Russ Roberts of George Mason University has this wonderful post that I am sure never will make it to Paul Krugman's articles or blog. (HT, Christopher Westley)
Here is a great quote from...Paul Samuelson, Mr. Keynesian himself:
When this war comes to an end, more than one out of every two workers will depend directly or indirectly upon military orders. We shall have some 10 million service men to throw on the labor market. We shall have to face a difficult reconversion period during which current goods cannot be produced and layoffs may be great. Nor will the technical necessity for reconversion necessarily generate much investment outlay in the critical period under discussion whatever its later potentialities. The final conclusion to be drawn from our experience at the end of the last war is inescapable–were the war to end suddenly within the next 6 months, were we again planning to wind up our war effort in the greatest haste, to demobilize our armed forces, to liquidate price controls, to shift from astronomical deficits to even the large deficits of the thirties–then there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced.
(From Paul Samuelson, “Full Employment after the War,” in S.E. Harris, ed., Postwar Economic Problems, 1943.)
222 comments:
«Oldest ‹Older 201 – 222 of 222Bala:
"Major_Freedom: "If the concept "unemployment" is stripped away from intentions, then yes, you're right."
"It would be erroneous to say this, IMO. My point is that units of the labour factor are the "good" in question."
But that's not the thing in question for unemployment. Unemployment is not intended to be a measure of how many exchanges are taking place. It is a measure of lack of desired exchanges.
It is like a measure of "non-insured" for those who desire to be insured but are not insured for some reason, or "non-married" for those who want to be married but are not for some reason.
"Like any other good, these units of the labour factor have an owner who values them. As a human owner, the person definitely has intentions which are revealed in his action of offering or not offering the factor unit at a particular price."
Unemployment measures those human owners of labor who are offering their labor to others, but for some reason have not found a willing buyer.
"So, it is impossible to strip away from intentions."
That's why I think you're wrong. Only IF we strip unemployment away from intentions would measuring it be a reification of zero.
"However, the correctness of my point does not depend on stripping away from intentions but in fact derives its correctness by sticking with intentions."
It's funny how you so casually go on as if your point is correct, as if my refutation of your point doesn't even exist.
"It is the fact that the owner values the factor unit in a particular manner vis-a-vis what he gets in exchange that results in employment or non-employment of the labour factor in the particular process of production."
Hey cool, you just gave an economic meaning to the concept of "unemployment." Now take all the individual instances of "that results in unemployment" and add them up, and you get a measure of "unemployment."
Bala:
"Major_Freedom: But if we define "unemployment" as the PRESENCE of someone looking for a job, but unable to find a job"
"Bala: actually strips away the buyer of the factor unit under discussion and you cannot be talking of an exchange any more."
Unemployment is supposed to strip away the buyer. Unemployment only takes into consideration SELLERS.
Unemployment is not a measure of exchanges. It is a measure of how many exchanges are not taking place, given that sellers of labor are willing to sell their labor, but for some reason are not engaged in a trade with labor buyers.
Instead of trying to shoehorn in a Randian concept into this, I recommend that you first try to understand how the concept is defined.
"Major_Freedom: Economists typically do not include people who aren't looking for work in the heading "unemployment.""
"Bala: The language in this sentence is plain topsy turvy. These are not "people looking for work" but "people looking for a buyer for the units of the labour factor that they intend to supply if the price is acceptable".
No, that's wrong. The people referred to here are NOT "people looking for a buyer for the units of the labor factor that they intend to supply." They are people NOT looking for a buyer. For example, those who are retired but are not looking for work, are not counted in measurements of unemployment.
"It in fact highlights the conceptual confusion that can be created by accepting the concept of "unemployment" as a legitimate concept."
But you just accepted the concept of unemployment above, when you said:
"It is the fact that the owner values the factor unit in a particular manner vis-a-vis what he gets in exchange that results in employment or non-employment of the labour factor in the particular process of production."
"This is one more example of the mental disintegration that anti-concepts can wreak."
Those individuals looking for work but for some reason are not engaged in trade with buyers, is not an "anti-concept."
Bala: My point is that "unemployment" can exist but to label it as "involuntary" is ridiculous because all unemployment is the expression of the volition of the two individuals on the two sides of the transaction.
Oh gee whiz, Bala. There's a town where hundreds of people are employed to mine coal. They have mortgages, kids in school, and are members of long-standing communities. Suddenly, due to economic events elsewhere, the mine shuts down and people are involuntarily thrown out of work.
