Sunday, April 20, 2014

Hidden damage

According to the free-marketeers, financial panics are a good thing. Sure, they are destructive of so much, but it's "creative destruction," clearing away inefficient firms and obsolescent methods and making openings for the novel, efficient and expansive.

This is bogus, for many reasons, one of which is that the destroyed do not get to enjoy the benefits of the creative forces. Naturally enough, they object (when they figure it out) to being destroyed so that what Incurious George called the Haves can become the Havemores.

An increasing body of evidence shows that the supposed beneficiaries, despite their short-term gains (the only kind they recognize), are being set up for eventual destruction themselves.

An excellent Washington Post story says:

New research tracking people who have been out of work for six months or longer found that 23 percent landed a job within a few months of the study. But a year later, more than a third of that group was unemployed again or out of the labor force altogether.
 The findings are the latest in a bleak but growing body of literature suggesting long-term unemployment has become a trap that is difficult to escape.
 Economists say that means the long-term unemployed could become a permanent underclass . . .

We have already seen what happens to society when a permanent underclass is created. This was done in the Rust Belt when jobs were shipped overseas (for efficiency, we were told) but not replaced with better jobs (which we were told would be the creative part of that destruction).

This was part of the unstated but very obvious bias of Reaganomics in favor of the coasts as against the interior (or, to take Britain, which was the model, the South against the Midlands and North).

RtO has frequently mentioned the miserable incompetence of American business management, the highest-paid in the world but, in terms of return for pay, the worst-performing.

It is pretty obvious, except to American managers, that if a Bush Crash throws millions out of work but an Obama recovery rebuilds many fewer jobs, at least in the early years, then millions of people will be out of work for a longish period.

Republicans are certain this is because American workers are lazy, which is why they torpedoed long-term unemployment benefits, as a way to force workers to return to labor (on business's harshest terms). How's that working out so far? Not like they thought.

In any case, it turns out that even when workers pull up their socks and offer to work, managers won't hire them, because there must be something wrong with them (rather than with Reaganomics); or because their skills have deteriorated, although it us hard to see how a sales clerk's skills could deteriorate.

The idea, as a general notion, is as ridiculous as other rightwing economic myths:

Ghayad said this dynamic creates what he called “the jobless trap,” in which those who are unemployed are increasingly likely to remain that way. He places the blame solely on the businesses doing (or not doing) the hiring.
“There’s no occupation where you lose your skills in one month, between six and seven,” he said. “I wouldn’t blame the unemployed people for 1 percent of what’s happening.”
But according to Senator McConnell, the only thing holding back the "job creators" are taxes and regulations.

1 comment:

  1. According to the free-marketeers, financial panics are a good thing.

    Name one.