Jurriaan wrote: > Is anybody actually explaining thoroughly how it is possible to have a > jobless recovery at all ?
the standard macro explanation points to Okun's "Law," which says that for the US, real GDP has to increase at about 3 per cent per year simply to keep the unemployment rate constant. This type of growth counteracts the employment- depressing effects of an increased labor force and the growth of labor productivity. Okun's "Law" should be called Okun's "empirical generalization." >.... What are the > "rigidities" which > prevent the marvellous price mechanism from doing its > balancing act, and > establishing a steady employment-creating growth path in this > case ? In > other words, why is the market not working properly now, and what is > impeding market efficiency this time ? orthodox macro -- or what's called "new Keynesianism," though it's neither new nor Keynesian -- points to wage rigidities as discouraging rapid equilibration of labor- power markets. This, of course, encourages them to call for making labor-power markets less rigid, by smashing unions, abolishing the minimum wage, etc. >.... Am I to understand that now people are blaming > inappropriate foreign > currency levels for economic woes in the USA ? If that is the > case, why > aren't we getting good quantitative pictures of the world > currency markets > so we can assess that ? some blame the fact that the Yen and renibi (sp?) haven't risen as the dollar has fallen, so that US aggregate demand has been slow. These rigidities are blamed on the Japanese and Chinese governments, respectively. (The above is not my explanation, though Okun's "Law" works pretty well.) Jim D.
