tag:blogger.com,1999:blog-1740670447258719504.post4602280387745969966..comments2024-03-27T03:00:27.024-04:00Comments on Facts & other stubborn things: Evan Soltas goes too far in criticizing full employment goalsEvanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-1740670447258719504.post-39406005762822087372012-08-12T22:11:18.311-04:002012-08-12T22:11:18.311-04:00Daniel,
Thanks for the feedback. Here's why, ...Daniel,<br /><br />Thanks for the feedback. Here's why, I think, you and I don't see eye-to-eye here. <br /><br />I think it is the exclusive responsibility of monetary policy to manage aggregate demand, doing so by stabilizing nominal income. Beyond the provision of public goods and the provision of social insurance/a "minimum opportunity standard," I think public spending -- and maybe even public policy, period, but don't hold me to this in case I'm forgetting something -- doesn't accomplish anything of use unless it increases aggregate supply or increases the rate of AS growth.<br /><br />You make a comment at the very end of your post which implies that unemployment affects AS growth for the unemployed. I agree; I've made similar points on my blog in the past which argue that our measures of productivity are flawed because they don't include the productivity of the unemployed, just the productivity of employed persons. (http://esoltas.blogspot.com/2012/02/getting-hysterical.html) The obvious response to this is to say that public policy should aim to increase AS under conditions of full employment as maintained by the central bank.<br /><br />Daniel, what would be your indifference curve between GDP growth and declines in the unemployment rate? You seem to imply that you are willing to trade off between the two. I don't think it's worth it in the long run at any margin. Declines in the unemployment rate w/o rising GDP mean declines in AS, which to me is unambiguously and always a bad thing.Evan Soltashttps://www.blogger.com/profile/06212305798151301158noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-83759905639850576032012-08-12T16:07:01.724-04:002012-08-12T16:07:01.724-04:00I don't know: I think there's something to...I don't know: I think there's something to the Soltas/Friedman point here. I'm thinking of: 1) Malthus's defense of landlord expenditures on "unproductive labor" as bolstering effective demand when investment lags behind savings; 2) Keynes's rhetorical use of pyramids and money-burying to illustrate his point about supporting aggregate demand in a depression; 3) Ricardo's addition of the chapter "On Machinery," in which he allows that the introduction of labor-saving machines may increase short-run unemployment, and argues that adoption of more efficient methods should be limited. <br /><br />The rub is as Soltas and Friedman suggest: the goal of maximizing productivity and the goal of maximizing employment are not necessarily aligned. We can object -- as Daniel does here, and as Keynes did after making his rhetorical point -- that there is no need to push employment into useless and inefficient projects. But it may really be the case that we will face quickly diminishing returns in finding suitable public works projects. In this case, some may say (as Kalecki did) that it is better to support demand through transfer payments. But is a transfer payment really equivalent to a pay check? I say no. Having a job makes a person feel useful, and having more people working is good for social morale.Willhttps://www.blogger.com/profile/14943136764424893492noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-23410473884031035232012-08-12T01:17:28.390-04:002012-08-12T01:17:28.390-04:00I have to agree with your position, Daniel. Even t...I have to agree with your position, Daniel. Even though Evan Soltas writes well, he was wrong in this instance.Blue Aurorahttps://www.blogger.com/profile/02044362251868221897noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-73281098830554666842012-08-11T23:24:24.517-04:002012-08-11T23:24:24.517-04:00Soltas: "President Barack Obama and presumpti...Soltas: "President Barack Obama and presumptive Republican nominee Mitt Romney seem to agree on something: the primary policy goal of the federal government should be increasing the level of employment. "<br /><br />Evidence? <br /><br />If Obama thought that that was a primary goal, he would have made more of an effort to increase employment. Instead, he takes pride in reducing gov't employment.<br /><br />And Romney likes to fire people. Besides, there is no reason to think that he would not be in thrall to a Republican Congress in regard to jobs. High unemployment is an opportunity for Republicans to push anti-labor policies.<br /><br />Neither candidate has presented anything like a real plan to increase employment, something with means, goals, and deadlines.Minnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-38023591414680047722012-08-11T21:52:22.727-04:002012-08-11T21:52:22.727-04:00I would put it more simply and ask him how does on...I would put it more simply and ask him how does one improve the productivity of the unemployed.Lordhttps://www.blogger.com/profile/06747994571555237739noreply@blogger.com