How to solve the unemployment problem?

[stephkyle7]

yesterday on Morning Joe two Economists were discussing what is wrong with where we are.
The Keyensian(demand side,or stimulus ,guy) was pointing to income inequality as the biggest issue,people making less money can afford less goods and services and therefore there is no road out until that is addressed.
The Supply side(free markets,less regulation) guy was pointing to the shifting of our economy away from manufacturing and into tech and inovation as the catalyst of the problem and without some kind of economic surge(real estate,.com,oil)things will remain stagnant as less and less people are engaged in the new engine of our economic security.

In listening to them I recalled something I was told many years ago regarding this dynamic which seems to indficate that they are both right to a certain degree.

In a free market, the most efficient producer of a good or service should be the 'contract winner" so to speak.For many years it was us, but we transitioned away from manufacturing not because Buissness leaders were evil tyrants trying to crush the american worker, but because the market dictated where production was most effective.
In saying that Im not absolving Buisness from the Keyensian perspective, they should to an extent make allownaces for the american worker ,if only to maintain a strong economy for themselves.
But where we failed is deciding how to transition our workforce into the new model for our success.We basically left a generation of workers hugh and dry to figure it out for themselves.
Here is where I think the Liberal side must be embraced,if we are going to embrace the Free market at its purest.
We simply cant turn our backs on 30% of the amercian workforce and say figure it out yourself.
The two ideas are counter productive to each other and have created a push and pull that has moved us nowhere.

Does anyone have any Ideas as to how we can address this imbalance?

Ive been thinking lately that maybe Academic standards need to be tinkered with through the accreditation standards.And less emphasis on some of the less then relevant requirements that drive up costs and debt.
Weve streamline k-12, why are college kids still required to spend money on classes completely irrelevant to their career choice that enrich the university more then the student?

It seems to me if we have transitioned into a higher level of economy, passing manufacturing on to the chinese and the Indians, then we must bring our workforce into that new economic driver regardless of cost if we expect to ever recover.

thoughts?

[The Schmooze]

Some causes:
- Our Horrendous Education System: Quality, cost, and our education system as a whole is deeply flawed and is not producing a work force capable of competing with emerging and growing technologies.

- Outsourcing/globalization: The corporation will almost always choose paying a worker overseas 30 cents an hour versus minimum wage here in the United States.

Some solutions:
- Education: focus and incentivize educational programs for computer technology, engineering, and other growing sources for jobs. Make college education completely free by cutting a tiny portion of our empire...I mean defense budget. We need a complete overall of our education system starting from the earliest levels.

- Corporate subsidies/tax breaks/loopholes: Allow corporations to keep these programs on the condition that they will keep a certain % of workers in the United States. Use this % as a baseline, and for every job created in this country allow them the possibility of achieving what they had their prior in terms of subsidies, tax breaks, and loopholes.

- Investment in Infrastructure: Initiate a serious investment in rebuilding our infrastructure. Fix our bridges, Create/rebuild buildings in various cities, rebuild Detroit. This may not create permanent jobs but it will help unemployed persons earn wages for 5-10 years.

[Sota4Ever]

College free?? Are you serious?

[The Schmooze]

College free?? Are you serious?

I'm very serious. Consider the following:

Economist Doug Henwood points out that it would be quite easy to make higher education completely free. In the U.S., it accounts for less than 2 percent of gross domestic product. The personal share of about 1 percent of gross domestic product is a third of the income of the richest 10,000 households. That's the same as three months of Pentagon spending. It's less than four months of wasted administrative costs of the privatized healthcare system, which is an international scandal.

http://www.alternet.org/story/151921...hat's_next

It sounds as if it would be an extraordinary amount of money, but when looking at the details it is a drop in the bucket compared to what is spent on empire alone, and it is infinitely more valuable. We spend so much on empire, war, and giving cost-plus contracts to companies to re-build countries after we blow them up. There's no way anybody can tell me that we cannot make higher education completely free.

[Nymfan87]

I'm very serious. Consider the following:



http://www.alternet.org/story/151921...hat's_next

It sounds as if it would be an extraordinary amount of money, but when looking at the details it is a drop in the bucket compared to what is spent on empire alone, and it is infinitely more valuable. We spend so much on empire, war, and giving cost-plus contracts to companies to re-build countries after we blow them up. There's no way anybody can tell me that we cannot make higher education completely free.

