"Unemployment: what to do?
In light of today’s terrible unemployment numbers (pdf)- a 138,400 rise in the claimant count in February alone - this new paper (pdf) by David Bell and David Blanchflower is especially important.
They remind us that unemployment is very costly. It reduces well-being even among those who keep their jobs, increases crime and stress and reduces life expectancy. And among young workers it has a scarring effect; being unemployed when young increases one’s chances of being unemployed when older. This is an especial problem because unemployment is disproportionately concentrated among the young; today’s figures show that 18-24 year-olds account for 30.6 per cent of all the unemployed.
So, what can be done? Bell and Blanchflower are sceptical about active labour market programmes - policies aimed at “helping” the jobless into work. These are of limited use in good times, and are likely to be less useful in bad ones.
Instead, they have a number of ideas. One is a massive fiscal stimulus; £87bn, if we follow the US’s lead, they estimate.
Other ideas they have are: to encourage 18-24 year-olds into training schemes; tax breaks to encourage firms to hire youngsters; encouraging work-sharing, via the tax credit system; and raising the education leaving age to 18.
However, they recognize that these policies are mere palliatives. They won’t stop unemployment rising, probably to over 3 million by year-end.
And there’s the point. As Michal Kalecki pointed out, unemployment is “an integral part of the normal capitalist system.” It’s just fantasy to believe you can have capitalism (or perhaps any form of market economy) without unemployment.
For me, the question is: to what extent is it possible to increase ways of pooling risk - reducing the pain of unemployment - without dampening incentives?
My hope - which is not strongly held - is that this recession will lead people to acknowledge that this can be answered in the affirmative. (Hint: citizens’ basic income).
They remind us that unemployment is very costly. It reduces well-being even among those who keep their jobs, increases crime and stress and reduces life expectancy. And among young workers it has a scarring effect; being unemployed when young increases one’s chances of being unemployed when older. This is an especial problem because unemployment is disproportionately concentrated among the young; today’s figures show that 18-24 year-olds account for 30.6 per cent of all the unemployed.
So, what can be done? Bell and Blanchflower are sceptical about active labour market programmes - policies aimed at “helping” the jobless into work. These are of limited use in good times, and are likely to be less useful in bad ones.
Instead, they have a number of ideas. One is a massive fiscal stimulus; £87bn, if we follow the US’s lead, they estimate.
Other ideas they have are: to encourage 18-24 year-olds into training schemes; tax breaks to encourage firms to hire youngsters; encouraging work-sharing, via the tax credit system; and raising the education leaving age to 18.
However, they recognize that these policies are mere palliatives. They won’t stop unemployment rising, probably to over 3 million by year-end.
And there’s the point. As Michal Kalecki pointed out, unemployment is “an integral part of the normal capitalist system.” It’s just fantasy to believe you can have capitalism (or perhaps any form of market economy) without unemployment.
For me, the question is: to what extent is it possible to increase ways of pooling risk - reducing the pain of unemployment - without dampening incentives?
My hope - which is not strongly held - is that this recession will lead people to acknowledge that this can be answered in the affirmative. (Hint: citizens’ basic income).
I'm assuming that this is a form of Guaranteed Income, as in the plans of Milton Friedman and Charles Murray. If so, then I agree completely.
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