Friday, May 27, 2011

What If Our Government Prefers High Unemployment?

I've argued that a component of neoliberal economic policies is high unemployment. Overall it means less economic output. Unemployed people are like a wasted resource. But for a powerful corporation it produces low labor rates and hence high profits.

Some are puzzled by the economic policies of the US government in the wake of the financial crisis. Paul Krugman wonders if the unemployed have been forgotten. The latest jobless report reveals a surprising spike in jobless claims. Is it because, as they suggest at Talk Left, that Obama is "foolishly" listening to Tim Geithner?

That depends on whether one would think it's foolish for the President to serve the interests of wealth. What if unemployment is desired by them? As in Mexico and Haiti (with unemployment between 50 and 75%) this is a direct consequence of policies that are imposed, as if these conditions are the goal. And we know that they are desirable for some powerful and wealthy segments of society.

A recent article sheds further light. Why The Rich Love High Unemployment. It's not all that puzzling that Obama is doing little to nothing. It's what his corporate backers want.


Sheldon said...

Insightful post. Unemployed people are timid and scared people, happy to get any crumbs that my drop from the table. And the employed who are fearful of losing their jobs because of high unemployment are also scared and timid, afraid to fight back and ask for better wages, benefits, and working conditions.

HispanicPundit said...

High unemployment sucks! This is yet another reason why I prefer the United States to Europe!

Chad said...

This is a great topic, but one in which we never will agree on Jon. Americans lead by unions have over priced their labor for decades and decades. First we all know that a minimum wage is not only unconstitutional, but is the absolute #1 reason for unemployment and rising costs today - impossible to argue that fact. An individual is responsible for negotiating and accepting the wage at which he or she will sell their labor - not the all knowing gov't, not Jon and not me. If the job is placing a ball from bin A to box B, the person interviewing for that job will fit the skill level to match the labor so what is that worth? What kind of person would be able to perform this task? 95% or more of every American? 11 year olds or 12?

If the job requires that the person know how to design bridges well then the level of knowledge, experience and understanding just jumped exponentially and so did the labor. If a person chooses
and willingly accepts labor at $2 per hour then so be it. Notnonly would the cost of goods fall so would the unemployment rate.

Jon said...

Did unions cause high unemployment in Haiti, Chad?

Here's what you both need to deal with. For some segments of the corporate world high unemployment is desirable because it reduces labor costs. That improves profits.

How is that achieved? Not necessarily by free market means. There are no free markets anywhere. Not in the United States certainly.

People are puzzled that Obama is not doing what one would expect him to do if we thought he wanted to reduce unemployment. But is that surprising? If his corporate backers want that (as the auto czar at the linked article I provided effectively states) then we shouldn't be surprised. Rather this is what we should expect.

Unemployment may not be a free market problem. We have a crony capitalist health care system that stifles the development of small businesses. Yeah, we pay a lot in taxes. The war machine is a $1 trillion/yr enterprise. I think we should be able to agree that Obama and our government are not serving our interests, but are serving the interest of powerful corporations. We should be able to agree that we need to devise a strategy to resolve this.

Chad said...

As a former Liberal it is not lost on me your position, but your biggest hurdle is simple. You want to steal money that is not yours then to give that unnamed money to groups of people who realistically offer very little to society.

About Haiti - you continually want to throw them in the mix the only problem is that they mean NOTHING to the world economy and to the US. A country that has nothing, makes nothing and supplies nothing is nothing. If their labor costs go up they will die.

Jon said...

And you, now that you've reaped the benefits of money stolen from others, want to kick the ladder out from under you and make sure nobody else is able to be similarly prosperous. You are a child of nanny state government. But now it's time to give back, like Americans did give back from 1945 up to the Reagan years. Not for you. You want the gifts of those that worked from the 40's to the Reagan years AND you don't want to offer any gifts to others. Had Americans been less socialist you'd be poorer today and you might not even have the ability to give back.

See, your Dad made lots of money and gave you a privileged upbringing. He was over payed you say. The reality is CEO bonuses were a little lower back then. Corporate profits were a little lower. We didn't have the boom/bubble/bust world prior to Reagan. The rich had a lower percentage of all the wealth and income. That hurt them short term. But long term since we had a middle class and that middle class was able to provide education for their kids, the rising tide lifted all the boats. The rich got richer too.

You probably are a stock holder. So you benefit when labor rates are reduced. That means higher stock prices. It's tough on people that don't have much stock. Screw them. You got yours. It's nanny state for you, tough love and free markets for them.

The difference between you and me is I admit that I benefit from money "stolen" from others and the government redistribution. And I'm prepared to make the short term sacrifice in order to help others and ultimately reap long term benefits. You can't see further than the nose on your face. So you just want to hold on to every penny. You don't see that depriving a child of an education not only hurts that child, in the end it hurts you.

Jon said...

Relevant story.

Sheldon said...

No comment from Chad on the Business Insider article posted by Jon, where the U.S. Govt. pressures the Haitian govt. to keep wages low for Levis and Hanes. And then he has the gall to say Haitians produce nothing when they produce his undershorts and pants.