Splinter: Full Employment

Discussion in 'Business & Economics' started by Tiassa, Nov 1, 2013.

  1. Tiassa Let us not launch the boat ... Staff Member

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    It Has Wheels. It Goes.

    Splinter Note: This thread is a splinter from "New, Improved Obamacare Program Released On 35 Floppy Disks". Posts #1-8 are copied from that discussion.

    ‡ ‡ ‡​

    It's not quite that grim.

    Think of it this way: Do you own a bicycle?

    Actually, the answer to that doesn't matter; the example works well enough:

    Imagine, please, if you would ... the government has just passed a new set of laws including quality standards on cars. An opponent of the law appeals to you that the government is going to make you get rid of your car. Oh, my goodness, is the sky falling? Well, okay, so, what it turns out that means is that if you "own a car", you actually have to "own a car". That is, there is no good reason, liberty or otherwise, to make you pedal your two-wheeled velocipede down to the department of motor vehicles, make you pay the excise tax or licensing fee for the "car" you rode to the office. Indeed, the businesses the government is cruelly closing are good car dealers like the one where you spent several thousand dollars to buy your used Schwinn.

    Wait, what? What the hell am I talking about? Am I talking about a car or a bicycle?

    Well, that's the point. Part of the question, metaphorically, is whether some insurance plans are really insurance plans. One of the Molina plans rejected in the state of Washington for the insurance exchange failed because its provider network was insufficient. Sure, you have insurance to cover that referral to a cardiologist, but your insurance company is going to make you travel two hundred miles to see that doctor, since they don't have any in their provider network any closer to you. In other words, it's not really an insurance plan of any useful effect. I got a letter from my insurance provider back in September; my plan is compliant, and while it will technically remain in effect for the next policy cycle, it will, in fact change, and as near as I can tell from the detail, it is as the political reality would suggest—my plan is about to get better, and it's about to get less expensive.

    The problem with people still not having insurance is that's how the individual mandate is designed. While it is true that unemployment is running a bit high right now, we can think of it in context in order to see that point. There is no time when American political conservatives won't rip on public benefits as provender for the lazy. But the truth is that our economy is executed in such a manner that unemployment can get too low. We actually need willing workers unemployed; as the saying goes, it's a feature, not a bug.

    Many get distracted in the political discourse by complaints that Democrats aren't compromising. In order to pass the individual mandate, the Republican-devised plan designed as an alternative to universal health coverage, Democrats gave up any pretense of universal health coverage.

    Remember, the whole point of this plan from the time it was devised was to forestall single-payer and use force of law to herd people into the private sector insurance rolls. That's never changed. How do you think Obama managed what concessions he did from hospitals and the pharmaceutical industry? He traded away single-payer. Meanwhile, it is true that about three percent of people already insured will see their current plan canceled and their basic premium rise. These are the ones who aren't going to be allowed to keep paying their motor vehicle excise tax for their Schwinn brand "car".
     
    Last edited: Nov 2, 2013
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  3. wegs Matter & Pixie Dust Valued Senior Member

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    This is nothing short of... delightful.

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    Thank you; it really helps to sort through some of the confusing issues I've noted, in watching/reading the various news stories on the subject. I'd like to explore a wee bit more, as to your point ''we actually need willing workers unemployed,'' (that comment made me cringe, slightly

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    ) but, perhaps another time--another thread.

    Thanks for the clarification, Tiassa.
     
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  5. Tiassa Let us not launch the boat ... Staff Member

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    Honestly? Ask a capitalist, who could tell you much better than I can explain it.

    True, it requires its own thread, but full employment is considered anywhere between 2-4% unemployment; below that, and economists fear—rightly or wrongly—inflation; some formulae put full employment at up to 13% unemployment, but such definitions are, as you might imagine—or, perhaps, see outright—unstable and dependent on context assigned to extraordinary conditions.

    Ask any capitalist what happens if you achieve zero unemployment. By any measure, it's a bad sign.
     
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  7. wegs Matter & Pixie Dust Valued Senior Member

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    While socialism is sensible, as we know it can't "survive" in any country independent of some form of capitalism. That said, do you think there is a way to have a free market economy, sans capitalism? (The basic idea of capitalism I like, it is investor greed and over-competition that has tainted capitalism as it was intended.)

    (My apologies in advance, I haven't read through this entire thread so not sure if this has been discussed.)
     
  8. Captain Kremmen All aboard, me Hearties! Valued Senior Member

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    The problem with modern capitalism is the ability to make money through leveraging and other financial instruments
    which make money for people without creating anything of value.
    The older form of capitalism entailed risk and created jobs and wealth.
    This was the capitalism that built roads and railways, factories and houses.
    Thank God for the Victorians. An age of engineering giants.
    This new form is a worm in the apple, eating out its insides,
    leaving the appearance of a healthy apple, until you bite into it and realise that the inside is worthless and rotten.
    The new schemes make so much money that the corporations who run them can buy whole countries and governments.
     
