Realist, not conformist analysis of the latest financial, business and political news

An At Least Partially Serious Question About Full Employment

A Richard Murphy

The question being when did the UK ever have full employment?

Back in January or thereabouts the employment to population ratio was the highest it has been since we started recording it. The unemployment rate was 3.9 % or summat, about what near all economists regard as the frictional rate – it takes time to be interviewed, hired, onboarded etc, meaning that there’s going to be some unemployment rate of people moving between jobs.

At which point Murphy told us there was still an awful lot of unemployment because not everyone had work that provided a decent income and living.

OK, his definition.

And the last time we had unemployment lower than that 3.9% was back in the 1960s/70s, when everyone was considerably poorer than they are now. Meaning that they didn’t have work that provided a decent income and living.

So it’s difficult to see that the UK – by he definitions being used of course – has ever had full employment. What makes Richard Murphy think that this time will be different? Other than, of course, that this is his idea?

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Spike
Spike
9 months ago

Between “full employment” and balancing the budget, shouldn’t gov’t limit its activity to things its tax revenue will cover? If so, gov’t might have to abandon subsidies and pursue goals like “full employment” by CEASING to do things that get in the way, such as dictating wages, hours, and work conditions to mollify the thin-skinned.

But Murphy is not conceding this; in fact, his Pinned Tweet says to “Pay for it with money creation”. Seems his “poll” has a right answer.

john77
john77
9 months ago

The only way to make sure that *everyone* has a job that provides a decent income and living is to abandon the market economy (where no employer is going to pay that wage to someone who cannot or will not work) and impose Stalinism where everyone is forced to have a job and the state dictates their pay (and their job). Murphy may like that – most of us would not. And it ends up with widespread falls in the standard of living because there is no incentive to work. Russia went from being an exporter of grain under the… Read more »

Spike
Spike
8 months ago
Reply to  john77

And such Stalinism ought to be compared to the free-market alternative, where generally, employees are anxious to do their best job and employers are anxious to retain their staff.

Bongo
Bongo
9 months ago

The Weimar Republic had full employment with a seriously imbalanced budget, but it didn’t seem to restrain the rise of nationalism and anti-semitism.
But if the budget is broadly balanced ( to within a couple of % allowing for inflation and people hiding money under the mattress and not collecting their gambling winnings, that sort of thing ) then it does reflect a government that gets out of the way of the job creators.

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