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March 18, 2009


Luis Enrique

Agreed you cannot have a capitalist system without unemployment - if for no other reason than creative destruction and frictional unemployment, never mind business cycles.

But we have a mixed economy with a large state controlled element. Might it be possible to designed countercyclical state job creation? I know this sounds trite, but things like street cleaning, upgrading all that shoddy MoD housing, planting trees, installing heat pumps in houses, etc. can all absorb workers. Things that can be scaled relatively quickly. Can't a "ministry of works" step up maintenance and fixed capital investment in UK infrastructure during downturns? And as the paper you cite suggests, we can "employ" people in education (human capital investment) and so on.

I know none of this will 'solve' recessions, but it might help. I don't quite understand why things shouldn't be set up so that the state is able to absorb and useful employ workers on short-term projects during downturns, as a component of countercyclical fiscal policy. I don't see why we can't get better at expanding employment during recessions.

Bishop Hill


That would assume that in good times government spending would be cut back. But we know that government spending is never cut back.

Luis Enrique


yup, I see the problem, but I don't see why we cannot ties our hands a little - have the BoE officially forecast a recession, and authorize pre-existing spending plans that are constrained to be temporary. You know, write some rules or something. It wouldn't be perfect, but I don't see why it couldn't be better than what we've got.

If we take your objection too seriously, doesn't it mean that countercyclical anything is impossible? Is that degree of pessimism warranted?

Don the libertarian Democrat

I'm assuming that this is a form of Guaranteed Income, as in the plans of Milton Friedman and Charles Murray. If so, then I agree completely.

Andrew Duffin

"...being unemployed when young increases one’s chances of being unemployed when older."

Do you not rather mean, that the older unemployed are likely to be those who were also unemployed when they were younger?

Correlation does not equal causation!


"Might it be possible to designed countercyclical state job creation?" Yes, picking poly bags out of hedges. By the time the depression is over we won't be able to afford poly bags and the problem will have gone away.

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"Other ideas they have are... raising the education leaving age to 18."

How would that help? The 16-18 year-olds still would not be in work. They just would be no longer classed as "unemployed". Or is that all they want?


Try being unemployed wanting to work and disabled, then you see the world in a different light, and the Labour party as well

Tom Addison

My worry is that because they aren't including the underemploymed in these figures things are actually even worse than they make out.

I finished Uni last summer and from then till only recently have been doing nothing but pub work at an average of 15 hours a week, unable to find a full-time job in my lcoal town. I pretty much felt unemployed, and yet I and I'm sure many in the same situation as me weren't included in the figures. Okay, over Christmas I did secure a great job starting in September, but till then I was fucked until my Dad reckoned he could employ me till then doing basical clerical office work.

And from other friends and family all I hear is that, even though people aren't necessarilly getting laid off, their hours are being reduced.

Then there's my friends who, as you say, are unemployed young and are more likely to be unemployed when older. I couldn't agree more.


Doesn't a CBI make the pain of unemployment worse than it is at present, as you lose more income (this is the flipside of it reducing disincentives to work)?

omega watches

This is just one idea, and perhaps displays no more than my limited imagination. If there are better ideas out there, that amount to more than "implement something called "market socialism" and then - alacazam! - full employment!" then I'd love to hear them. http://www.watchgy.com/ mostly bank deposits, fell by £143.2bn in Q1. And of course there’s no guarantee such buying will continue.

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