I believe this type of thread belong in the “social justice” section. Should unemployment be treated as paying jobs?
The world economy, through technological progress and non-regulated markets, has entered a stage of overcapacity in which the management of aggregate demand is the obvious solution. Yet we have a situation in which the people producing the goods cannot afford to buy them and the people receiving the profit from goods production cannot consume more of these goods. The size of the US market, large as it is, is insufficient to absorb the continuous growth of the world’s new productive power. For the world economy to grow, the whole population of the world needs to be allowed to participate with its fair share of consumption. Yet economic and monetary policy makers continue to view full employment and rising fair wages as the direct cause of inflation, which is deemed a threat to sound money.
The Keynesian starting point is that full employment is the basis of good economics. It is through full employment at fair wages that all other economic inefficiencies can best be handled, through an accommodating monetary policy. Say’s Law (supply creates its own demand) turns this principle upside down with its bias toward supply/production. Monetarists in support of Say’s Law thus develop a phobia against inflation, claiming unemployment to be a necessary tool for fighting inflation and that in the long run, sound money produces the highest possible employment level. They call that level a “natural” rate of unemployment, the technical term being NAIRU (non-accelerating inflation rate of unemployment).
It is hard to see how sound money can ever lead to full employment when unemployment is necessary to maintain sound money. Within limits and within reason, unemployment hurts people and inflation hurts money. And if money exists to serve people, then the choice becomes obvious. Without global full employment, the theory of comparative advantage in world trade is merely Say’s Law internationalized.
An interesting perspective on the standard Philips Curve trade off of contemporary macroeconomics where in order to reduce inflation one must increase unemployment and conversely to reduce unemployment one must tolerate more inflation. Inflation is a threat to the value of money because it effectively reduces the purchasing power of a given amount of currency overtime. Unemployment is necessary to reduce inflation thus unemployment is a structural necessity to keep the value of money for the greater good of future economic growth even though it harms the entire labor market by reducing the demand of their labor resulting in lower wages. Since laborers are also potential consumers who could spend the money that they earn on goods, lower wages denies them nominal currency that they can use in the marketplace effectively reducing aggregate demand. As a result of lower wages, these workers do not have surplus income to demand the labor intensive goods and services of other workers further reducing the demand for labor causing lower wages. Therefore, in order to keep money valuable in a fiat regime, money is not kept scarce by pegging it to a finite quantity such as gold or silver bullion, but instead labor is devalued so money itself can retain its value. Those who derive their income from capital (or from a differentiated form of labor whose demand and value is not affected by this) benefit from this trade off because of lower inflation because of the reduced competition from the demand side since they do not have to compete with many consumers.
Raising wages are scant compensation if unemployment in the economy keeps increasing from structural job losses. Job creation then becomes a priority and a policy prerequisite in a modern economy. Government must adopt policies to create new jobs to achieve full employment at high and rising wages to absorb the loss of jobs from rising productivity and use sovereign credit to sustain consumption to obliterate overcapacity that weakens economic growth. Charlie Chaplin’s Modern Times has finally arrived in the modern post-industrial economy. Perhaps the economic definition of a job needs to be reconsidered. What about treating involuntary unemployment as paying jobs? The logic is immaculate. If structural unemployment is necessary to keep money sound and valuable, it can be argued that a “natural rate” of unemployment to prevent inflation is a profitable arrangement to the economy and the unemployed should be paid for their selfless service to society.
Contrary to some of the opinions expressed here because of Calvinist influence on the economic views of conservative Catholics, the plight of the unemployed is not to due character flaws due to laziness or a lack of work ethic because they are not culpable for their misfortune as it is the result of a structural necessity to maintain the value of money which supposedly benefits the entire economy.