Once again, the great Krugman hits one out of the park. In his latest piece in the New York Times he debunks the right-wing myth that our unemployment problem is “structural,” i.e. workers are “in the wrong places, or they have the wrong skills” and that this “will take many years to solve.”
[A]ll the facts suggest that high unemployment in America is the result of inadequate demand — full stop. Saying that there are no easy answers sounds wise, but it’s actually foolish: our unemployment crisis could be cured very quickly if we had the intellectual clarity and political will to act.
Krugman quotes two prominent proponents of the structural problem theory.
Narayana Kocherlakota, President of the Federal Reserve Bank of Minneapolis and Bill Clinton. Kocherlakota is quoted as saying, “Firms have jobs, but can’t find appropriate workers. The workers want to work, but can’t find appropriate jobs. It is hard to see how the Fed can do much to cure this problem.” Clinton was quoted recently, saying the cause of high unemployment is due to the “fact” that “people don’t have the job skills for the jobs that are open.”
This is obviously untrue as the unemployment problem should be sector-based. Krugman writes,
[T]here should be significant labor shortages somewhere in America — major industries that are trying to expand but are having trouble hiring, major classes of workers who find their skills in great demand, major parts of the country with low unemployment even as the rest of the nation suffers.
None of these things exist. Job openings have plunged in every major sector, while the number of workers forced into part-time employment in almost all industries has soared. Unemployment has surged in every major occupational category. Only three states, with a combined population not much larger than that of Brooklyn, have unemployment rates below 5 percent.
Krugman concludes by drawing some comparisons to the Great Depression.
Part of the answer is that this is what always happens during periods of high unemployment — in part because pundits and analysts believe that declaring the problem deeply rooted, with no easy answers, makes them sound serious.
I’ve been looking at what self-proclaimed experts were saying about unemployment duringthe Great Depression; it was almost identical to what Very Serious People are saying now. Unemployment cannot be brought down rapidly, declared one 1935 analysis, because the work force is “unadaptable and untrained. It cannot respond to the opportunities which industry may offer.” A few years later, a large defense buildup finally provided a fiscal stimulus adequate to the economy’s needs — and suddenly industry was eager to employ those “unadaptable and untrained” workers.
But now, as then, powerful forces are ideologically opposed to the whole idea of government action on a sufficient scale to jump-start the economy. And that, fundamentally, is why claims that we face huge structural problems have been proliferating: they offer a reason to do nothing about the mass unemployment that is crippling our economy and our society.
So what you need to know is that there is no evidence whatsoever to back these claims. We aren’t suffering from a shortage of needed skills; we’re suffering from a lack of policy resolve. As I said, structural unemployment isn’t a real problem, it’s an excuse — a reason not to act on America’s problems at a time when action is desperately needed.