  9. quinnsong Valued Senior Member

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    I remember my economics teacher saying 5% unemployment was too low. Why is this even acceptable? Why scapegoat that percentage of the population when ideally you need a portion of the population unemployed? For me it is a flawed economic formula and I find it hard to believe we cannot do better.
     
  10. wegs Matter & Pixie Dust Valued Senior Member

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    Excellent point...I agree. The 'rich' keep getting richer, in essence.

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    There are not enough 'fair' opportunities to go around, it seems, which in its purest sense, is what capitalism was intended to do...provide fair opportunities in the private sector so everyone could experience the fruits of their labor.

    I like how you put this!

    Agree.

    haha, Some extreme view points in this thread, I see.

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    I agree with your thoughts about a free market, but there needs to be a way to create such a market whereby captialism isn't at its core. Do you agree? (Posed another way, is there an economic approach where we can take the positive points of socialism and capitalism, and create a new ''model'' for the U.S.?)

    An informative read, if anyone is interested:
    http://en.wikipedia.org/wiki/Capitalism_and_Freedom
     
  11. joepistole Deacon Blues Valued Senior Member

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    Well the estimated full employment rate varies by country. For the US the estimated full unemployment rate is currently generally considered to be 5.5%. But it’s a soft number.

    “For the United States, economist William T. Dickens found that full-employment unemployment rate varied a lot over time but equaled about 5.5 percent of the civilian labor force during the 2000s.[2] Recently, economists have emphasized the idea that full employment represents a "range" of possible unemployment rates.” Wikipedia

    A growing economy requires more workers. Employers need unemployed people seeking employment; else labor shortages could restrain economic growth - just as any other resource shortage could restrain economic growth. Remember new people coming into the labor pool usually begin as unemployed. A growing economy needs some level of unemployment so employers can fill their need for labor.

    http://en.wikipedia.org/wiki/Full_employment

    Zero unemployment would be analogous to all oil producers freezing oil production levels during a period of economic growth.
     
  12. wegs Matter & Pixie Dust Valued Senior Member

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    Joe, I read through the link you provided above, thanks. So, keeping unemployment above 0% is necessary for controlling inflation. Good point, and one that's easily missed.

    I have a question. I was reading an article recently about how higher home ownership has hurt the US economy. I don't get it. The article discussed how the labor market has suffered because of a boost in home ownership. Some of the 'reasons' had to do with commuting, and how people who own homes will be less apt to relocate to look for work. I thought these reasons were weak. Can someone explain to me the connection (if there is one) to a boost in home ownership, causing a problem for the job market?

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    Thx.
     
  13. Captain Kremmen All aboard, me Hearties! Valued Senior Member

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    Full employment never lasts long.
    When there is full employment, people start looking round for better paid jobs.
    Companies have to compete for labour by offering better wages.
    Increased pay increases the cost of goods, so that they are less competitive internationally.
    Companies go out of business leading to unemployment.
     
  14. Tiassa Let us not launch the boat ... Staff Member

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    Blithering Idiocy

    I should note that I do, in fact, see a venn overlap between the ideas juxtaposed in the "topic" post; rather than politicize the question of the PPACA, which is beside the point of a B&E thread, I might instead point to the economic reality that a "civilized society" inherently depends on human suffering in order to provide a reserved idea of propriety, defined in this case as a lesser degree of suffering.

    I always make the joke about my underwear being available at certain major retailers for bargain prices, and how this wouldn't be if the laborer who made it was working a factory in Illinois instead of Honduras or Bangladesh. But even within our privileged economic ("micromacro"?) being, we require a certain degree of human suffering in order to provide a reserved condition of lessesr suffering.

    What arose in the healthcare discussion was a question that could simply be answered by saying the impossibility of universal coverage is a feature of the system. Analogously, the idea of "full employment" was invoked; it was not simply a mechanistic comparison. There is a genuine question about the measure of a society to be discovered in this consideration. That is, the best aspects of our society must necessarily be reserved to fewer people, with the balance carried on the backs of a less secure majority. Throughout human history, this is society. Indeed, it is the basis for that most famous declaration of the Communist Manifesto: The history of all hitherto existing society is the history of class struggles.

    If there is a political question in this thread, a moral conundrum to be resolved, it would seem to be the question of what degree society has achieved that it might extend the greater, reserved benefits of its empowerment to a greater number of people; whether such reservation is necessary; and, at the core, whether such reservation is appropriate.

    In other words, it probably behooves us to hew closer to the mechanistic questions. The psycho- and socio-moral questions—the ethical and moral dimensions—cannot reasonably be determined unless we understand myriad inherent factors not yet accounted for.

    This is what I do know:

    (1) Unemployment can be too low.

    (2) Full employment does not mean zero unemployment of willing workers.

