“Unemployment” is the center of all realistic economic concern; it’s why we’re here. The reason economics is something a politician needs to pretend to know, the reason there’s such a thing as economic policy at all when there is no public policy in the fields of physics or botany, is because every economist is to some extent attached to the hunt for the monster that ravaged us in the thirties. We’re all out with our nets and blinds and rifles, looking for hair or footprint of this one society-destroying beast, or else we’re crafting those nets and rifles, or studying the behavior of our quarry, so that we may better stalk him.
So what to we know of this this creature? Much like Bigfoot, reports vary. When Ben Bernake says we’re on the path to full employment (as he astutely did in 2007) he does not precisely mean jobs for everyone who wants one, though that is more or less included. “Unemployment” in the sense of the word used by such Keynesian economists more generally refers to economic slack of all types. Statistically, if EVERYONE had a paying job, but numerous factories sat idle, implying waste in investment, this metric of unemployment would remain high, because it refers to ANY economic resources sitting idle, not exclusively to idle workers. This is consistent with the Keynesian worldview, which is associated with modern Liberalism because it provides excellent excuses for deficit spending and interventionism. The general idea is that economic activity in general must be maximized; human wants are regarded as unlimited (which is approximately so) and that they are satisfied by the output of productive processes guided by consumer spending (which is…roughly the case) and that mass poverty can only averted by mass employment in these productive processes (which is a credible desperate expedient).
This scheme has a couple of quirks to it, in spite of the credibility that has allowed it to guide or at least rationalize virtually all public economic policy worldwide in the past century. I’m not kidding, this shit is more popular than democracy. Continue reading