The Great Fake Unemployment Debate
The great unemployment debate is, to put it ham-fistedly, lame. If it suggests anything, it's that econ needs to update it's very definition of unemployment. Here's what I mean by that.
Is it "structural" - or is it "cyclical"? Structural unemployment, ie, vacancies, but no skills, hence skills mismatches - or cyclical, just a downswing in business as usual that's preventing firms from hiring workers? Is it the workers, in other words, or the firms? It is, of course, neither: the great unemployment crisis is institutional.
The truth is that the bulk of today's companies are on their last legs. That's a straightforward inference from mounds of data on the accelerating rate of firm hazard (ie, how fast firms die).
Yet, tomorrow's haven't been created yet. Why not? Partly, because we've been propping up yesterday's with subsidies, hard bailouts, and soft de facto and de jure special privileges. Partly, because just as Wall St overinvested, so venture investors underinvested - we've been underinvesting in innovation for decades. And, of course, partly because we haven't even invested in the right organizational and legal vehicles for 21st century corporate activity.
Let me restate all that. The unemployment debate is terminally lame, because, as orthodox econ so often does, it assumes richer answers away to begin with. The assumption is that it must be either yesterday's firms that are unable to offer jobs today, or yesterday's workers that are unable to meet the requirements for today's jobs. A hard look at the economy suggests in no uncertain terms that exactly the obverse is the case. Unemployment today is the result of tomorrow's jobs never having been created yesterday. The jobs aren't there, in other words, because workers don't have the skills, or because firms aren't confident enough to employ workers - but because the roles, tasks, and positions of the 21st century were never created in the first place.
Think about it this way. We've underinvested severely, for example, in next-gen transportation and green construction. So the positions of "high-speed train network manager" or "renewable materials engineer" don't exist yet. Nor do the skills that make them up. Because - nor do the companies that could offer them. That's neither "structural" nor "cyclical" - it's institutional.
The unemplyment crisis just another facet of the bigger, more sweeping crisis: one of severe, structural misallocation. Of, ultimately, deep, perhaps fatal, institutional disrepair.