From: tcox@netcom.com (Thomas Cox)
Subject: Re: Economy of USA
Date: Tue, 01 Sep 92 00:44:07 GMT
Organization: Netcom - Online Communication Services (408 241-9760 guest)
Distribution: ca

asylvain@fritz.filenet.com (The Chipmunk) writes:
> me [tcox@netcom.com (Thomas Cox)]:
>: guido@island.COM (Guido Marx) writes:
>:> asylvain@fritz.filenet.com (The Chipmunk) writes:

>:>> However, there's one point on your side: the 8% only represents the
>:>> numbers of people who _apply_for_unemployment_.  Two things gets people
>:>> off the application process; one, they find a job, two, they give up.

>: If someone is not looking for a job, then they should not be counted.
>: That is because they are not having the same effect on the economy
>: that "real" unemployed people have -- reducing the pressure for wage
>: inflation. 

>This will require clarification.

Read on.  I have the impression that it's fairly basic.

>First, why not counted?  "Looking for a job" has nothing to do with
>"wage inflation," as it depends on which categories are looking.  12
>million bricklayers looking for work will no impact on the wage of an
>Ada programmer, and vice versa.

I believe you're wrong.  You can slice up job-seekers into categories --
bricklayers and Ada [shudder] programmers, but in that case you just
look at wage inflation in each slice.  The relationship is the same.  I
will sketch a general case here.  You may go apply it to different
portions of the job market if you wish.

And the relationship is clear (IMHO): as more people compete for the
same number of some type of job, the wage you must pay to fill that job
rises more and more slowly, or will [given enough job-seekers] drop.

_Wage inflation_ is the opposite: Instead of an oversupply of
job-seekers, there is an undersupply of them, and so you (as employer)
must outbid other employers for the few workers.

As employers pay more and more in wages, they must hike their prices,
and so prices begin creeping, or rushing, upward.

The '80s were marked by _real estate_ inflation, which tends to be less
ugly when you're in the middle of it (your house's value shoots up).
But it's only good for people who own real estate, and only good for as
long as the prices don't deflate.  Which is what's happening in New
England, and indeed around the world.

>Second, whether or not you count them depends on what you're measuring.
>Since we're measuring "the economy," one would think that being unemployed,
>whether or not actively looking, has some impact on spending habits.

>: It looks like the unemployment rate is rising at the same time as the
>: number of jobs is rising.  Yes, they're BOTH going up as of the last
>: few months, and total jobs have returned to 1990 levels.  Note that
>: losses in blue collar jobs (as manufacturing productivity increases)
>: have been matched by gains in white collar jobs.

>Well, that's some good news then.  But is this a definate dependable
>trend, or just a blip on an overall downslide?

If I knew, I'd charge money.  So would anyone.  Ask five experts and get
six opinions. ;-)

>My question is this: so what's your point?

_My_ point was that some of the talk of "we're in a depression" was
unjustifiable by any data, and that a claim of "we're in a scummy mild
little recovery" is at least maybe justifiable by some data.

>The Chipmunk.

Also, in this posting that you've just read, my additional point is that
some amount of unemployment is (a) inevitable and (b) economically
valuable. 

Cheers.
	-- Tom
-- 
Tom Cox      DoD #1776   '91 CB 750 Nighthawk   tcox@netcom.netcom.com
Yeah, I have a day job.  They don't believe me any more than you do.