I'd say it's more a preference for personal power and the Soviet tendencies for top down management instead of trusting the initiative of subordinates.
" 4 to 6% unemployment is healthy for the economy. "
For a site that so proudly agitates against western oligarchies, I'm shocked you're using the ideas of the oligarchic neoliberal system ie NAIRU or Non-Accelerating Inflation Rate of Unemployment.
This theory is designed to impoverish working classes and destroy their bargaining power.
It basically states that to limit inflation, salaries and wages growth must be stifled.
1. The 4-6% "healthy" unemployment range (or any other range) is purely arbitrary. There is no empirical evidence as to what unemployment range is healthy.
2. There have been plenty of instances when unemployment dropped below NAIRU without causing inflation (eg US in Clinton era).
3. There have also been numerous cases of inflation being higher despite high unemployment (so many examples).
4. Since NAIRU was embraced by US in 1970s, US real wages have collapsed. They only managed to get to their 1970 level in recent years.
5. Also since NAIRU was embraced, US middle class has shrunk from 61% to 51%.
6. NAIRU type policies limit wages growth which has meant more and more wealth is concentrated in the hands of a relative few.
7. Here in Australia NAIRU policies means our standard of living has continued to drop (now down to 2014). Over 1 in 4 Australians now suffer "food insecurity" (ie struggle to eat) due to decaying incomes relative to inflation.
8. NAIRU does nothing to stop companies profit gouging. In fact it helps them as they reduce their wage costs whilst increasing profit margins. In Australia, most recent inflation was due to profit gouging, not salaries and wages growth. Real salaries and wages are in decline.
And this was in spite of record low unemployment which means NAIRU is doing it's job: impoverishing people.
9. NAIRU literally works on premise of sacrificing living standards of large numbers of people by not having enough jobs for them. Eg if you have 100 million workers, that means 4-6 million of them are condemned to absolute poverty. But then the remaining 84-86 million have their living standards reduced because the 4-6 million unemployed act as a pool of reserve labour and reduce worker's bargaining rights.
10. In reality the "ideal" unemployment rate is unknown as each economy is different and even with economies there's a lot of variation depending on economic activities in different reasons. Eg a city might have 4-6% unemployed but a rural or regional area might have 25%.
During my brief introduction to economy and social studies in school, we learned that full employment is 0% to 2% (there will always be people who dont work because they raise their kids, are sick, take care of their elders or whatever).
Anything above 2% = mass unemployment and an economy in bad health.
Unemployment rate does not care about people who are not working because they support want to or can't work for whatever reason. It's only measuring people wanting to work, but not being able to find work they are willing to do (for the price offered).
Also claiming that anything about 2% it's mass unemployment is ridiculous. Everyone is super happy when unemployment is that low.
Unemployment rate does not identify why people are not working.
Which is why in serious economic studies, 0% to 2% unemployment is considered "full employment" as in nearly all people looking for a job have one.
Any measure which pretends to exclude people unwilling to work like the International Labour Office (ILO) measures are highly unreliable and grossly underestimate unemployment rate.
For exemple, in France, the ILO rating gives 2.7 millions of people unemployed. The official national employment agency estimates there is 5.8 millions of people unemployed. And it does not even count all of them.
To rejoice about anything above 2% unemployment rate is like rejoicing about a 1% to 2% GPD growth : today it may be the optimal scenario Western countries dont even reach but prior to the 1973 oil crisis, it would be considered a catastrophe for any [Western] developed economy.
As Stilicho mentioned, unemployment only counts those who are actively looking for work. If you have given up looking for work and report that in the surveys they use to collect unemployment data, you are not unemployed.
Also under ILO you only have to work 1 hour paid work a week to be classed as employed.
But industrial systems have been deregulated and people often not guaranteed sufficient hours.
So now we don't just have to track unemployment, there's also underemployment.
In Australia they shunt unemployed through pointless education courses after so many months, so they no longer count as unemployed even if they are looking for work (they're now a student).
And then the expansion of the institutionalised welfare state which means people can stay on welfare their whole lives without working (eg my parents)!
The whole system is a joke designed to deceive people.
Real unemployment and underemployment in west are much higher but the statistical systems have been designed to keep it artificially low.
Thank you for this information. As you seem to be interested in economic concepts, you may find interesting to read a few pieces of classic Austrian Economics works. This school of thought argues that unemployment is only a consequence of government regulations, specifically minimum wage, corporate regulation and taxation requirements. In absence of those there would be only "natural unemployment", where people do not want to work or are not happy with offered salary. As historical examples you can remember something like Mark Twain works, or similar period, where even teenagers were mostly working, so no problems with unemployment. And please don't take my words as arguing yours, I am simply offering an exploration.
The period between 1820 and 1860 in US history combines these factors: number of people employed both free and slave increased 3 times, GDP grown almost 2 times, this was industrialisation, machines "substitued" people, and there was a steady deflation. How that could be all together according to many of today's economic theories?
