economy doesn't think "What / How much do people need?" but "What / How much can I sell?"

The bum down the street is the living example.
While it is absolutely no problem to produce enough food for all of us (in fact, we produce a lot more than we need, and through away tons and tons of it), he is hungry.
Because he can't pay. So his needs are not satisfied. He is economically nonexistent.

Commodification is the only thing that matters, and not satisfaction of needs, and that's my point.

Apparently, peoples' preferences seem to be for a 40-hour work week, given the various constraints that exist.

Sure. Everyone is a player in the game.
You won't here stupid moralist stuff like "Uh, the bad capitalists force people to do xyz..." from me.

The capitalist economy that you so despise has led to people being more satisfied now than they have ever been anywhere in human history.

Capitalism has indeed produced more wealth and a higher standard of living than every pre-capitalist economy. Only a fool would deny that (some self declared "socialists" actually do...).

But that doesn't change the fact that the satisfaction of needs is in no way the goal of capitalism, but a fall-out in it's process of productivity increase.

First off, people who are unemployed can't easily replace the people who work. The 35-year old high school dropout with an alcohol problem can't just jump in and share the workload of the investment banker working 80 hours per week. In the West many of the people who are unemployed are so because they lack skills demanded in the market.

Secondly, even to the extent that people do have the right skills work isn't an infinitely divisible mass. If I invest 20 hours in reading up on the election of 1976 I'll be the only one able to invest another 20 hours in writing a summary of it. I can't share that job with someone else. Nor could I easily have shared the reading. A lot of jobs in the modern economy has these properties.

Thirdly, there are many fixed costs involved in an employee, such as commuter time, having an office, etc. These costs make it inefficient to share jobs between a lot of people.

Now, I'm not so arrogant as to think that everyone else in the world has failed at rationally organizing work whereas I alone have found the golden path to paradise. If it actually were more efficient to divide work between more people I suspect some of the many companies struggling to get ahead in the market would be doing it.

As regards how a market works, you seem to be mixing up different things. An agent in the market doesn't think "how much can I sell." He or she thinks "how can I best satisfy my preferences" Most people have preferences such as having a house or food and to obtain that they must have money. To have money they must work (thus, sell their labour services). Thus, they work. They don't sell as much as possible, because most people also value leisure time.

It is true of course that the agents typically don't consider how to satisfy the needs of everyone else. They might not aim to satisfy the preferences of the bum on the street. That might be a moral failure of human beings, but it's hardly the system failing to satisfy preferences.

The capitalist system does not really have a goal. People have goals and these goals tend to involve satisfying their preferences by selling something in the market. If people preferred not doing that there is nothing inherent in capitalism forcing it upon them.

Of course, not everyone gets everything they want. Then again, I think more people are getting what they want to a larger extent now than ever before. And in my book, that is a good thing.

This is an excellent post of the highest caliber.

[Politico]

The other thing that happened though, this goes to the point you were just making, is there are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers - Obama

This just means we have to create 'inefficiency' - large-scale 'state industries' or direct government employment in the form of sinecures (little work, absolute security, good pay and benefits).

You see, this worship of 'efficiency' is what has doomed us.

There is no such thing as a free lunch, buddy. I am beginning to suspect you are the ultimate troll of the economics sub-forum.

[Politico]

30- hour work week on unskilled/low-skilled jobs might be a start. Federal minimum wage of $10 and mincome that's about $800 a month(10k a year) to all taxpayers would also help out a lot.

With all due respect, if no firm is willing to hire particular unskilled workers for just one-hour per week at $6.XX per hour, what in the world makes you think any firm is going to hire one of those unskilled workers for thirty-hours per week at $10 per hour?

One of the golden rules of economics: We cannot legislate away the laws of supply and demand.

As for the idea of a minimum living income for all Americans, the problem with that idea is that it eventually must be paid for by taxpayers and/or via inflation. If we are talking about $10,000 per year for every adult in America, we are talking about over two trillion (trillion, not billion) dollars in government expenditure on an annual basis. Do you see the problem there?

[Politico]

Market forces are forces of nature (human nature, if you want to be exact), and you ignore them at your own peril.

The laws of supply and demand cannot be legislated away. In order for the government to give anything to anybody, it must first take something from at least somebody, or many people, or everybody. These are observations, not opinions. I did not make this world; nobody did. This is just the way things are.

[Politico]

Market forces are forces of nature (human nature, if you want to be exact), and you ignore them at your own peril.

The laws of supply and demand cannot be legislated away. In order for the government to give anything to anybody, it must first take something from at least somebody, or many people, or everybody. These are observations, not opinions. I did not make this world; nobody did. This is just the way things are.

Fine let's take away something from people like this...



and see what happens.  My hypothesis is they won't curl up in a ball and die of starvation.  Keep in mind the person that owns this house is 22.

The Constitution means nothing to you? It is the United States, not the Soviet Union. Everybody pays enough in taxes from the richest who pay over 50% of all taxes collected to the poorest who rightfully pay nothing at all. The current problem is not people being taxed too little; the problem is too much spending on too much waste.

[Politico]

Market forces are forces of nature (human nature, if you want to be exact), and you ignore them at your own peril.

The laws of supply and demand cannot be legislated away. In order for the government to give anything to anybody, it must first take something from at least somebody, or many people, or everybody. These are observations, not opinions. I did not make this world; nobody did. This is just the way things are.

It may be the "way things are", but it's not how they always been, so it's a safe bet that it's not going to always be that way.

There are basically three ways to organize an economy: traditionalism (i.e., everybody does what their father did and everybody is permanently stuck "in their place" while the "lords," the owners of the land, run the show; this sort of thing has not really been seen since the Medieval ages), command and control (i.e., through a monarchy, dictator, communist apparatus, etc.), or free enterprise. The historical record shows which is most successful at raising standards of living for everybody. If you have any doubts about the miracle of free enterprise, do a comparison of South Korea/North Korea and West Germany/East Germany: Same history, same culture, and dramatically different results. Hell, just compare China before it adopted elements of free enterprise with its current status.

[Politico]

What would you suggest cutting?

He already suggested cutting 'waste' for which the definition in the skeptic's dictionary should probably be:

• waste n.
  1. Any government activity that does not meet the approval of whoever is currently talking about waste.  Often mentioned in conjunction with efficient.
  We need to get rid of government waste and save taxpayer money by making government efficient.
  2. When used by a politician a government activity which is purposely left undefined so each voter can believe the politician means what the voter considers to be waste (def. 1) instead of an essential government program.

We can start by not throwing $500 million at pie-in-the-sky companies?

I cannot even begin to imagine the type of waste that is taking place at the federal level. If Al Gore was able to find a way to cut billions in waste from the budget back in the 1990s, I am sure there is a way today to cut billions more today. I definitely have zero faith in Barack "The Trillion Dollar Deficit Man" Obama doing anything about waste, though.

[Politico]

Dear Link,

A) West Germany no longer exists.

B) You should probably figure out what GDP per capita is before attempting to fool anybody into believing that you have even the slightest idea about economic growth.

C) Comparing the dot-com bubble to Solyndra? Talk about comparing apples and oranges. Nobody forced anybody to invest in any of the dot-com companies, some of which failed (e.g., pets.com) and some of which are successful today (e.g., Amazon.com). American taxpayers are forced to be on the hook for the half billion dollars lent to Solyndra that will never be paid back (And the evidence is starting to pour in that it was clearly a bad bet from the get-go if the Obama Administration had simply done its homework). If you do not think that is a noteworthy example of contemporary government waste then you are truly helpless.

D) Let me take a shot in the dark: You are not an American taxpayer.