MF,
I think you misunderstand me. I have no problem with the concept "unemployment" or the point that counting the number of people who are thus unemployed (as I tried to explain it) is a measure of unemployment. My issue is with the claim that it can have attributes such as "involuntary". My point is that the absence of employment (for an individual) is as voluntary as the presence of employment as an attribute and hence that the concept "involuntary unemplyment" is an anti-concept.
Hope this clarifies.
"Hey cool, you just gave an economic meaning to the concept of "unemployment." "
Incidentally, that's what I was trying to do. I was trying to come up with an economically coherent definition of the concept "unemployment" and show that the notion "involuntary unemployment" is an anti-concept because it is an instance of the fallacy of the reification of the zero.
MF,
I think I can see where we are talking past each other. Here is what I said.
"This is like saying "non-existence" is defined as the absence of "existence" (both terms taken in the noun form). It is entirely meaningful here to talk of the characteristics of existence (that which exists) but what of the characteristics of non-existence? Isn't taking of the characteristics of non-existence reification of the zero? Therefore, isn't talk of the characteristics of "unemployment" which is nothing more than the absence of the relationship of "employment" also an instance of reification of the zero?"
And here is what you said.
"Only IF we strip unemployment away from intentions would measuring it be a reification of zero."
My point is NOT that measuring unemployment is a reification of the zero. My point is that talking of characteristics of unemployment, especially forming a category called "involuntary unemployment" is a reification of the zero. Hope this makes what I am trying to say clear.
"But you just accepted the concept of unemployment above, when you said:"
Mea culpa. Refer to my previous post.
Hey Zac. I think you must not realize that all those people walking from town to town during the thirties, claiming to be looking for work, were really taking a hiking vacation.
"Hey Zac. I think you must not realize that all those people walking from town to town during the thirties, claiming to be looking for work, were really taking a hiking vacation."
Do you read? I guess not. Continue spouting your anti-concepts. So Keynesian.
Anderson, are my responses in this thread still in the queue? They haven't shown up yet. Sorry about all this, I know it's not your fault.
Anderson:
Oops, nevermind. I see them now. You don't have to post either this message or the last one.
Bala:
I think you misunderstand me. I have no problem with the concept "unemployment" or the point that counting the number of people who are thus unemployed (as I tried to explain it) is a measure of unemployment.
My issue is with the claim that it can have attributes such as "involuntary". My point is that the absence of employment (for an individual) is as voluntary as the presence of employment as an attribute and hence that the concept "involuntary unemplyment" is an anti-concept.
Suppose someone is looking for work, and that if you asked them, they will tell you that they would rather be employed than unemployed. It just so happens that they are not employed because they haven't found a willing buyer yet.
If you're right that it would be wrong to characterize this as "involuntary" unemployment, then by that logic, we should conclude that the unemployed person is voluntarily choosing to be unemployed, and that the only thing stopping them is their choice to be unemployed.
But that doesn't make any sense because they want to be employed, they just haven't found a willing buyer for some reason.
Incidentally, that's what I was trying to do. I was trying to come up with an economically coherent definition of the concept "unemployment" and show that the notion "involuntary unemployment" is an anti-concept because it is an instance of the fallacy of the reification of the zero.
Employment takes two parties to consent. If one does not consent, then...hmmm wait, I think I know where you're going with this. You're saying that because unemployment is generated when potential employers VOLUNTARILY choose NOT to hire, then the unemployment cannot be classified as "involuntary."
I see what you're saying, and I think I know the source of the confusion now. When most people see the words "involuntary employment", they interpret that from the potential employee's perspective. Maybe that is the wrong thing to do, I am not sure. But in terms of "unemployment" as such, namely, the lack of employment, then it doesn't matter if the potential employee wants to sell their labor but they can't find any buyers. The point is that the unemployment is due to the employer's voluntary choice not to hire workers. Their voluntary choice is the crucial decision criteria that turns the alleged involuntaryness of unemployment into voluntary unemployment (from the potential employer's perspective).
I think the confusion can go both ways. If A wants to trade with B, but B does not want to trade with A, then the lack of trading is due to B voluntarily choosing not to trade with A. There is nothing involuntary about it. Or is there? Is not A involuntarily prevented from a trade?
I guess it depends on what you mean by involuntary. If you mean someone not getting what they want, then we can say unemployment is involuntary from the potential employee's perspective. If you mean the absence of a labor contract only, then we can't deny the potential employer's perspective, since the potential employer is included as well. So from the potential employer's perspective, the unemployment is voluntary. He voluntarily chooses not to hire labor.
