from Dean Baker's Blog: June 18, 2009
The Economist Gets the Arithmetic of Shorter Work Time Wrong The Economist warned readers of the error of trying to reduce unemployment by cutting work hours or other such methods, referring to the "lump of labor" fallacy -- the idea that there is a fix demand for labor to be spread around. While the Economist has an arguable case in normal times, it does not have an arguable case in a prolonged period of high unemployment like the current situation. In the current situation, the notion of a fixed demand for labor (absent some exogenous stimulus) is very much on the mark. We can have 100 million people 40 hours a week or we can have 111 million working 36 hours. Of course, the world is a bit more complicated than this, but the basic arithmetic does hold. Given that the unemployment rate is almost certain to keep rising for most of the rest of the year, and we are unlikely to see the unemployment rate cross 9.0 percent again for at least a year and a half, it would be nice if our politicians in Washington would start doing some arithmetic and think about this obvious way to deal with the unemployment problem. [Yes, in a recession or its aftermath, the effective demand for hours of labor-power is constrained by the demand for commodities (GDP), following the "sales constraint." So all else equal, a restriction of work-hours per person would increase the number of people hired. BTW, given the political balance of power, it is unlikely that this would occur with no cuts in weekly, monthly, or yearly pay being suffered by individuals. But it would spread the burden more evenly. I don't know whether or not this would be superior to the unemployment insurance system, which instead of spreading the joblessness burden, spreads money around. ] -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
