The IMF published this chart this afternoon:
As they say, the idea that the unemployment consequences of the 2008 crash are over is not true: in the OECD it would appear that the impact remains real and will continue for some time. Outside the OECD that's not the case.
So, what's the reason? Is the OECD issue the impact of big finance? Or globalisation exploiting a situation? Or ideological rigidity demanding austerity? Or a lack of credit? Or big government (which I do not think at all likely, but have to put in the list)?
I'd say it was over dependence on finance and an inappropriate model of macroeconomics incapable of embracing an appropriate reaction to a significant shock.
But what I think we can agree on is that the problem is not solved, and that has a real human cost.
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Yes Richard, I think big government is the correct answer, so it is good to see that you included it on your list. Big government and wasteful government inevitably chokes out the growth of the private sector and genuine employment growth. And things will only get worse for these Big Government countries, as all of these high growth Asian economies that manage to keep their government spending down to below 20% of their GDP, will eventually take most of our service sector jobs in the next few years, just in the same way that they have already taken most of our manufacturing jobs. Regards.
If you were right business would have invested every penny it had
But the reality is it us not despite incredibly low interest rates
The squeezing out idea is ridiculous with not a shred of evidence to support it
Shall we keep discussion to facts, not your fantasies?
@Alan
I have simply never understood this argument. Governments do not absorb money, they MOVE money. The taxes they receive, they immediately spend. The money goes straight back into the wider economy to be used again. It pays wages and buys services. It is the private sector that has far more opportunity to pull money out of the system.
Of course the Government will have a major effect on where money goes, who receives wages, which sectors are favoured. It is perfectly legitimate to argue that it moves money to the wrong places, though personally I am in favour of schools, hospitals, roads etc..
But it is a logical contradiction to argue at the same time that the Government spends too much money and that it sucks money out of the system. Surely it is not too difficult to see that both of these cannot be true. And if it is argued that the Government is spending too much and has to borrow, then at least the money is moving.
The Government could use taxes to buy gold bars to bury in the ground, which would indeed take money out of the system. Indeed I have seen it argued that it should do this. But I suggest it is the financial and private sectors that are far more likely to engage in behaviour that sucks money out of the system.
Presumably they are still considering those in very part time work as employed which skews things somewhat as well as over a million still needing housing benefit whilst IN work?
What is considered ’employment’ has conveniently become a moveable feast
Sorry Alan, but I don’t see any local authorities opening burger bars, building cars or opening lap dancing bars and squeezing out the private providers!
What I see is a stock market that wants to squeeze every spare pound out of the companies that investors have invested and are therefore moving jobs abroad to incur cheaper wage costs that can be turned into returns for investors
Also, if your sales are down because of a manufactured austerity programme, you are going to squeeze out staff from you company aren’t you to save money.
So I feel that you’ve used the right word but in the wrong context.
Yes but what you do see is thousands of Government and public sector jobs, which may be far in excess of what is required by an efficient state, offering salaries which cannot be matched by the private sector. For example the burger bar may want to employ a kitchen worker for £12,000 a year, but they prefer to take the job offered by a bloated and inefficient state which pays them £16,000 a year.
The state job can only be paid for by increasing taxes or increasing public sector debt. This equation has a limit, where the private sector is squeezed and the state is bloated, and the UK has already reached that limit.
Public sector pay has been cut dramatically
Hundreds of thousands of essential public sector workers have lost their jobs
Supposedly 760,000 new businesses have been created in the UK in the last five years (it’s not true, but the Tories claim it)
And still you write this nonsense
Do facts ever invade your consciousness?
OK Alan, in your version of the good society you want to end my decent paying £16000 job in the public sector, and move me to work in a burger bar for £12000. Exactly how does that make me and other working people better off? And if we are moving people out of professions such as nursing where they are a public sector drag on society and and converting them to wonderful private sector kitchen workers or lapdancers why do we think that is a more productive use of society’s resources?
All I can add is that if the private sector or even the present mode of capitalism was actually truly efficient at delivering wealth for everyone (‘the greatest amount of social utility to the greatest amount of people’) and not just for those already at the top, then you wouldn’t need much of a public sector in the first place.
A larger public sector is indicative of badly functioning capitalism. That’s why the Welfare State was created in the first place. Because unmanaged capitalism was failing.
The public sector deals with the consequences of so-called ‘efficient markets’ (a complete fallacy – they do not prevent bubbles) such as housing for those who are priced out of the housing market; those who are priced out of the legal system or specialist services etc.,;those who are competed out of jobs.
If there was more equality, you’d probably need less of a public sector!!
Also what is wrong with wage inflation if it puts people back into tax and enables the UK to pay its public sector obligations? What’s wrong with higher wages so that workers can comfortable spend, save and service the right amount of debt – and pay taxes?
Taking low paid people people out of tax (like the Lib-Dems crow about) actually creates more of a burden on those who can pay but also sets those who do not pay tax apart from everyone else so that they become future targets for politician directed discrimination and resentment!
Which brings me to tax itself: Why do people see tax as a burden when in fact it contributes to wealth creation? Jobs paid for out of tax means that money can be spent on groceries, cars, holidays – items and services that contribute to the weailth of employees invovled in these services and the shareholders of those companies too!!
Services provided by the state through tax (NHS, etc.,) enables people to spend the rest of their income elsewhere on other things (services, goods, savings, investments).
I think that the reality is that people hate tax because because they are paying too much for housing, food and cars,and all too often going in to debt because their wages are not keeping up with the cost of living or house prices. So tax is really the fall-guy for market failure.
Too many people in this country have fallen for the overpaid public sector worker story. What those wages were doing, was dragging up wages in the private sector – but not always. Before 2008, the private sector was paying more for equivalent posts ( I am a public sector project manager) and at this time equivalent posts were £15-20K above mine; post 2008 these have declined considerably and more likely don’t exist.
And do not forget Alan that your taxes are being used to pay those low paid workers additional benefits (income and housing benefits) to make up for what their lower wages cannot afford.