Your youth unemployment editorial (18 September) sees the crisis clearly, but reaches for the wrong tools. Placements, apprenticeships and work coaches cannot conjure jobs that do not exist. We need macro solutions to macro problems. Youth unemployment is not a crisis of skills or geography. It is insufficient government deficit spending. There is not enough money circulating to employ everyone who wants to work and that is a policy choice, not an accident.
O..kay….
Macroeconomists divide the economy into three sectors: government, households and businesses, and the rest of the world.
That’s four sectors, isn’t it? I mean, I’m not too good at maths but…
One sector’s spending is another sector’s income. Put simply, government spending is income for the non-government sectors.
With the UK running a persistent current account deficit, money flows continuously abroad.
I hesitate to encroach on Tim’s territory, but this doesn’t sound right even to me…
Indeed, unemployment has long been used deliberately as an inflation management tool. As the US economist Stephanie Kelton notes, orthodox economic policy assumes that a certain amount of unemployment is necessary.
So what should Labour do? Not pay employers £3,000 to hire someone that the market won’t touch (an admission that demand is absent), but become the employer directly. A job guarantee, publicly funded and locally administered, would offer anyone a job at a living wage doing socially useful work.
Who decides what constitutes ‘socially useful’ work?
It is not welfare. It is work.
Simon Ripton Co-founder, Resilient Economy CIC
But not all their readers are insane:
It doesn’t take a graduate qualification in economics to see that Rachel Reeves’s increase in employers’ national insurance contributions has reduced their ability to take on new people. She has also created a timebomb – as, by reducing the number of new people getting jobs, she has also reduced the number of people able to start paying into pensions.
Susan West Quorn, Leicestershire
What pensions? They won’t be worth claiming if Bodybags isn’t kicked out of No 10!
