How to Unf★ck Unemployment

Dean Baker explains how the employment rate in the economy is a matter of the government's fiscal and monetary policy. Baker contrasts the macroeconomic insights of John Maynard Keynes vs. the more recent views of Milton Friedman when it comes to government spending, unemployment, and inflation. Baker goes on analyze the Federal Reserve's role with particular attention to the decision of recent board chairs (Volker, Greenspan, Bernanke, Yellen, and Powell) on setting interest rates (federal funds rate) and the policy goals they have targeted.

Baker explains how fiscal and monetary policy has lately focused more on limiting budget deficits and fighting inflation, rather than maintaining high levels of employment. Abandonment of post-war Keynesian full employment policy, and embrace of the Monetarist NAIRU fiction since 1980, has allowed the US government (and the Federal Reserve in particular) to engineer recessions and tolerate excessively high levels of unemployment.

What's the fix? Dean proposes to restore full employment as a macroeconomic policy goal and ensure that workers at the middle and bottom of the wage ladder have the bargaining power to secure wage gains. The Federal Reserves should be focused on maintaining full employment, rather than being obsessed with inflation and prematurely raising rates to the detriment of employment and labor markets.

☆ How to Unf★ck America ☆

This series is all about solutions.

Over the last four decades, the US economy has done quite well for the top 1%, but it has been stagnant for most Americans. This was not an accident, nor the natural workings of the market and certainly not an inevitability. US policies have been deliberately structured since 1980 to redistribute income upwards. In other words, the system has been rigged.

Dean Baker shows us how public policy can be deployed to #UnfckAmerica. Over six episodes, Baker illustrates how even minor changes in public policy can help change our trajectory dramatically. It just takes the political will to recognize that the current situation is not insurmountable, and that change is achievable.

Credits: Dean Baker, Matthew Kulvicki, Nick Alpha, Gonçalo Fonseca, Kurt Semm

[xxcrysadxx]

The thing to understand about our modern global economy is that if we don't manage it in the public interest, multinational corporations and other powerful economic actors will manage it in their private interest.

[Skylark_Jones]

In the UK at the moment we have high employment low wages and huge staff shortages in many sectors especially the NHS, inflation is the highest it's been for 40 years at around 10% or more, energy price hikes will increase again by 78% in October (it increased by 54% last April) which means millions of workers, persistently demonised by the government as "lazy", will struggle to eat and heat as the winter nears.

Many small businesses unable to pay their huge utility bills will lay off workers and close. This, as the £billion-profit-making fossil fuel corporations receive tax breaks and subsidies from the government(!) All after over a decade of government austerity, Brexit and covid. Meanwhile the government's policy is NI tax cuts; but that usually works out well for the rich not for the poor: no tax on Wealth only on income. Plus, where's the money to come from for public services like national healthcare which is on the verge of collapse? The super rich pay nominal tax if at all much of which they squirrel away into tax havens....It doesn't sound too healthy, does it?

[PoliticalEconomy]

I have a better idea Dean. Why not have capital work for the benefit of labor, rather than labor working for the benefit of capital?

[ConanDuke]

Friedman was obviously wrong: We already have hyperinflation, WITH high unemployment.

[RevolutionaryThinking]

I was one of those young men. So pissed I had all these credentials and no opportunities.

[zuggrr]

thank you so much for this series ! very very interesting

[roylangston]

This is all beside the point. Unemployment has always been caused primarily by landowner privilege. There are three main ways landowners' legal entitlement to steal from everyone else causes unemployment:
1. Everyone has to pay landowners full market value just for PERMISSION to live near employment opportunities, and the least productive can't afford it out of their wages.
2. Because the productive have to pay the taxes that landowners get to pocket through spending on desirable public services and infrastructure (Henry George Theorem), employers can't afford to pay both their employees' wages and the taxes they have to give to landowners.
3. Because government has to provide desirable public services and infrastructure as a subsidy to landowners, and can't recover their costs by requiring landowners to repay the resulting subsidies, governments can't afford to hire people to provide all the desirable public services and infrastructure that would pay for themselves if they didn't have to be provided as a welfare subsidy giveaway to landowners.

[Mr.Nichan]

2:25 Why are NET exports counted as demand. Aren't exports demand no matter what is imported? I suppose the theory is that imports effectively take away demand from the domestic economy as that demand is fulfilled by foreign economies, when it could (supposedly) alternatively have been fulfilled by the domestic economy?

[tonysoviet]

This ties back to the seminar book Why Nations Fail. Institutional capacity, check and balance, and the rule of law are much more important than economic metrics. Resource-rich nations, according to Friedman, should be the most prosperous and happy places on Earth, but he completely ignored the rule of law and human nature, and failed to explain why resource-poor nations like Japan, Korea, Taiwan are much more prosperous than those in the Middle East or southern regions of Africa. Friedman is a great mathematician, but a horrible economist.

[niklaslehner]

Increasing demand in an economy by increasing government deficits only works when supply of labor and production have unused capacities.

However in the current environment it mainly leads to inflation as supply is still recovering from lockdowns. It didn’t work in the 70s and it won’t work now. New Keynesians seem to be in trouble.

I agree though that policies should focus on helping the poorest individuals as this is both most efficient and morally right.

[beyondCapitalism]

This all ist very well known a long time ago. The "fraud-thing" lies in the banking-process itself - lies in the not fully reflected implications of the creation of bank money.

[psikeyhackr]

Why do people need employment?

Why are some people paying other people to live on the planet? Why hasn't accounting/finance been mandatory in the schools since Sputnik?

[petithor]

could you provide examples of the 'young men choosing not to work' 2008 narrative?

[crippsuniverse]

What if robots made everything and everything was free?

[day]

This argument doesn't work well when you're not also taking the results of inflation into account.
Dean himself noted that low unemployment is counterbalanced with high inflation, and vice versa. Right now inflation in the US is higher than wage growth, despite the low unemployment giving people more choices. Which means the spending power of the poor (those most affected by inflation) is still being decreased.

[ncooty]

219? Jerome Powell isn't *that* old.

[ncooty]

What this was missing was a solid definition of inflation (versus, for example, a price spike from constrained supplies).

To me, economists almost always sound like pompous nincompoops. They have no idea what is going on, but they have enormous egos... and numbers to 7 decimal places.

[NotShowingOff]

Weimar Germany. What happened was in fact deflation. Sure, prices inflated, but that because their own currency dropped like a rock.
An unpopular opinion is because their labor force was small.
Yea, because they lost too many men in the war.

[PoliticalEconomy]

Dean is so clueless he thinks he is left wing when in actuality he is extremely far right.

[ricardoretardo]

Sending back the immigrants is the answer😁