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I enjoyed this Krugman piece. He’s worried about the long-term unemployed. I am too. A few things.

(1) There are some trends to longer term dissociation from the labor market that have nothing to do with this crisis or the weak policy response to it. Would Dr. Krugman agree that we can and should do something about this?
(2) Are ANY of my readers lamenting the fact that 5 years ago “we” didn’t just have a $3 trillion blowout stimulus to test these ideas once and for all? I am almost tempted to want to experiment with such a plan today.

Have a nice day. I look forward to rereading this same column again in a decade.

5 Responses to “If Woody Would Have Gone Straight to the Police …”

  1. Harry says:

    One reason why Treasurys are so high priced is that the Fed is buying $45 billion of them a month.

    The stimulus could have been ten trillion and Krugman would be saying it was not enough.

  2. chuck martel says:

    My response to Krugman’s worries:

    The real focus of this Krugman column is the problem of long-term unemployment for the long-term unemployed. It’s something of a tautology, those that have been unemployed for a long time are having a difficult time getting a job.

    This is typical statist crap, looking at individuals in the aggregate. When it came time for a reduction in force companies took the opportunity to get rid of their least productive employees. Why would they lay off their best workers? Companies kept the folks with whom they were the most comfortable. Sure, they may have let some good workers go but in general they wanted to add to their work force by subtraction, after all, in the late 90s they were dragging people off the street to fill positions.

    In fact, since the unemployment rate is probably less than double its “normal” amount, you might be able to say that unemployment in the country really isn’t all that significant anyway, unless you’re the one that doesn’t have a paycheck to cash.

    If the feds really wanted to boost employment they’d get out of the way of business and cancel the myriad of regulations that get in the way hiring.

    Maybe, by official statistics, the unemployment rate in Spain is more than 25%. But plenty of Spaniards (and Portugese and Greeks and Italians and Americans) are either working for cash or running their own all cash businesses, cutting hair, doing bookkeeping, gardening, plumbing and drain cleaning, car repair and all manner of services, dodging the government requirements, not paying for insurance and forgetting about taxes. The more onerous the government gets, the bigger this problem for them becomes.

    Why is it that in the unemployment conversation we never hear anything about retirees that remain in the work force? If you’re going to tell me that a 55 year old retired L.A. cop is going to sit home and watch Seinfeld re-runs all day, I’m going to scoff. In fact, he might have two jobs. Most school teachers work summer jobs and many public employees have businesses of their own. While that may not be illegal, it still has an effect on the employment market. Taxpayers are subsidizing nascent businesses that are in direct competition with them.
    Unemployment hasn’t been at the same level across the occupational spectrum. Since 2007 the construction trades workers, for instance, have had a high unemployment rate while the demand for truck drivers has stayed pretty constant. Doesn’t a person who wants a job need to have the skill sets that are currently in demand? Is it wise for one to spend five or six years studying to be a ballerina, a concert oboist or a potter in the expectation that a job in one of those fields awaits? Does society or the government have an obligation to provide employment to individuals that have skills that no part of the private sector wants or needs?

    • Harry says:

      Right, Chuck.

      Chuck and WC, did you notice how Krugman loosened the standard for NARU?

      Indeed, it is a straw man to say his critics are worried about the deficit. I, for one, am more worried about inflation and its pernicious effects, and, more importantly, on the War on Growth and the war on western civilization. Every day we dig the hole deeper.

  3. Scott says:

    The Jobless Trap
    By PAUL KRUGMAN

    “To test this hypothesis, Mr. Ghayad then did an experiment, sending out résumés describing the qualifications and employment history of 4,800 fictitious workers. Who got called back? The answer was that workers who reported having been unemployed for six months or more got very few callbacks, even when all their other qualifications were better than those of workers who did attract employer interest.”

    RESPONSE: I wonder if Krugman would prefer to employ a young assistant with a BA in English from Columbia who is currently working for the Boston Globe, or an elderly PHD from Yale who was fired from the Washington Post ten years ago?

