By PAUL KRUGMAN ¡°Structural¡± unemployment is a fake problem, which mainly serves as an excuse for not pursuing real solutions. http://community.nytimes.com/comments/www.nytimes.com/2010/09/27/opinion/27krugman.html?sort=oldest&offset=3
A Comment by 52. Old Curmudgeon Akron, OH September 27th, 2010 11:06 am
If Dr. Krugman is beginning to sound shrill about this oft-repeated point, he has reasons. First, he's right about the substance; demand is the problem. All of a sudden, a nation whose government and consumers lived on credit cards for thirty years wants to shed debt. So no one wants to buy. That's why there's a huge job deficit. And a big-enough stimulus could do double duty by repairing and improving our dilapidated infrastructure. It might even help start new industries.
But the second reason why Dr. Krugman sounds shrill has nothing to do with economics. So it's nothing an economist (even a Nobel Prize winner) can cure. That's the "political will" part.
If it were up to the so-called "blue" states, which produce the vast majority of the nation's GDP, we would have more stimulus in a heartbeat. But the "red" states have "equal suffrage" in the Senate (to use our Constitution's term), despite the fact that nearly all of them (except for Texas and Florida) have minuscule populations and make minuscule contributions to GDP. Our twenty-one smallest states can mount a filibuster, despite the fact that, all together, they account for less than 11% of our people and about 10.2% of GDP.
Furthermore, there is nothing anyone can do about it. Our Constitution (Article V) provides that "no State, without its Consent, shall be deprived of its equal Suffrage in the Senate." In other words, it is designed to let the few govern the many and the (economically) weak govern the strong. And it precludes anyone from changing this dismal arrangement, even by constitutional amendment, unless the small states concur.
When you add the fact that the GOP now uses the mere threat of a filibuster as a means to stop every Democratic initiative dead in its tracks, you begin to sense the source of Dr. Krugman's frustration.
So the problem is indeed structural. But the structural impediment is political, not economic. Our big industrial states provide the vast bulk of jobs and could employ the jobless easily with proper stimulus. But our Constitution has them roped and hog-tied. No other democracy---not Australia, Canada, England, France, Germany, Japan, India, New Zealand, South Korea or even Russia---has such a structural impediment to rational policy.
Aside from a miraculous epiphany on the part of voters and senators from places like South Carolina, there are no short-term solutions save massive economic pressure, secession or another civil war. In the long run, immigration into, development of, and demographic changes in the obstructive states might do the trick. But as the great economist John Maynard Keynes once said, in the long run we are all dead.
Welcome to the Banana Republic of America.