Are both perspectives right, or are both wrong, or is one right and the other wrong, or are perspectives the wrong way to even approach this?
Bala:
I think I can see where we are talking past each other. Here is what I said.
"This is like saying "non-existence" is defined as the absence of "existence" (both terms taken in the noun form). It is entirely meaningful here to talk of the characteristics of existence (that which exists) but what of the characteristics of non-existence? Isn't taking of the characteristics of non-existence reification of the zero? Therefore, isn't talk of the characteristics of "unemployment" which is nothing more than the absence of the relationship of "employment" also an instance of reification of the zero?"
And here is what you said.
"Only IF we strip unemployment away from intentions would measuring it be a reification of zero."
My point is NOT that measuring unemployment is a reification of the zero. My point is that talking of characteristics of unemployment, especially forming a category called "involuntary unemployment" is a reification of the zero. Hope this makes what I am trying to say clear.
Yes, I understand what you're saying, and like I said above, I think I know the actual source of disagreement.
You define unemployment as the LACK of something that exists, namely employment, and so in that sense, sure, it would be wrong to attribute any predicates to it. It would be wrong to say it is blue, voluntary, involuntary, anything that would characterize it.
But, if we define unemployment not as the absence of something, but as the presence of something, namely, the presence of people looking for work but haven't yet found any, then it would not be a reification to attribute predicates to it. We could ask someone who is without a job "Are you looking for a job?", if they answer yes, then the definition "involuntary unemployment" is applicable to them, and the predicate "involuntary" can apply to that individual. He wants a job, and would choose a job, but others are not choosing to hire him, so from his perspective, his unemployment, which is a positive attribute of him, namely, he is doing something other than working, can be characterized as involuntary.
Like I said before, most economists don't even count those who merely don't have a job in the statistic "unemployment." Most economists only include the positive aspect of unemployment, namely, the presence of individuals who want jobs but haven't found any. So because most economists don't define unemployment merely as a lack of something, but the presence of something, it is not wrong to attribute predicates to it.
Major_Freedom: Like I said before, most economists don't even count those who merely don't have a job in the statistic "unemployment." Most economists only include the positive aspect of unemployment, namely, the presence of individuals who want jobs but haven't found any.
The most common measure only includes those actively seeking work, though there are other measures that include those who would rather work, but have given up.
Your comment demonstrates that you are, indeed, capable of a reasonable response, and that you can address the argument actually being made rather than your preconceived view of the position.
test
Zachriel:
"Major_Freedom: Like I said before, most economists don't even count those who merely don't have a job in the statistic "unemployment." Most economists only include the positive aspect of unemployment, namely, the presence of individuals who want jobs but haven't found any."
"The most common measure only includes those actively seeking work, though there are other measures that include those who would rather work, but have given up."
Wanting a job can only be inferred by observing people actively seeking work. Your point is moot.
"Your comment demonstrates that you are, indeed, capable of a reasonable response, and that you can address the argument actually being made rather than your preconceived view of the position."
LOL, you're no judge on that. You should look in the mirror. Your entire rants in the other thread are just one giant appeal to have your pre-conceived worldview validated, which I won't do.
Being reasonable is precisely how I know you're wrong so often.
Major_Freedom: Wanting a job can only be inferred by observing people actively seeking work. Your point is moot.
It's quite possible that people have looked for work for a long period of time, then decided there are no jobs to be had, then quit looking, especially when the overall unemployment is high. You can find various definitions and measures of discouraged workers—if you look.
test
Zachriel:
Major_Freedom: Wanting a job can only be inferred by observing people actively seeking work. Your point is moot.
It's quite possible that people have looked for work for a long period of time, then decided there are no jobs to be had, then quit looking, especially when the overall unemployment is high.
That's why I still include those people when I look at what the unemployment situation really is. The CBO ignores these people.
Major_Freedom: Wanting a job can only be inferred by observing people actively seeking work. Your point is moot.
Major_Freedom: That's why I still include those people {who quit actively seeking work} when I look at what the unemployment situation really is.
Voluntarily working for free may hold some advantages.
Zachriel:
"Major_Freedom: Wanting a job can only be inferred by observing people actively seeking work. Your point is moot."
Major_Freedom: That's why I still include those people {who quit actively seeking work} when I look at what the unemployment situation really is."
Unemployment = Wanting a job but can't find one PLUS those who gave up looking because the economy is so bad.
One can observe both of these, the former by observing their declarations of applying for work, and the latter by observing their declarations of no longer finding work.
You are getting confused because you believe I am using "unemployment" and "wanting a job" interchangeably.
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