Many complexities of today's theories conceal some important facts, whenever governments start to borrow from banks, and relaxing their banking regulations too (i.e. collude in printing money), things start to go in a less and less controlled direction and more and more theories needed to control things.
The US and British industrialisation systems were still very manually intensive as was the agricultural sector which was expanding due to need to feed growing populations.
But over time manufacturing became less manual intensive so people were shunted into service industry (eg from financial industry to making coffees and mowing lawns).
Even then I would argue, western governments started creating unnecessary jobs just to keep unemployment from skyrocketing. Eg new pointless regulations need people to enforce and monitor them. Everything was made more complex and required more humans to achieve even simple tasks).
I work in health administration and we've grown so much. Most of us no longer perform any real value add role (my job is budget management but no one cares about budgets anymore). We've gone from 1 manager for every 20 staff to 1 manager for every 3-4. That doesn't include all the consultants, project officers and administrative staff.
Now AI guts all of these pointless jobs because it can do those jobs.
Eg in Australia all employment growth is government. Private sector is downsizing (except for government funded private sector). Yet they keep pumping in 500,000 net migrants each year.
If AI makes all those pointless administrative and management jobs redundant, where do these people go to work? Even jobs where there is value add such as engineering or medicine will go the way of the dodo to some degree as AI takes over.
Already we've seen a decrease in demand for junior lawyers and paralegals because modern computers can do a lot of their work.
This is why the tech giants are promoting a Basic Universal Income. Most of us are redundant.
I can see that as an alternative explanation but the historical experience says otherwise.
Eg unemployment in USA in 19th century was between 3% and 10% with some higher peaks (eg 18% in 1893).
I mention 19th century because government intervention in economy was low and size of government was miniscule.
Average size of government as % of GDP in 19th century is 3% (today it 36%). That includes local government as well as state and federal.
The regulatory environment was near non existent - no child labour laws, no industrial protections, no environmental regulation, no income tax (except during Civil War), virtually no immigration restrictions.
It was true laissez faire capitalism yet unemployment still existed and was occasionally really high.
Thanks
The 32 billion was payed to serving soldiers, wounded soldiers and families of KIA. It was not just for the KIA's families.
Commenting on part 3, it’s like U Stab are working for the Russians than their people with the way they’re handling this war.
I'd say it's more a preference for personal power and the Soviet tendencies for top down management instead of trusting the initiative of subordinates.
" 4 to 6% unemployment is healthy for the economy. "
For a site that so proudly agitates against western oligarchies, I'm shocked you're using the ideas of the oligarchic neoliberal system ie NAIRU or Non-Accelerating Inflation Rate of Unemployment.
This theory is designed to impoverish working classes and destroy their bargaining power.
It basically states that to limit inflation, salaries and wages growth must be stifled.
1. The 4-6% "healthy" unemployment range (or any other range) is purely arbitrary. There is no empirical evidence as to what unemployment range is healthy.
2. There have been plenty of instances when unemployment dropped below NAIRU without causing inflation (eg US in Clinton era).
3. There have also been numerous cases of inflation being higher despite high unemployment (so many examples).
4. Since NAIRU was embraced by US in 1970s, US real wages have collapsed. They only managed to get to their 1970 level in recent years.
5. Also since NAIRU was embraced, US middle class has shrunk from 61% to 51%.
6. NAIRU type policies limit wages growth which has meant more and more wealth is concentrated in the hands of a relative few.
7. Here in Australia NAIRU policies means our standard of living has continued to drop (now down to 2014). Over 1 in 4 Australians now suffer "food insecurity" (ie struggle to eat) due to decaying incomes relative to inflation.
8. NAIRU does nothing to stop companies profit gouging. In fact it helps them as they reduce their wage costs whilst increasing profit margins. In Australia, most recent inflation was due to profit gouging, not salaries and wages growth. Real salaries and wages are in decline.
And this was in spite of record low unemployment which means NAIRU is doing it's job: impoverishing people.
9. NAIRU literally works on premise of sacrificing living standards of large numbers of people by not having enough jobs for them. Eg if you have 100 million workers, that means 4-6 million of them are condemned to absolute poverty. But then the remaining 84-86 million have their living standards reduced because the 4-6 million unemployed act as a pool of reserve labour and reduce worker's bargaining rights.
10. In reality the "ideal" unemployment rate is unknown as each economy is different and even with economies there's a lot of variation depending on economic activities in different reasons. Eg a city might have 4-6% unemployed but a rural or regional area might have 25%.
Thanks for that I had no idea about NAIRU.
I feel like Don meant 4% was normal as a baseline to give the sense that 2% is alarmingly low. Not that he's advocating for neo liberalism.
No I don't think Don is advocating for neoliberalism! However NAIRU is key to modern neoliberal economics but most people don't know that.
