On Saturday, Dean Baker wrote an interesting article, Labor Economics 101: Few Jobs Means Bad Jobs. In it, he shows that bad labor markets lead to bad jobs. This isn’t hard to understand. If there is a big surplus of workers, employers have no incentive to pay well, it is easy to find qualified people who will be glad to have any job at all.
I remember when the opposite was the case. In the late 1990s, during the dot-com bubble, companies were so desperate for employees that you could get a job in a single day. Now, you go through numerous interviews, background checks, employment checks, credit checks. And if all goes well (that is, you’ve never lived an actual, you know, life) they will hire you at half the rate they would have 15 years ago.
None of this should surprise us and I don’t actually think it is a bad thing. What I do think is a bad thing is how the power elite try to keep unemployment high. Since the bursting of the housing bubble, unemployment has been very high while inflation has been low—too low if what you want is to stimulate the economy. And for a good two years of the last five of this employment crisis, even the supposedly liberal Democrats were obsessed with—Wait for it!—the budget deficit.
Also on Saturday, another of my favorite economists, Paul Krugman wrote, The Arithmetic of Fantasy Fiscal Policy. In that article he looked at how big the 2009 stimulus should have been in order to get the economy back on track. This is done by looking at the difference between what the economy was actually producing and what it would have been producing at full employment. He calculates that it would have taken another trillion dollars in spending. And that is making assumptions that are unreasonably conservative, so the amount would likely be substantially less—0.75 trillion by my calculations. Regardless, that would change our current federal debt from 72% of GDP to 76% of GDP. Not exactly a crisis, right?
But we didn’t do that and I really don’t think it is about a general fear of government debt. Sure, the power elite get the media to scream about it and the prols gets scared. But the reason that the power elite feed the fear machine about the debt is that they don’t want the government to improve the economy. Doing that will put more people to work. The more people who have jobs, the more workers have power to demand better pay and working conditions from employers.
So on this Labor Day, let us make a commitment to improve the job situation in this economy. Politicians who talk about the national debt are just the minions of the power elite. All of their rhetoric about fiscal rectitude is just falderal to distract from their real objective of prohibiting workers from sharing in the American Dream.