by A swedish kind of death
Fri Aug 31st, 2007 at 04:48:31 AM EST
I have come to believe full employment (everyone who wants a job, has a job) as a goal is essential to the left regaining its moyo. As long as we have a substantial unemployment the right is going to use it as an argument to lower taxes, lower regulation and such in order (so they claim) to increase employment. The far-right (the ugly parties) are going to claim that it is the foreigners fault, who take our jobs either oversea or here. If the lefts only answer is that those propositions are false but have no own agenda to get full employment the right will keep on winning.
I have come to realise that when it comes to the economics of employment I have a lot of questions, and few answers.
I will start where I think I know something and work myself towards were I know I do not know. Between we will pass some unknowns...
This is more of a sketch then anything else, and I hope I get some answers in the comments.
From the diaries ~ whataboutbob
1. Why do we not have full employment today?
A common answer is that we are out of jobs or they have moved. Therefore we need to take them back or share those we have. While I am supportive of shorter workdays for other reasons (more time, less consumption = healthier planet, happier people) I do not think this is the case. There are a lot of tasks in society that should be done but are not, and that in itself for me falsifies the notion that we have run out of jobs.
Labor is power coupled with intelligence. We have run out of need of neither. Then the answer as I see it would be that we have an economic structure that does not allow full employment.
2. As I understand it central banks in our modern age (the last 20-30 years or so) have been tasked with keeping inflation down, and in accordance with the NAIRU theory, unemployment up over a certain level. There was an abstract here on ET the other day from a report claiming that the FED really aimed at keeping unemployment up (please link it in the comments if your memory is better then mine). The central banks tool for this is increasing the interest rates if unemployment falls to far.
Here I have two questions:
2a. Is this a (somewhat) accurate description of the roles central banks try to play?
2b. Does it work? Does increasing the interest rates increase unemployment and decrease inflation?
3. How should this be reformed to allow full employment? Since I augur Chris answer will have to do something with getting rid of toxic money, I will specify a bit.
3a. Is a solution possible within the current system of central banks and money? If so, how?
3b. Is the solution reforming the monetary system from the bottom up? If so, how?
3c. Does the solution have nothing to do with the central banks and money? Then why do we not have full employment?
Take your pick of question to answer, or find the glaring holes in mine line of thought. This is mostly an outline of a train of thought really, and any input is welcome.