I have a few problems with the free college education thing:

1) We already have too many people going to college for basketweaving. There would have to be major incentive to go into a real major for me to even consider supporting it. Taxpayers shouldn't have to fork over $80-200k so Sally can hang out with her BFF's while studying to be a social worker, or so Steve can wake up hammered on his frat's front lawn every weekend to study sports management (sorry to any sports management majors here)

2) What happens to the people who already are loaded down by college debt? Are we going to pay off the student loans of everybody in the country? And what about the people who have already spent their entire lives paying off their debt? Do we just say "tough ****" to them?

3) What incentive will there be for people to have cost as any sort of driving factor in their college decision? College costs are already ballooning out of control; are colleges going to be able to push their tuition bills even further through the roof just because the taxpayer is footing the bill?

[Sota4Ever]

Exactly what I was thinking.

[Buckwheat]

Yeah, I don't think college should be free. However, it's currently a ****ing joke and severe aid needs to be offered compared to what's currently out there.

[bootleg42]

I have a few problems with the free college education thing:

1) We already have too many people going to college for basketweaving. There would have to be major incentive to go into a real major for me to even consider supporting it. Taxpayers shouldn't have to fork over $80-200k so Sally can hang out with her BFF's while studying to be a social worker, or so Steve can wake up hammered on his frat's front lawn every weekend to study sports management (sorry to any sports management majors here)

2) What happens to the people who already are loaded down by college debt? Are we going to pay off the student loans of everybody in the country? And what about the people who have already spent their entire lives paying off their debt? Do we just say "tough ****" to them?

3) What incentive will there be for people to have cost as any sort of driving factor in their college decision? College costs are already ballooning out of control; are colleges going to be able to push their tuition bills even further through the roof just because the taxpayer is footing the bill?

First those college costs are going up because private institutions are leeches who produce waste and artificially drive up costs.

The U.S. should have direct funding for state and city colleges, with incentives to lower costs, which can be done by cutting out private waste (which exists in our education system AND especially our healthcare system). Such cuts should not cuts the wages of the professors and staff. That way people can have access to college. The MIT's and Harvard's of the world will still exist, but we would have state and city colleges for everyone else. There is no excuse for the richest country in the world to NOT have free college available to it's population. We should want as much of the population educated regardless of what they study.

As for employment, we need more stimulus. The Obama Stimulus of 2009 wasn't big enough. It needed to replace about 1.5-1.6 trillion dollars in annual demand lost from the housing bubble, but instead Obama only made the stimulus about $300 billion. The numbers are the following (warning, math REQUIRED):

The target for unemployment should be no higher than 5.0 percent. (The year-round average for unemployment in 2000 was 4.0 percent.) This leaves a gap between actual unemployment and our employment target of 5 percentage points. As a rule of thumb, it takes a 2 percentage points increase in GDP to reduce the unemployment rate by 1 percentage point. This means that in order to reach our target of 5 percent unemployment, we would have to increase GDP by 10 percent, or $1.5 trillion.

Different types of stimulus have different multiplier effects. One dollar of addition spending is generally estimated to have a multiplier effect in the neighborhood of 1.5, meaning that for every dollar we spend on a government project, we increase GDP by $1.50 as the people we hire go out and spend their paychecks, creating new demand.

The multiplier effect on tax cuts is generally estimated as being in the neighborhood of 0.9, or less. This means that $1 of tax cuts will end up increasing GDP by about 90 cents. Unlike spending on things like road construction or health care, a tax cut does not directly generate demand. It only generates demand when people go out and spend their tax cuts. Since much of any tax cut will be saved, the stimulus effect of tax cuts is almost always less than the effect of direct spending.

Okay, if we have an annual GDP shortfall of $1.5 trillion and we decided to fill it by spending, then we would need approximately $1 trillion per year of additional spending. Alternatively, if we tried to fill the gap with tax cuts, we would need $1.65 trillion per year in tax cuts. After pulling out spending for later years, and the alternative minimum tax fix, the Obama package provides about $300 billion a year in stimulus. This is obviously inadequate. He needed to make it bigger.

We need more stimulus right now, point blank.

[cabernetluver]

Some college used to be essentially free. Community college (it was called junior back then) had a token fee. The state college system (here in California, before it became another University system) was very reasonable. Today's cheapest costs are outrageous.

The funny thing is, in today's world, with technology, it is eminently doable. One can watch lectures, read books, all from the comfort of my home. All I would have to go to school for would be proctored tests.

[Sota4Ever]

One of my professor thinks that in 5-10 years that will be the new college. Were people watch lectures from famous people in the respected fields and then go to class to do examples and homework from those lectures as well as take tests.

