Unemployment has become a cancer consuming the middle and working class in America. There’s no need to explain how we got here, the impact of the redistribution of wealth, the bubble economy that led to this mess or even the real culprit the Fed and how it protects interest rates at the expense of employment. All of the above deserve discussion but it is not needed here now to discuss alternatives to unemployment. My source is Dean Baker’s new book The End of Liberal Loserism which can be downloaded free at the Center for Economic and Policy Research.
I’m bypassing the points above because no matter what there will be no meaningful changes through policy as long as Congress is dysfunctional and corrupt. Also the Fed, the other major player if not THE major player, will continue to shirk one of it’s prime directives which is to keep unemployment low. Instead it is focusing to keep inflation low, not for you and me, but because inflation is the scourge of the financial industry, even if it means creating more unemployment!
Every liberal should have a working knowledge of the Fed if they are really concerned about jobs because full recovery will never arise until the Fed lets it happen. It’s fully explained in the book in 2 easy chapters.
So, if we are foregoing policy and the Fed to fix unemployment it may seem futile to even continue but please hang on another paragraph which you would be reading now had I omitted this one.
In Dec 2007 unemployment in the U.S. was around 5%, rose to over 10% in 2009 and continues to hang around the double digit mark to this day. Germany had the opposite experience during the same period. At the start of the economic collapse unemployment in Germany was around 8% and over the same 4 years has dropped to around 6%. How can this be?
Work Sharing
Work sharing deals with a lack of demand for labor by dividing up existing jobs among more workers. Your first reaction can’t be it doesn’t work because the German experience proves it does. It’s not a perfect solution but it is a working solution to get through tough times like these.
Work sharing has been tried in the U.S. but only on a small scale and mostly in a half-assed way that lacks key elements used in Europe. There are short and long term advantages to work sharing as well as trade offs workers have to accept but in most cases the tradeoffs are to the workers liking. For example European workers may have slightly lower income levels but they work fewer hours with better benefits and a lot more leisure time. No wonder studies show Europeans on almost every level are happier and healthier.
To get the full understanding of work sharing you’ll need to read Chapter 6 Full Employment without the Fed in Baker’s book. I’ve read the book twice and will probably read it again because it is the best reference for learning what’s wrong with the system and how to fix it with liberal remedies. Remedies you will not find discussed in your daily surf through the net or talking head television.
How can we ever achieve economic justice/stability until we all understand how the system really works? For example, I assumed creating lots of jobs through repairing and improving infrastructure would be a primary way to turn the economy around. No, it’s not. Sure it will employ many people and stimulate those businesses who are impacted by an infrastructure overhaul but it’s not enough to cure the problem and it’s not permanent. If fact policy changes alone cannot fix the problem. The real problem is the Fed and the way it sacrifices jobs to keep interest rates low for the financial corporations.
That’s just one example of the many given in the book liberals should know in order to be able to demand the best economic changes from the federal government. I hope I’ve piqued your interest enough to seek out some more. You can lead a liberal to a source but you can’t make him or her think. My hope is to stimulate a thread that expands on what I’ve started.
Image credit [top]: “Workers” By daily sunny
