Joanna's friend's view is pretty much the traditional view of unemployment in neoclassical economics. Labor markets, like other markets, are supposed to have an inherent tendency to clear, at which point, supply equilibrates with demand, so that everyone willing to work is employed. If people are not working then that's either due to their unwillingness to accept employment at the wages being offered in the market, or because interventions by the government and/or by non-governmental bodies like labor unions are preventing labor markets from equilibrating. Thus, from the standpoint of neoclassical economics, such things as minimum wage laws and labor unions are bad.
Now, Keynes pretty much blew this view of unemployment out of the water some seventy years ago, when he argued that unemployment rises during periods of falling effective demand, and that wage drops instead of enabling labor markets to clear, can instead, lead to reduced aggregate demand resulting in even more unemployment. In the past thirty years or so, however, the more traditional neoclassical view of unemployment came back into fashion among economists.
Jim F. http://independent.academid.edu/JimFarmelant
---------- Original Message ---------- From: Joanna <123hop at comcast.net> To: lbo-talk at lbo-talk.org Subject: Re: [lbo-talk] Jobless future? Date: Mon, 22 Feb 2010 21:45:20 -0800
I just had a letter from a friend who wrote that the reason people aren't getting jobs is because they're not willing to earn less. This is a guy with a job-for-life, and pension, and an attitude on top of that. Motherfucking asshole.
Joanna
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