I see no need or reason to make college free or forgive any college loans. I can't stand when people say we should forgive college loans. No I wanted to go to school, so therefore I should pay it off. Making college free does what, makes more educated people for things that we don't need educated people for? We have a problem right now with people trying to find jobs within their field would be even worse with free college.

[bootleg42]

One of my professor thinks that in 5-10 years that will be the new college. Were people watch lectures from famous people in the respected fields and then go to class to do examples and homework from those lectures as well as take tests.

I see no need or reason to make college free or forgive any college loans. I can't stand when people say we should forgive college loans. No I wanted to go to school, so therefore I should pay it off.

We are the richest country in the world, and in the last 40 years, the economy has been structured in a way that intentionally forces wealth upward towards the 1%.

With this in mind, the LEAST we can demand is a free education. There is no excuse for the richest country in the world to not have free higher education.

Making college free does what, makes more educated people for things that we don't need educated people for? We have a problem right now with people trying to find jobs within their field would be even worse with free college.

Not true. We don't have a problem of people not able to find jobs in their fields. We have a lack of managers who don't know how to pay a proper wage. That along with a lack of stimulus that would get us near full employment (see my previous post for details on that one).

This idea that we have a skills mismatch for college grads, and that people are getting educated in things that are worthless, is NOT true. The big problem is that managers and CEOs are not paying the proper wage for college educated workers.

How do we know this??? Well the overall ratio of job openings to positions has risen from the trough of the recession but is still well below its pre-recession level. To see the point, it's worth looking at restaurant employment for comparison. The current ratio of job openings to employment in the restaurant and hotel sectors is 2.8 percent (it had been 3.5 percent in the summer months). This is slightly higher than the 2.6 average for the economy as a whole. Unless we think that it is especially hard to find someone with the skills needed to work in a restaurant or hotel, then there must be some other explanation for the rise in the job openings ratio. For example, employers may be taking advantage of the fact that there are large numbers of unemployed workers (thanks to the popping of the housing bubble and lack of a big enough stimulus from Obama) to be more picky about who they hire. The failure of wages to keep step with productivity growth would suggest that this is the case.

In other words, it's not the people are getting worthless degrees and we ended up with a skills mismatch. It's that people who run businesses (mainly medium-to-big business) aren't paying wages good enough to attract any college grad.

[Sota4Ever]

So you think that people are refusing to get jobs within their field because the pay is to low. These people are refusing to gain experience and get their foot in the door because the pay.. I don't buy it. The objective is to gain experience and build up your resume to possibly move up.

There are plenty of excuses to why college should not be free and hopefully it will never be.

[jomota]

You do realize that if you increase wages to what anyone feels is an acceptable level that prices will go up. That makes things more expensive and then workers need another raise for the higher prices and then...

[dbroncos78087]

You do realize that if you increase wages to what anyone feels is an acceptable level that prices will go up. That makes things more expensive and then workers need another raise for the higher prices and then...

I would concede to you that point if we hadn't seen prices continue to go up over the last 50 years while wages have (adjusting for inflation) dipped. How can you make the case that increasing wages will increase prices when we have seen empirical evidence of the exact opposite instance? Is there any movement in wages that won't result in prices going up?

[Jester4k0]

Macroeconomically I realize that the US policy has been to have perpetual inflation. As stated above, Dbronc makes a good point that real wages have deflated while costs have been driven up. Therefore, microeconomically I would like to see a level of controlled deflation. Therefore, I will take pay cuts, lose bennies, work more with less for my bosses, if the costs of goods that are supposedly driven up by higher employee wages, drop commensurate.

Everyone takes a 10% haircut including the owner class/government class then, in theory, my loaf of bread goes down by 10% adjustment or more. I know things don't work like this, because supply and demand come into play, but it would stand to reason if a company reduces pay/benefits, then their product should become cheaper in the same breath. Should be net zero change, in theory.

Unfortunately, the "savings" by keeping wages low, decimates consumers' spending power, reducing demand for the widget, inflates companies' inventories, forces management to make tough cuts, and then we start the process all over again.

If our macro policy is "controlled" perpetual inflation, then the wages should go up as well over the long term, not necessarily in one fell swoop. It would be a lagging deal. But, as I see it, cost cutting happens to the employee class, but the savings get gobbled up somewhere. Where, oh where, did these savings evaporate. Or did they get redistributed a bit? IDK

Essentially, a controlled period of deflation should be a corrective action back to equilibrium. Unless, there actually is not inflation that has occurred for that past, well, forever.