Unemployment

[Beet]

Use this thread to discuss unemployment. All views are welcome. I am not necessarily interested in jumping down anyone's throat or debating to death on this one.

Here are my initial thoughts about how to raise employment levels-

1) Lower the cost of employment. Particularly, health care costs have pushed up the cost of labor. The Obamacare debate is a red herring. The real problem is distorted incentives. Even insured patients must shoulder a greater burden for care. Additionally, doctors are human beings and not saints, and in America they are overpaid. It shouldn't be heresy to say this.

2) Shift from traditional education model to employer-based education model. Give incentives to companies to train their own workers- with an eye to the long term. For example, instead of giving Johnny a loan to go to Big State University and study whatever he wants, give Acme Manufacturing a loan to give Johnny a loan to study a specialized kind of welding that Acme Manufacturing is likely to need in 5 years, and if Johnny takes employment at Acme Manufacturing upon graduation and works there for three years, the loan is forgiven.

3) Lower search costs. Endless time is spent searching for a job. The government should create a database where anyone can submit a job opening and a resume. Perhaps this begins with an initial buyout of the big jobs sites likes like monster.com. Make the data available to anyone and independent contractors can then use this information to match people with opportunities.

4) Georgia Works. Georgians receiving unemployment benefits are matched with employers who are seeking employees and who agree to provide up to eight weeks of training. The employers do not pay the workers, who work no more than 24 hours a week; instead workers continue to receive their unemployment checks and a $240 stipend to help cover transportation, child care and other expenses.

5) Reduce the workweek. Instead of laying off workers, reduce the workweek from 5 days to 4. If five people work only 32 hours a week instead of 40 hours a week, that leaves 40 hours of work undone-- enough for an extra employee. As a corollary, more holidays. Mother's & Father's Day? Columbus Day? Super Bowl monday? Halloween? Make them all time off. If people have these days off, they'll likely use them to go out on the town or something-- spend money. This will not only reduce labor supply, but boost consumer spending.

[TeePee4Prez]

All great ideas, but I have a few additional:

1.)  ELIMINATE all payroll and self employment taxes and raise the top rates to offset the need for more revenue.  This would encourage more risk taking and entreprenurship amongst poorer Americans and boost innovation.  The SE tax is antiquated and highly regressive.

2.)  I thought of this as companies are sitting on record amounts of cash on their balance sheets and not hiring, but instead buying back stock.  I would propose similar to Florida's pre-2006 Intangible Personal Property tax a non-capital (Current) asset property tax for corporate non-capital assets over $2 million, BUT with an offsetting credit if an employer hires new workers or gives workers a raise.  Basically-  Free your cash or pay for hoarding or stock buybacks!

[greenforest32]

1. Second stimulus spent on infrastructure totaling 10% of GDP ($1.5 trillion) over 3 years from the federal government using treasury bonds with their record low interest rates

2. Free up businesses from health care costs by shifting the job to where it belongs: the government. This would be done by eliminating the health savings
accounts/employer health care tax deductions (what "incentivizes" businesses to offer it) and instead expand Medicare to everyone

3. End the wars, cut military spending by 75%, eliminate many of the unnecessary tax loopholes (looking at you Oil & Gas) and redirect this money to more useful domestic spending (social services, education, healthcare, etc)

4. Tax earned and unearned income the same, let the Bush tax cuts expire for the wealthy (bringing back the top bracket to 39%), and enact a financial transaction tax

5. Repeal the mandatory minimum sentencing laws like three-strikes and legalize many of the victimless crimes (marijuana, prostitution, etc) that throw people in jail for nothing harmful or wrong and prevent them from earning income

[phk]

1.) Find a way to help people deleverage.

[republicanism]

Of course in a rational society when millions are out of work, while other millions suffer from burnout, backache or sleep-shortage due to overlong working time, we would redistribute work in a way that allows us to produce the same amount of goods and services with a 20hour-week for everyone.

But since the capitalist economy's goal is not the satisfaction of needs, but the production of abstract wealth, this is impossible.

[opebo]

1.) Find a way to help people deleverage.

Inflation is the way to do this.   And by the way, yours in the only really spot-on point in this thread so far.

What is needed is not any lowering - lowering of costs, etc., but massive increases.  Increases in government expenditure, increases in economic activity, increases in wages, increases in fiat money being created and spent.

Here's the program:

1) Start printing money.  Massively.
 a) use it to buy up mortgages and forgive them
 b) buy up all credit card debt and student loan debt and forgive it
 c) buy housing and take it off the market.  buy whole neighborhoods and tear    them down.
 c) buy the Euro and the Renmenbi like a mother.
 d) buy long term Treasuries till the rate on the 10 year is zero.

