Column: The road not taken

Abstract

With the eurozone in deep crisis and China slowing significantly, the June unemployment rate of 8.2% in the US reported last Friday indicates that the American economy is also in danger. The Federal Reserves massive quantitative easing for four years has not delivered adequately. The next days NYT headline states that Job Weakness Starts to Shape Election Tone. US President Barack Obama, whose jobs Bill got rejected by the Congress last October, will be looking hard for new ways to reduce unemployment. The solution, in my opinion, needs to be extricated and developed from the labour market history of the 1930s. It is very unorthodox. When the Great Depression hit from 1929 to 1932 the unemployment rate rose enormously from 3.2% to 24.1%. Over this same period, the manufacturing work-week fell a little, from 44.2 to 38.3 hours. The bulk of the drop in hours thus came from the fall in number of workers, and not from hours per worker. Obviously, the economic hardship during a downturn is invariably less if the drop in hours comes mainly from a drop in hours per worker, and not from more layoffs. Read more at: https://www.financialexpress.com/archive/column-the-road-not-taken/972316/