Economic perspectives

Krugman:

How bad is the problem of involuntary unemployment, and how much worse has it become?

The U.S. unemployment measure you usually hear quoted in the news is based on a survey in which adults are asked whether they are either working or actively seeking work. Those who are seeking work but don’t have jobs are considered unemployed. In December 2011 that amounted to more than 13 million Americans, up from 6.8 million in 2007.

If you think about it, however, this standard definition of unemployment misses a lot of distress. What about people who want to work, but aren’t actively searching either because there are no jobs to be had, or because they’ve grown discouraged by fruitless searching? What about those who want full-time work, but have only been able to find part-time jobs? Well, the U.S. Bureau of Labor Statistics tries to capture these unfortunates in a broader measure of unemployment, known as U6; it says that by this broader measure there are about 24 million unemployed Americans–about 15 percent of the workforce–roughly double the number before the crisis.

Yet even this measure fails to capture the extent of the pain.

Brooks:

Other people — some on the left but mostly in the center and on the right — look at the cyclicalists and shrug. It’s not that they are necessarily wrong to bash excessive austerity. They’re simply failing to address the core issues.

I would take issue with a number of things in Brooks’ column, from using the term “cyclicalists” for  people who want more government intervention (Real Business Cycle is much more a conservative theory than a liberal one) to his assumption that they are missing the larger issues. I think the evidence is clearly against his assertions that deficit spending can’t stabilize the economy, and his claim that the weak economies in Europe are a counter example to deficit spending suggests that he hasn’t understood the position he’s arguing against at all. Even his use of the term structural is questionable. But I think the most objectionable thing about it is his attitude that the widespread suffering left in the wake of the crash is not important. That he can hear Krugman’s desperate plea to do something for the millions of American’s suffering economic distress and respond with a shrug.

Meanwhile, Ezra Klein answers that short term problems, left un-addressed, become long term problems. Fixing the problems that caused people to become unemployed will not necessarily allow them to become employed again after so long. Things have changed in the meantime. Also, dealing with the short term does nothing to prevent us from dealing with the long term problems Brooks wants us single-mindedly focused on.

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