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Output gaps and unemployment.

by on July 23, 2013

If you were an owner of a business and your accountants told you that millions of your employees and a percentage of your factories were sitting around doing nothing and that idle capacity is costing your business about $900 billion a year, would you fire the people running your business? Hopefully you answer yes.

Most business owners try to find more customers, and attract more customers.  They would never try to reduce their customer base, and that is exactly what the government does when they tax or reduce spending.  One side of the political aisle wants to reduce spending, which causes higher unemployment, and the other side wants to increase taxes (forced health care purchases), which will also increase unemployment (outside of the health care sector).  Both sides have it wrong, we should be reducing taxes, by eliminating FICA and increasing spending, via a jobs bill and/or single payer health care.  This is how unemployment is reduced and how to allow the private sector to run at full steam.

“If the government can land on the moon, it can create a job.”  Bill Mitchell

The job guarantee would be used as a transitional program for those who can’t get rehired by the private sector.  Unemployment insurance is a program that actually hurts the unemployed by making them less employable, if they are using unemployment for too long.  Thus the JG can be used to keep employ-ability higher and also improve this countries infrastructure, while giving more people the skills to be rehired.

List of jobs that could be created:

Elderly Transport
Pipe Repair
School Lunch Delivery
Replanting Trees
Graffiti Removal
Erosion and Flood Control
Personal Care/Assistant for elderly
Housing Maintenance
Business Maintenance
Storm Cellars in Tornado Alley
Bury Power Lines
Bridge Repair
Road Maintenance
High Speed Rail
VA Backing
Solar Power for every willing homeowner

“Unemployment is the result of the government not spending enough to cover your tax bill and propensity to save” Warren Mosler.

By not having full employment the government is causing lost output and lost production to occur:

Link to output clock: $4.5 Trillion and rising

The above clock only measures lost output since the start of the 2008 recession.  My guess is that it would dwarf the far less important measurement of government debt if we measured total lost output since this countries creation.

Our politicians are far too focused on measurements with little meaning (deficit reduction and outstanding debt), and far too ignorant of real economic measurements such as lost output and unemployment.


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  1. Alfonse Bartlette permalink

    Ahh, the boom was sustainable!

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  1. Output gaps and unemployment « Political Blok
  2. Why My Vote is for Hilary | Heretical Druthers

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