Well, let’s consider, say, electrical generation plants that convert coal into electricity, in an isolated country. It is absolutely normal and there’s nothing whatsoever mysterious that some fraction of the generating capacity would generally go unused. It’s when you start abstracting out the generation capacity as a “good” traded on the market, that it becomes mysterious why it would be “unsold”.
If you look at jobs, we have extremely severe discrimination based on origin (needs of citizens absolutely trump in almost all circumstances the needs of foreigners) on top of intrinsically very high cost of moving around or learning a foreign language, or learning a different skill, and regions are thus largely isolated. The labour is essentially a non moveable resource. If you have farmers struck in Antarctica, they will never be able to compete with farmers somewhere less hostile to farming, and they’ll be unemployed and actively prevented from working anywhere else (because that sounds like it might drop the wages of the workers in those other regions). And they will be unable to price-cut anyone, because the fertilizer, fuel, and so on still costs the same for these guys, and their produce will cost more than anyone else’s produce.
It is absolutely normal and there’s nothing whatsoever mysterious that some fraction of the generating capacity would generally go unused.
Lets run with that and see how it would apply to unemployment.
Generating capacity is a very general term covering a range of different specific things. Is it a coal-burning baseload plant? A natural gas burning peaker plant? A nuclear plant? A solar plant? One could easily imagine shutting down the coal plant if a nuclear plant is meeting all demand at a price below the cost it would take to buy coal for the coal-burning plant. Then we have a plant which WAS economically useful but IS no longer. We have a plant which requires other inputs, while competing plants are able to produce market-clearing supplies at prices less than the cost of those additional input.
Applying this to people we hypothesize:
People are a general category made up of a bunch of specific categories. There are engineers, doctors, lawyers, dancers, and sex workers. There are the “unskilled,” people who do not qualify for any of the categories that take years to enter, and can only take jobs where they can be trained on the job, i.e. very low skilled jobs. And indeed, when we look at unemployment we see its presence among the low skilled, but not among the high skilled. And could it be that the unskilled require other economic inputs to make them produce, and those other economic inputs might cost more than the current market rate for the fruits of the unskilled labor? Well, the unskilled require to be managed and trained, and for many productive jobs they require capital investments. Managing the unskilled to produce might be tricky enough that the rate to hire managers might be higher than the output of the unskilled. This seems to be the case in the current market. The most unemployed are the most unemployable, poorly- or un-educated youth are the most unemployed.
Well, let’s consider, say, electrical generation plants that convert coal into electricity, in an isolated country. It is absolutely normal and there’s nothing whatsoever mysterious that some fraction of the generating capacity would generally go unused. It’s when you start abstracting out the generation capacity as a “good” traded on the market, that it becomes mysterious why it would be “unsold”.
If you look at jobs, we have extremely severe discrimination based on origin (needs of citizens absolutely trump in almost all circumstances the needs of foreigners) on top of intrinsically very high cost of moving around or learning a foreign language, or learning a different skill, and regions are thus largely isolated. The labour is essentially a non moveable resource. If you have farmers struck in Antarctica, they will never be able to compete with farmers somewhere less hostile to farming, and they’ll be unemployed and actively prevented from working anywhere else (because that sounds like it might drop the wages of the workers in those other regions). And they will be unable to price-cut anyone, because the fertilizer, fuel, and so on still costs the same for these guys, and their produce will cost more than anyone else’s produce.
Lets run with that and see how it would apply to unemployment.
Generating capacity is a very general term covering a range of different specific things. Is it a coal-burning baseload plant? A natural gas burning peaker plant? A nuclear plant? A solar plant? One could easily imagine shutting down the coal plant if a nuclear plant is meeting all demand at a price below the cost it would take to buy coal for the coal-burning plant. Then we have a plant which WAS economically useful but IS no longer. We have a plant which requires other inputs, while competing plants are able to produce market-clearing supplies at prices less than the cost of those additional input.
Applying this to people we hypothesize: People are a general category made up of a bunch of specific categories. There are engineers, doctors, lawyers, dancers, and sex workers. There are the “unskilled,” people who do not qualify for any of the categories that take years to enter, and can only take jobs where they can be trained on the job, i.e. very low skilled jobs. And indeed, when we look at unemployment we see its presence among the low skilled, but not among the high skilled. And could it be that the unskilled require other economic inputs to make them produce, and those other economic inputs might cost more than the current market rate for the fruits of the unskilled labor? Well, the unskilled require to be managed and trained, and for many productive jobs they require capital investments. Managing the unskilled to produce might be tricky enough that the rate to hire managers might be higher than the output of the unskilled. This seems to be the case in the current market. The most unemployed are the most unemployable, poorly- or un-educated youth are the most unemployed.