Most Americans think inflation is bad for everyone while unemployment is bad only for the unemployed. In reality, the reverse is more the case – unemployment hurts us all and inflation hurts some but helps others. “Okun’s law” estimates that every 1% increase in the US unemployment rate reduces real output by 2%. That is, the pie we all have to eat shrinks by 2% when 1% of the labor force loses their jobs. Moreover, a study of the social effects of unemployment prepared for the Joint Economic Committee of Congress in 1976 – back when congress still cared about such things – estimated that a 1% increase in the unemployment rate led to, on average: 920 suicides, 648 homicides, 20,240 fatal hearts attacks or strokes, 495 death from liver cirrhosis, 4,227 admissions to mental hospitals, and 3,340 admissions to state prisons –each tragedy impacting a network of connected lives.
– Robin Hahnel, The ABC’s of Political Economy; A Modern Approach (2002)
An increasingly “progressive” family member -who entertains himself by reading micro and macro economic theory from left and right- read that aloud to me, and both of us had a chuckle at the glaring irony: by focusing so relentlessly on passing his health care initiative -while the nation focuses on jobs, and their scarcity- President Obama is increasing the strain on our healthcare system and the citizenry who depend upon it.
It’s a funny old world, isn’t it?
I am a little swamped with work, but please, discuss! We’ll file this under “Remaking America.”
Megan McArdle wonders what can be done about job-creation.
Glenn Reynolds starts to answer