2) Institute massive government works projects - the 1.5 trillion mentioned above isn't bad, but it should be quite a bit larger than that.  I envision replacing all the nation's bridges (requiring union wages at at least $35/hour minimum, and american made 100% on any products, machinery, or supplies used), new subways and rail, power plants, etc.

3) Set up a generous dole of around $1,200/month per US citizen, regardless of location.

4) Full national health care with private health care made illegal

5) increase taxes on the rich to approximately double their current levels (this has no effect on growth obviously)

6) Lower the legally mandated working week to 32 hours initially, with double time required after that.

7) Institute a $15/hour minimum wage.

[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.

[opebo]

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

I would like to burn the Constitution.

If the nation were a person, then we broke our leg after playing a risky game (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 him even more ill are not going to speed up the process. Indeed, such actions may actually kill the patient or throw him into a coma. Think about it.

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.

[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.

[opebo]

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.

No, everything I proposed was thoroughly Keynesian, and had nothing to do with a state economy. 

Besides, your idea of 'freedom' is laughable.  Capitalism is slavery.

[Yelnoc]

1.) Find a way to help people deleverage.

Inflation is the way to do this.   And by the way, yours in the only really spot-on point in this thread so far.

What is needed is not any lowering - lowering of costs, etc., but massive increases.  Increases in government expenditure, increases in economic activity, increases in wages, increases in fiat money being created and spent.

Here's the program:

1) Start printing money.  Massively.
 a) use it to buy up mortgages and forgive them
 b) buy up all credit card debt and student loan debt and forgive it
 c) buy housing and take it off the market.  buy whole neighborhoods and tear    them down.
 c) buy the Euro and the Renmenbi like a mother.
 d) buy long term Treasuries till the rate on the 10 year is zero.

2) Institute massive government works projects - the 1.5 trillion mentioned above isn't bad, but it should be quite a bit larger than that.  I envision replacing all the nation's bridges (requiring union wages at at least $35/hour minimum, and american made 100% on any products, machinery, or supplies used), new subways and rail, power plants, etc.

3) Set up a generous dole of around $1,200/month per US citizen, regardless of location.

4) Full national health care with private health care made illegal

5) increase taxes on the rich to approximately double their current levels (this has no effect on growth obviously)

6) Lower the legally mandated working week to 32 hours initially, with double time required after that.

7) Institute a $15/hour minimum wage.

You wouldn't happen to be someone parodying a liberal, would you?

[J. J.]

All great ideas, but I have a few additional:

1.)  ELIMINATE all payroll and self employment taxes and raise the top rates to offset the need for more revenue.  This would encourage more risk taking and entreprenurship amongst poorer Americans and boost innovation.  The SE tax is antiquated and highly regressive.

2.)  I thought of this as companies are sitting on record amounts of cash on their balance sheets and not hiring, but instead buying back stock.  I would propose similar to Florida's pre-2006 Intangible Personal Property tax a non-capital (Current) asset property tax for corporate non-capital assets over $2 million, BUT with an offsetting credit if an employer hires new workers or gives workers a raise.  Basically-  Free your cash or pay for hoarding or stock buybacks!

How about, instead of your second one, a tax on undistributed corporate profits.

[TheDeadFlagBlues]

What this country needs is some Kurazarbeit:http://en.wikipedia.org/wiki/Kurzarbeit

[True Federalist (진정한 연방 주의자)]

Of course in a rational society when millions are out of work, while other millions suffer from burnout, backache or sleep-shortage due to overlong working time, we would redistribute work in a way that allows us to produce the same amount of goods and services with a 20hour-week for everyone.

But since the capitalist economy's goal is not the satisfaction of needs, but the production of abstract wealth, this is impossible.

I see someone needs to read up on The Mythical Man-Month.

[Roemerista]

Of course in a rational society when millions are out of work, while other millions suffer from burnout, backache or sleep-shortage due to overlong working time, we would redistribute work in a way that allows us to produce the same amount of goods and services with a 20hour-week for everyone.

But since the capitalist economy's goal is not the satisfaction of needs, but the production of abstract wealth, this is impossible.

That is a nice goal, sure. And let us say we got rid of the greedy man, I still do not see how any such system could work. Even with the perfect "socialist" man,  what you are asking would require perfect information of all needs. No "Rational" society would say that they have perfect information...

[t_host1]

Of course in a rational society when millions are out of work, while other millions suffer from burnout, backache or sleep-shortage due to overlong working time, we would redistribute work in a way that allows us to produce the same amount of goods and services with a 20hour-week for everyone.

But since the capitalist economy's goal is not the satisfaction of needs, but the production of abstract wealth, this is impossible.