During my brief introduction to economy and social studies in school, we learned that full employment is 0% to 2% (there will always be people who dont work because they raise their kids, are sick, take care of their elders or whatever).
Anything above 2% = mass unemployment and an economy in bad health.
Unemployment rate does not care about people who are not working because they support want to or can't work for whatever reason. It's only measuring people wanting to work, but not being able to find work they are willing to do (for the price offered).
Also claiming that anything about 2% it's mass unemployment is ridiculous. Everyone is super happy when unemployment is that low.
Unemployment rate does not identify why people are not working.
Which is why in serious economic studies, 0% to 2% unemployment is considered "full employment" as in nearly all people looking for a job have one.
Any measure which pretends to exclude people unwilling to work like the International Labour Office (ILO) measures are highly unreliable and grossly underestimate unemployment rate.
For exemple, in France, the ILO rating gives 2.7 millions of people unemployed. The official national employment agency estimates there is 5.8 millions of people unemployed. And it does not even count all of them.
To rejoice about anything above 2% unemployment rate is like rejoicing about a 1% to 2% GPD growth : today it may be the optimal scenario Western countries dont even reach but prior to the 1973 oil crisis, it would be considered a catastrophe for any [Western] developed economy.
As Stilicho mentioned, unemployment only counts those who are actively looking for work. If you have given up looking for work and report that in the surveys they use to collect unemployment data, you are not unemployed.
Also under ILO you only have to work 1 hour paid work a week to be classed as employed.
But industrial systems have been deregulated and people often not guaranteed sufficient hours.
So now we don't just have to track unemployment, there's also underemployment.
In Australia they shunt unemployed through pointless education courses after so many months, so they no longer count as unemployed even if they are looking for work (they're now a student).
And then the expansion of the institutionalised welfare state which means people can stay on welfare their whole lives without working (eg my parents)!
The whole system is a joke designed to deceive people.
Real unemployment and underemployment in west are much higher but the statistical systems have been designed to keep it artificially low.
Thank you for this information. As you seem to be interested in economic concepts, you may find interesting to read a few pieces of classic Austrian Economics works. This school of thought argues that unemployment is only a consequence of government regulations, specifically minimum wage, corporate regulation and taxation requirements. In absence of those there would be only "natural unemployment", where people do not want to work or are not happy with offered salary. As historical examples you can remember something like Mark Twain works, or similar period, where even teenagers were mostly working, so no problems with unemployment. And please don't take my words as arguing yours, I am simply offering an exploration.
How can this apply in the age of AI and automated industry? Mark Twain witnessed a different world..
The period between 1820 and 1860 in US history combines these factors: number of people employed both free and slave increased 3 times, GDP grown almost 2 times, this was industrialisation, machines "substitued" people, and there was a steady deflation. How that could be all together according to many of today's economic theories?
Many complexities of today's theories conceal some important facts, whenever governments start to borrow from banks, and relaxing their banking regulations too (i.e. collude in printing money), things start to go in a less and less controlled direction and more and more theories needed to control things.
The US and British industrialisation systems were still very manually intensive as was the agricultural sector which was expanding due to need to feed growing populations.
But over time manufacturing became less manual intensive so people were shunted into service industry (eg from financial industry to making coffees and mowing lawns).
Even then I would argue, western governments started creating unnecessary jobs just to keep unemployment from skyrocketing. Eg new pointless regulations need people to enforce and monitor them. Everything was made more complex and required more humans to achieve even simple tasks).
I work in health administration and we've grown so much. Most of us no longer perform any real value add role (my job is budget management but no one cares about budgets anymore). We've gone from 1 manager for every 20 staff to 1 manager for every 3-4. That doesn't include all the consultants, project officers and administrative staff.
Now AI guts all of these pointless jobs because it can do those jobs.
Eg in Australia all employment growth is government. Private sector is downsizing (except for government funded private sector). Yet they keep pumping in 500,000 net migrants each year.
If AI makes all those pointless administrative and management jobs redundant, where do these people go to work? Even jobs where there is value add such as engineering or medicine will go the way of the dodo to some degree as AI takes over.
Already we've seen a decrease in demand for junior lawyers and paralegals because modern computers can do a lot of their work.
This is why the tech giants are promoting a Basic Universal Income. Most of us are redundant.
I can see that as an alternative explanation but the historical experience says otherwise.
Eg unemployment in USA in 19th century was between 3% and 10% with some higher peaks (eg 18% in 1893).
I mention 19th century because government intervention in economy was low and size of government was miniscule.
Average size of government as % of GDP in 19th century is 3% (today it 36%). That includes local government as well as state and federal.
The regulatory environment was near non existent - no child labour laws, no industrial protections, no environmental regulation, no income tax (except during Civil War), virtually no immigration restrictions.
It was true laissez faire capitalism yet unemployment still existed and was occasionally really high.