Bill Mitchell — Structural reform – code for smash the worker resistance

The ECB had another lavish annual talkfest in Portugal over the weekend just gone in the guise of their – Forum on Central Banking. Like all these EU-type gatherings there was plenty of fine food and wines. They even provided footagealong those lines. The President of the ECB Mario Draghi gave the opening speech – href=”http://www.ecb.europa.eu/press/key/date/2015/html/sp150522.en.html”>Structural reforms, inflation and monetary policy – on May 22, 2015. There was also talk about how “structural and cyclical policies … are heavily interdependent” but then a denial of the same. The message from the President was like a record stuck on the turntable – “to accelerate structural reforms in Europe … even in a weak demand environment”. Well here is my message – similarly like a stuck record – structural imbalances occur because of weak demand and the best time to assess structural policy is when you have first attained full employment by appropriate setting of fiscal deficits, not before. It is madness to deliberately constrain fiscal balances to levels that ensure high and entrenched unemployment and rising underemployment and then expect citizens to support microeconomic policies that further undermine their welfare and damage what job security they have. But that is the EU way and that is why the Eurozone is a massive basket-case failure.

Must-read.

Bill Mitchell – billy blog
Structural reform – code for smash the worker resistance
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Mark Thoma — What is driving changes in the job market?

 A recession causes a corresponding drop in demand for goods and services. In such a cyclical downturn, policymakers can help by replacing the lost demand. But if the changes are structural, such as when unemployment is due to skill mismatches, technological advances, or changes in what people purchase that require resources to be reallocated, policymakers are far less able to help. 

So an important question is whether the labor market is being hampered by demand-side cyclical problems, or supply-side structural issues....

The main takeaway is that contrary to speculation about technological change and part-time work, most of the variation is part-time employment appears to be cyclical rather than structural.

That's good news: it means policymakers, if they choose to, could use fiscal as well as monetary policy to bolster the recovery of the labor market.

Market Watch
What is driving changes in the job market?
Mark Thoma | Professor of Economics, University of Oregon Eugene

Mark Thoma on Paul Krugman 'Is There Any Point To Economic Analysis?'

Mark Thoma on Paul Krugman. Professor Thoma observes:

The arguments serve an ideological goal. Perhaps we shouldn't assume that the main motivation of many pundits and policymakers is economic rather than political?

The neoliberal position is that politics is economics and economics is laissez-faire. TINA period. Alternatives are ruled out.

Economist's View
'Is There Any Point To Economic Analysis?'
Mark Thoma