Letter in National Post, August 8, 2018

Re:  Expect job market moderation in the months ahead, internal memo tells Morneau, Andy Blatchford, Aug 1, 2018





Today's unemployment rate of 5.8% may be a a four-decade low, but a higher unemployment rate coincides with the rise of neo-liberalism in the 1980s. Unemployment after WWII until the mid-1950s averaged less than 3%, and had dropped to 1.4% during WWII itself. However, business and financial elites are happy to erase history, and to normalize higher rates because for them a slightly recessed economy delivers numerous benefits. 



Higher unemployment means less pressure on wages that reduce the profit share.  It also means less inflation that erodes accumulated wealth.  And if the workforce is induced to borrow to maintain lifestyles, not only is another stream of financial income created, but the debt burden keeps workers even more obedient, fearful of losing their jobs.



Through its fiscal and monetary settings, the federal government always chooses the level of unemployment.  Unfortunately the current choices benefit those at the top and sacrifice those at the bottom. 







Footnotes:

1. A note on Canadian unemployment since 1921

http://www.statcan.gc.ca/pub/75-001-x/1992003/87-eng.pdf

"From 1927 to 1929, and again during and after the Second World War, unemployment rates dropped to 3% or less......"

 

2. The Deficit: Hysteria and the Current Crisis

http://haroldchorneyeconomist.com/2011/10/11/the-deficithysteria-and-the-current-crisis/

"Further, in order to reduce the rate of unemployment and eventually the deficit in the longer term it is necessary to greatly increase the gap between government expenditure and revenues.

This is clearly what happened during World War II when the deficit rose from less than 1 percent of the GNE in 1939 to 21.7 percent of the GNE in 1944.  The unemployment rate fell from 11.4 percent to 1.4 percent during the same period."

3. You know who likes lackluster economic growth? The rich.  Jeff Spross

http://www.theweek.com/articles/580975/know-who-likes-lackluster-economic-growth-rich

"Elites obviously don't want to completely tank the economy. But it certainly works for them if it stays modestly stagnant, maximizing the growth of the pie while minimizing worker bargaining power."

 

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Modern Monetary Theory in Canada

http://mmtincanada.jimdo.com/