    (3) The general argument against zero unemployment is inflation.

    ―Some would claim stagnation, but it all leads back to inflation.​

    (4) Even believing, as I do, that this sort of inflation is bullshit, it still presents functional problems if there is no labor pool for advancement to tap.

    (5) I am uncertain that this is the best we can do, insofar as while we acknowledge the general proposition that there must always be some injustice in the world ... er ... right ... back to the mechanistic stuff.​

    Ja dig?

    All good?

    My two cents?

    Never mind, I'll shut up.
     
    Last edited: Nov 2, 2013
  15. wegs Matter & Pixie Dust Valued Senior Member

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    yep, we're all good. lol

    If someone would be so kind as to answer my question from post #9 -- I'd appreciate it.

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  16. Tiassa Let us not launch the boat ... Staff Member

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    Smokin' Farts?

    Honestly, I would presume it something to do with economic empowerment. If you're a homeowner, instead of a renter, you're already high enough on the income ladder to have some wage and hour leverage. One of the political themes I expect will emerge during this discussion is the question of what is really good or bad for the economy.

    For instance, if I follow this far enough down the rabbit hole, I arrive at the juxtaposition of ownership/management's expectation of a raw number reward. In other words, if I made this in a bonanza year, then I need to profit that much every year, and thus must lay off workers because profits are dropping.

    It's something we see. I recall the desperate collapse of LA Gear, which label actually still exists. But we're talking about the sort of board that started laying people off in order to maintain executive bonuses in the years after their pop-culture apex.

    The question of what ownership and management deserve will inevitably coagulate at the surface. It will be a fatty island that must be explored.

    (And I am so trying to duck the moral discussion until my more educated neighbors fill us in on the mechanical aspects.)

    (And you know? I'm not sure, anymore, which emoticon I was actually looking for, but I found :fart: [fart], and can't possibly think straight, now.)

    (Damn it ... that's it, I'm getting high ... -er.)

    :m:
     
  17. joepistole Deacon Blues Valued Senior Member

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    Capitalism didn't invent human pain and suffering nor does it require it. On the contrary, capitalism has to a large degree been responsible for the elimination of much pain and suffering…witness all of the advances in living standards. When I was a boy, there was only one television station…only black & white TV and modern medicines were unknown. And only the wealthy had air-conditioning.

    Unfortunately some unscrupulous capitalists invoke that myth in order to line their pockets at the expense of others. Capitalism is a great resource allocation tool. However, in order to be effective, and much to the chagrin of many special interests groups, it does require appropriate moderation and regulation. Appropriate regulation of capitalism is as a driver is to an automobile. You need both to get to your destination.

    There is also another major reason why there can never be zero unemployment in a healthy economy. It’s called transitional unemployment. A healthy economy, in fact any economy, is not monolithic. It is constantly changing and adapting to new technologies and changes in the market place. While buggy makers and coopers were major elements of our economy centuries ago, it’s not so today.

    Transitional Unemployment Defined:

    http://www.oxfordreference.com/view/10.1093/oi/authority.20110803105343188

    “Unemployment due to a major change in the way an economy is organized. This could apply to conversion from wartime to a peacetime economy, industrialization of less developed countries, or a shift from central planning to a market economy. In any major change it is likely that managers and skilled workers will be needed to set up new systems and production facilities earlier than less skilled workers are needed to operate them. The less skilled are thus liable to suffer from unemployment during the transitional period.” Oxford Reference
     
  18. wegs Matter & Pixie Dust Valued Senior Member

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    LOL!

    This forum needs to implement a 'like' feature for posts.

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    (Appreciate you giving us some room to talk about this as a separate issue, from the other thread.)
     
  19. joepistole Deacon Blues Valued Senior Member

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    Unfortunately, there is a lot of specious information out there these days and you would be wise to always question what you are being told. Conservatives like to push the meme that unemployment is the result of a spoiled workforce and this sounds like an extension of that meme. It has no basis in economics. It is an ideological/political argument, not an economic argument.
     
  20. wegs Matter & Pixie Dust Valued Senior Member

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    From an economic view, I found that argument to be really strange, indeed. Thinking back to the article though, political 'language' seemed to be left out of the commentary, but as we know...it's always there.

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  21. joepistole Deacon Blues Valued Senior Member

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    We now have the Koch brothers paying "academics" to write papers in order to rationalized and sell the Koch brother ideology and promote their political interests.
     
  22. quinnsong Valued Senior Member

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    This is the creative destruction aspect of Capitalism that must be addressed.
     
  23. joepistole Deacon Blues Valued Senior Member

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    And to some degree it has been in advanced economies. We have a social safety net with unemployment, food and shelter assistance and job retraining. It is everything Republicans are now trying to destroy. And you can certainly make an argument that more needs to be done. Europeans are much better at this than we are in the US because, in my opinion, European governments are less corrupt and Europeans are better informed.
     

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