Paul Krugman veers into the weeds again

From The New York Times:

Paul Krugman - New York Times Blog


Unemployment: It’s Not Personal

Matt O’Brien has an interesting if depressing piece on long-term unemployment, making the point that long-term unemployment is basically bad luck: if you got laid off in a bad economy, you have a hard time finding a new job, and the longer you stay unemployed the harder it becomes to find work.

Obviously I agree with this analysis – and I’d add that O’Brien’s results more or less decisively refute the alternative story, which is that the long-term unemployed are workers with a problem.

You can see how this story might work. Suppose that workers have some quality – sticktoitiveness, or something – that doesn’t show up in official skill measures but which potential employers can intuit. Then workers lacking this ineffable quality would tend to lose their jobs and have trouble getting new jobs; the difficulty the long-term unemployed have in job search would reflect their personal inadequacy.

Read between the lines of a lot of commentary on the unemployed – especially from those eager to slash benefits – and you’ll realize that something like this is the implicit underlying theory.

More at the link.

The last sentence is where the esteemed Dr Krugman starts to veer off into the weeds: he tries to say those of us who believe that government spending ought to be cut want to do so because we believe, inter alia, that the unemployed somehow deserve to be unemployed. It is that belief, almost certainly a genuine one on his part, that we wicked TEA Party conservatives want to punish the unemployed for being unemployable, but he’s wholly wrong.

Dr Krugman then tells us, in a single, though relatively long, paragraph, that the relationship between worker quality and unemployment isn’t really that strong in such a weak economy, and that’s not an argument with which I disagree; in this weak economy, there are man men who were good workers who are nevertheless unable to find new jobs. Then Dr Krugman concludes with a single paragraph:

In other words, it’s nothing personal; it’s the economy, stupid. And as O’Brien said, it’s one more reason failure to provide more stimulus is a crime against American workers.

The problem with that is we have already done that, and it didn’t work! The stimulus that the Nobel Prize laureate would like to see is more deficit spending, but even with the 2009 stimulus plan having run it’s course, we are still engaged in very heavy deficit spending, still importing money from abroad to spend in our economy. We have ballooned our national debt to a level which makes it difficult to see, honestly, how we will ever pay it off, and we still have fewer jobs today, 145,699,000 in April, than we did in April of 2008, 146,132,000. And in that time, we have gone from a national debt of $9,377,557,217,133.44 (on April 30, 2008) to $17,508,437,127,661.62 (on April 30, 2014), an increase of $8.310 trillion, an 86.7% increase, and it still hasn’t made a dent in the real unemployment rate. The official unemployment rate has declined, but not because more people have jobs; it has declined because so many people have stopped looking for jobs, and thus are not counted as being unemployed.

It would be nice if the left were actually right, if stimulus spending would create more jobs. In the scholarly journals and the learned papers, it all works out just so well, but it failed, and is continuing to fail, in real life.

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