Wednesday, June 05, 2013

Unemployment and the moral(e) issue

As it gets closer to the time that I will have to start grading, a different kind of a reflex reaction kicks in--I seek compensation in terms of reading and blogging, perhaps to replenish the dead grey cells.

Plus, there are incredibly serious problems all around--way more than the "poor me" problems.  Isn't that right, friend? ;)

Consider, for instance, this scary, scary chart:

I am flummoxed trying to imagine a 50% unemployment.  And more!  What the what?

We are not talking about some uneducated, illiterate youth simply idling away.  It is an educated population that is jobless.  I have lucked out in life--no firsthand experience of unemployment.  Even the teetotaler me would have picked up the bottle if I had been a young man looking at a decimated job market.

All I have to do is look at the graduating students in order to get a sense of how the dim prospects of jobs begins to affect their morale.  Robert Shiller writes about this morale dimension of high unemployment rates:
The high unemployment that we have today in Europe, the United States, and elsewhere is a tragedy, not just because of the aggregate output loss that it entails, but also because of the personal and emotional cost to the unemployed of not being a part of working society.
I recall that in the movie, Up in the Air, the number one issue that the unemployed workers said they faced was this: waking up in the morning and wondering what they were going to do that day.  Being jobless, when it is not by design or choice, is one morale crusher, I would imagine.
Unemployment is a product of capitalism: People who are no longer needed are simply made redundant. On the traditional family farm, there was no unemployment.
Indeed.  But then, of course, we do not want to return to all of us working on our respective forty acres either.  So, ... ?
For morale, we need a social compact that finds a purpose for everyone, a way to show oneself to be part of society by being a worker of some sort.
And for that we need fiscal stimulus—ideally, the debt-friendly stimulus that raises taxes and expenditures equally. The increased tax burden for all who are employed is analogous to the reduced hours in work-sharing.
But, if tax increases are not politically expedient, policymakers should proceed with old-fashioned deficit spending. The important thing is to achieve any fiscal stimulus that boosts job creation and puts the unemployed back to work.
Hmmm ... that's where we will get stuck in an endless debate, won't we?

Here in the US, though the unemployment rate is in the single-digit now, unlike the horror stories in the Euro countries, but the aggregate number doesn't tell the whole story of discouraged and underemployed workers.  One thing I am convinced about: there is no way we can escape from re-writing the social contract that ties together the government, taxpayers, businesses, and consumers.  Finally, even Germany is waking up to this reality.  Let's see what they come up with.

I don't care how the contract is re-written because, like with anything else, not everybody will be happy with a new contract anyway.  But, what pisses me off is how atrociously Congress has been ignoring all these issues.  It is pathetic.

It is the Congress members who ought to be forced into unemployment, not the young, bright-eyed and bushy-tailed educated youth.

(From the old country ...)


Ramesh said...

One of the biggest issues facing all of us today. Agree, there is nothing more degrading to the morale of educated youth than unemployment. Worse still, the loss of hope of employment.

Completely agree that the social contract between the members of society needs drastic revision. Part of the problem in Europe is that labour laws have grown to such an extent that you must be a nut to employ anybody. That is part of the social construct that needs revision - the cossetting of a few permanent workers at the expense of screwing the many unemployed.

I am not sure that deficit spending is the way out. It can be a temporary palliative in times of recession provided you balance it with surplus at the time of growth. Unfortunately its a rare country ever creates a surplus when the times are good (Norway, take a bow).

We have to stimulate growth, for that is the only real solution. And frame policies so that the growth is not a jobless growth. Not sure how - wiser heads than mind are required.

Agree how banal public policy discussions are amongst our elected luminaries - virtually in any country. Maybe the academicians must step in. All you grey haired Profs out there - pl take a leaf out of Prof Khe's book.

Sriram Khé said...

It is terrible, right, that pretty much in every country it is the same story of atrocious elected officials and, therefore, awful governance? I am always amazed that we have come even thus far with such craziness :)

It also means that we humans are really way more capable than what one might think ... so, there is hope that we will eventually figure things out ...

Yes, the deficit-spending approach is usually only a temporary one .... Five years after the Great Crash, it gets difficult to justify deficit spending ... but, it has been a very anemic, at best, a growth in jobs ..... aaaaah ... I tell ya, other profs can try their hands at solving this; I will merely pontificate here ;)

Sriram Khé said...

heyyyyy .... Ramesh, you didn't say anything about the video that I had embedded in this post :(
I was sure you would .... I wonder if you skipped that because you read via the RSS and the RSS doesn't always include the video????

Ramesh said...

Ha Ha. Much impressed by your remembrance of a song in a Tamil movie. This s even before our times :)

No, I now read your blog on the site - precisely to enjoy the photos and videos.

Mike said...

Oh Greece should we pity thou? You are in for a long haul of misery! Getting out of the Euro and deficit spending (think of all the health care providers they need) are attractive options, but what to do in response to their lack of production? Is it lack of production, governmental austerity, or a monetary policy suited for Germany and not Greece, that is creating the biggest mess? Whatever the solutions may be, the very real and immediate impact, unemployment is crushing their morale, but have no fear shisha is here to cut the pain and entertain; killing all hopes in the process.

But how can we pity when the same thing is happening here? I am pissed off by watching young, bright, bushy tailed, partially educated students giving their lives away to the seduction of escape that drugs give. So at least that leaves us with empathy. Can empathy create hope?

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