Why are global policy-makers unwilling to deal with high unemployment?




Paul Krugman re-tackles this important question, and tries out a different answer from his usual. Let’s see if we agree.

He begins with the glaringly obvious:

Unemployment is a terrible scourge across much of the Western world. Almost 14 million Americans are jobless, and millions more are stuck with part-time work or jobs that fail to use their skills. Some European countries have it even worse: 21 percent of Spanish workers are unemployed. … Yet a strange thing has happened to policy discussion: on both sides of the Atlantic, a consensus has emerged among movers and shakers that nothing can or should be done about jobs.

Krugman then offers the latest evidence that the people in power are determined to do nothing, the European OECD report, which he also discusses here.

But there really are things that can be done. As many have said (myself included), the problem is personal debt — mortgages, credit card payments, student loans. There’s little demand for goods in a world of un- and underemployment, job insecurity, large household debt burdens, and a post-bubble housing market. Who’s going to spend in that environment? Only the wealthy and the falsely secure.

Krugman heartily agrees. So what responses are available?

For example, we could have W.P.A.-type programs putting the unemployed to work doing useful things like repairing roads — which would also, by raising incomes, make it easier for households to pay down debt. We could have a serious program of mortgage modification, reducing the debts of troubled homeowners. We could try to get inflation back up to the 4 percent rate that prevailed during Ronald Reagan’s second term, which would help to reduce the real burden of debt.

All good things that won’t be tried. Krugman knows it, and we know it.

Which leads to the crux of the article, its title, and my disagreement (again) with the Professor. He now thinks the reason nothing will be done is not a failure of ideas, but “learned helplessness” on the part of policy-making elites:

As I see it, policy makers are sinking into a condition of learned helplessness on the jobs issue: the more they fail to do anything about the problem, the more they convince themselves that there’s nothing they could do. And those of us who know better should be doing all we can to break that vicious circle.

I have a different thought: Let’s apply Occam’s Switchblade. The people who are doing nothing, are doing it because they want to. The rest is just words, words, words and a barely credible cover story.

Please, Professor; sometimes you just have to let people show what they want and agree that they really do want it.

GP


Gaius Publius is a professional writer living on the West Coast of the United States.

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