    “So we are indeed creating a permanent class of jobless Americans.”
    RESPONSE: I knew it! I hate We. He is such a jerk.
    But to be honest, I didn’t realize We was creating social classes. I thought I was the one who was supposed to get me a job. Phew! What a relief!

    “And let’s be clear: this is a policy decision. The main reason our economic recovery has been so weak is that, spooked by fear-mongering over debt, we’ve been doing exactly what basic macroeconomics says you shouldn’t do — cutting government spending in the face of a depressed economy.”

    RESPONSE: But at least we are raising taxes, which is good because that is what basic macroeconomic says you should do. Or at least that is what he said the last time I talked to him.
    Oh, yes, and basic macro also said don’t worry about the dangers of making gigantic investments on behalf of the people. To be paid for by the people. At some point. It’s okay because the investment politicians really know what they are doing, and so far have not missed a multiplier effect.

    Macroeconomic also told me not to worry about interfering with the price system or anything, We knows what he is doing. We is really, really smart.

    “It’s hard to overstate how self-destructive this policy is. Indeed, the shadow of long-term unemployment means that austerity policies are counterproductive even in purely fiscal terms. Workers, after all, are taxpayers too; if our debt obsession exiles millions of Americans from productive employment, it will cut into future revenues and raise future deficits.”

    RESPONSE: Indeed, austerity will decrease the tax burden on private enterprise and increase hiring capabilities. Indeed, the shadow of misaligned government spending stretches much farther than that of fiscal responsibility. Indeed, government spending will only create publically dependent employment opportunities, which will be unsustainable without constant public funds, which will be unobtainable with private industry.

    Does Paul Krugman consider himself to be a “worker?” Is this term similar to “proletariat?” Or perhaps, “peasant?”

    RESPONSE: I assume he is referring to government “workers” when he refers to tax revenue? I think that taxing government workers to raise taxes is a great idea. Unfortunately, it will cost more for the government to employ these workers than the workers will generate tax revenue. Unless, of course, We taxes them over 100% of what We pays them.

    RESPONSE: Raise future deficits, eh? I thought We don’t have to worry about debt? Can’t we just print some money?

    “Our exaggerated fear of debt is, in short, creating a slow-motion catastrophe. It’s ruining many lives, and at the same time making us poorer and weaker in every way. And the longer we persist in this folly, the greater the damage will be.”

    RESPONSE: Amen brother Krugman! Entrepreneurs should be taking advantage of low interest rates, doing everything they can to obtain inexpensive financing, innovating and striving to increase the standard of living for everyone across America by assuming personal responsibility for their own economic future – starting business, taking on risk, and pursuing the American dream with reckless abandon, like never before! Thanks for the money Uncle Ben!

    I noticed I was feeling “poorer and weaker in every way” lately. My girlfriends asked why I was unable to perform. She asked me what was wrong. But deep inside, we both knew. It was the inability of Congress to approve more borrowing.

    Lots of lives are being ruined, not just mine. I was just talking to this guy; he is schizophrenic, lives on the street and is chemically dependent on heroine. He told me that if the government doesn’t raise the debt ceiling soon he could be in real trouble.

    I also have a friend who is in the military. He is getting a smaller raise this year than last year. When he told his wife, his wife took the kids and left town to live with her parents because she lost faith in her husband’s ability to raise a family.

    The longer we persist in this folly, the greater the damage will be.

    • Harry says:

      Scott, I do not remember if the government ever extended unemployment benefits beyond what we have done recently.

      A friend who voted for BHO said she did so because Obamacare extended health benefits to twenty-six year olds living at home. She has two and her employer, at least for now covers these two young men, at least until the employer offloads the whole family to the socialized system and pays the penalty for not insuring the mother and her family. So for now, her sons are covered. One lives under her roof. The other one lives two hundred fifty miles away, is a drummer, having gotten a music degree from a state teachers’ college. In this equation is not the question of when these men will grow up and not feed on their mother, who voted for BHO to be the ultimate mommy, or at least the guy would bring feed to the trough for her yearling heifers.

      My daughter has observed that there are no men out there, just boys living at home.

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