The reason the USA is more economically important than Canada is that we have many more people doing work, producing goods and services, and earning incomes. The reason China is more economically important than Serbia is that China has many more people doing work, producing goods and services, and earning incomes. This is often glossed by observing that China has a “large population” but of course a large population of people sitting on the couch watching TV doesn’t help, they need to be doing something.
So it strikes me as fairly scandalous—and not just in narrow humanitarian terms—that so many Americans are sitting on the couch and scanning help wanted ads:
As the recovery continues, the economy will add roughly 2.5 million jobs per year over the 2011–2016 period, CBO estimates. However, even with significant increases in the number of jobs, a substantial reduction in the unemployment rate will take some time. CBO projects that the unemployment rate will gradually fall in the near term, to 9.2 percent in the fourth quarter of 2011, 8.2 percent in the fourth quarter of 2012, and 7.4 percent at the end of 2013. Only by 2016, in CBO’s forecast, does it reach 5.3 percent, close to the agency’s estimate of the natural rate of unemployment (the rate of unemployment arising from all sources except fluctuations in aggregate demand, which CBO now estimates to be 5.2 percent).
This is an absurd situation to be in. Does anyone seriously deny that there’s something these people could be doing that would be more useful than being unemployed? Now ask yourself this. Suppose you had more money. Would you buy more goods and services? I would. And if more people were buying more goods and services, then wouldn’t firms need to hire more people to provide those goods and services? I don’t see any way around it. So why not put some money into people’s hands so they can go out and buy more goods and services? Maybe you think we can’t do that because “the money has to come from somewhere.” But it doesn’t. It’s fiat currency, we can just make more. It’s true that if we print more and more money that at some point we’ll soak up all the idle people and it’ll start to spark inflation. And that would be an excellent time to stop trying doing it. But what’s stopping us today?
Ezra Klein says the administration’s moved past unemployment as an issue because there’s nothing more they can get out of congress. Do they know there are other macroeconomic stabilization tools at the government’s disposal? Do they think it’s a problem that those tools aren’t being used?