 Sounds like an excellent idea for the millions of unemployed to form a company - a corporation, where as the 20hr work week is the max. requirement with all organized labors demands included.
 Call Apple, tell them that you have a deal to make all of their products, of course, they are not allowed to refuse, hence, abstract wealth will be abound. This should fill that hope and change curriculum.
    Then, once this new abstract corporation has accumulated all its wealth, call china, tell them that the new world abstract corporation will now be building their military complex. Shouldn't be a problem since china's $100B in military expenses produces the same results that the $700B US military complex accomplishes - once china understands that the new unionized world abstract cooperation is producing 100hrs of equity in 20hrs. 
 In a short time the world will have a 101% employment problem to which the new unionized world abstract cooperation will be paying people not to work, perfect -

wait a minute...

we're already there, cancel the above, why bother...? also think of the energy savings if nobody had to do anything - a veggie state of being...

ah... hmm... maybe NOT!


 

[Gustaf]

Of course in a rational society when millions are out of work, while other millions suffer from burnout, backache or sleep-shortage due to overlong working time, we would redistribute work in a way that allows us to produce the same amount of goods and services with a 20hour-week for everyone.

But since the capitalist economy's goal is not the satisfaction of needs, but the production of abstract wealth, this is impossible.

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

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

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

PS: I'd also like to note for the record that I think Opebo overdid it this time. No one can be so stupid as to believe what he posted...

[TheDeadFlagBlues]

Of course in a rational society when millions are out of work, while other millions suffer from burnout, backache or sleep-shortage due to overlong working time, we would redistribute work in a way that allows us to produce the same amount of goods and services with a 20hour-week for everyone.

But since the capitalist economy's goal is not the satisfaction of needs, but the production of abstract wealth, this is impossible.

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

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

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

PS: I'd also like to note for the record that I think Opebo overdid it this time. No one can be so stupid as to believe what he posted...

Time to go off topic:
I'd say that the existence of humanity in prehistoric times led to more contentment among the average person than this post-industrial lifestyle. The average prehistoric man actually ate a very healthy and balanced diet, was very tall, had many more hours of leisure time (obviously these were spent differently) and most important he/she had a major purpose. This primordial existence is ideal for humanity and is how it spent the majority of its time on Earth.

Not that I'd want to go back to that personally. Also the idea that our economy should be modeled after what makes us happiest is ridiculous, I'd like to think that we shouldn't determine the structure of society based off of a hedonic calculus.

[republicanism]

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.

[republicanism]

Also the idea that our economy should be modeled after what makes us happiest is ridiculous

Interesting statement.

What do you think should it be modeled after instead?

[Filuwaúrdjan]

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

That's a tad reductionist for you, no? Of course at that reductionist level, even Marx himself would not have disagreed.

[Filuwaúrdjan]

Time to go off topic:I'd say that the existence of humanity in prehistoric times led to more contentment among the average person than this post-industrial lifestyle. The average prehistoric man actually ate a very healthy and balanced diet, was very tall, had many more hours of leisure time (obviously these were spent differently) and most important he/she had a major purpose. This primordial existence is ideal for humanity and is how it spent the majority of its time on Earth.

Please tell me that this post isn't entirely serious.

[opebo]

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

What utter nonsense.  The goal of the capitalist economic or 'free market' is to serve a small upper class which has power (that power is expressed as capital).

The preferences of people who do not have capital are completely irrelevant in a capitalist society, Gustaf.  You might as well talk about the preferences of the pigs and cattle being slaughtered.

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

Talk about a baseless unproven assertion!  Gustaf, surely you realize that 'satisfaction' is not only subjective, but in point of fact not even knowable by the 'individual himself.  The system brainwashes the slave into accepting his role (or his evolved social instinct makes him adapt in order to survive, it comes to the same thing).

PS: I'd also like to note for the record that I think Opebo overdid it this time. No one can be so stupid as to believe what he posted...

Yes, yes, I find you to be an idiot, you find me to be 'stupid'.. where does that get us, Gustaf?  Your posting is pathetically lazy nowadays.  You might as well not bother.  Instead perhaps you could post something of interest - such as policy recommendations of your own.

[Gustaf]

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.

[Gustaf]

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

That's a tad reductionist for you, no? Of course at that reductionist level, even Marx himself would not have disagreed.

I'm conservative and a bit of an empiricist - I like democracy and capitalism because they have a very strong track record of delivering good things in society.

I always disliked the attitude of people who enjoy the vast freedoms and benefits that our societies today deliver but claim that others are better off being poor and oppressed. It's a bit of a silly point to tell someone they should go try North Korea and see how they like it, but then again it's even sillier to suggest that things like freedom and food on the table are useless or overrated.