In fact "free market" and "structural unemployment" should be disallowed from serious discussions. We know (to our huge cost) that the free market isn't free. It's anti-competition, it's anti-consumer. It's only free in the sense that its movers and shakers get away with shocking behaviors and are rewarded by low to no taxes. They are largely responsible for the giant sucking sound that's taking genuine freedom -- economic and political -- away from America.
Structural unemployment is one of those phrases that has a history. James Surowiecki looks at its past.
It seems to me that if you tell a guy he's laid off but we'll climb out of this recession "eventually" -- well, that's bad enough but at least there's hope. But if you tell him he's laid off and will never be needed again because the whole system is changing, that's the road to suicide (though you could call it murder). Best not to use that phrase "structural unemployment" unless you know it to be true and unless you have a solution for what it does to the formerly employed and to our society.
Surowiecki writes that "at times when everyone is cautious about spending, companies are slow to expand capacity and take on more workers. But another, more skeptical account has emerged, which argues that a big part of the problem is a mismatch between the jobs that are available and the skills that people have."
According to this view, many of the jobs that existed before the recession (in home building, for example) are gone for good, and the people who held those jobs don’t have the skills needed to work in other fields. A big chunk of current unemployment, the argument goes, is therefore structural, not cyclical: resurgent demand won’t make it go away.
Though this may sound like an academic argument, its consequences are all too real. If the problem is a lack of demand, policies that boost demand—fiscal stimulus, aggressive monetary policy—will help. But if unemployment is mainly structural there’s little we can do about it: we just need to wait for the market to sort things out, which is going to take a while.
Get that? Wait for the market (that den of heedless oligarchs) to tell us when it will be convenient and profitable for them to let us have our jobs back. The rest of us swallow this stuff because a) we're suckers, and b) we have a long puritan heritage which tells us that if things have been good, we need to be punished by going through a bad time.
The structural argument sounds plausible: it fits our sense that there’s a price to be paid for the excesses of the past decade; that the U.S. economy was profoundly out of whack before the recession hit; and that we need major changes in the kind of work people do. But there’s surprisingly little evidence for it. If the problems with the job market really were structural, you’d expect job losses to be heavily concentrated in a few industries, the ones that are disappearing as a result of the bursting of the bubble. And if there were industries that were having trouble finding enough qualified workers, you’d expect them to have lots of job vacancies, and to be paying their existing workers more and working them longer hours.
As it happens, you don’t see any of those things.
So cheer up. The recession is over, technically, and there are signs now that it may really be over soon.
Maybe this time, when we get our jobs and our prosperity back, we'll do something about that "free market" and throw out the ogres whose greed and lack of scruples created the recession. We'll tell them it's just structural: they're no longer welcome inside our new and healthier market structure. And we'll celebrate by toppling the Ronald Reagan statue and putting up an American flag in its place.
