The Washington Post Wants You to Accept High Unemployment (and Social Security Cuts)
Saturday, 20 August 2011 08:53
The
Washington Post ran a major article today telling readers that they should just get used to high unemployment. The article presented the view of some economists, that the economy can only recover from a financial crisis after a prolonged period of economic weakness, as somehow reflecting a consensus opinion within the economics profession.
For example, the subhead told readers that while presidential candidates promise a quick recovery, "analysts say this post-recession comeback may take longer." Since this pessimistic view is far from the consensus within the profession, a real newspaper would have said "some analysts." Similarly the sentence, "but because of the severity of this recession, and the accompanying crises hitting banks and other lenders, economists believe that recovering from it will be more difficult," would have the phrase the phrase "some economists" in a serious newspaper. (The article does include some dissenters, but it implies that their views are an exception.)
The article then includes a set of charts that show a number of countries in which it took more than a decade for the unemployment rate to return to its pre-crisis level following a financial crisis. It is possible to tell a very different story using a different set of countries as is shown below.
Source: International Monetary FundAs can be seen the unemployment record of these five recent victims of financial crises is mixed. Four years after the crisis (which would be 2012 in the U.S. case) South Korea and Malaysia had unemployment rates that were above the pre-crisis level, although in both cases they were at or below 4.0 percent. Most people in the United States could probably live with this outcome. In the case of both Russia and Mexico the unemployment was below the pre-crisis level four years after the crisis. In Argentina the unemployment rate was 8 full percentage points below the pre-crisis level, although the country had already been in a severe recession prior to the onset of the financial crisis. ............(more)
The complete piece is at:
http://www.cepr.net/index.php/blogs/beat-the-press/the-washington-post-wants-you-to-accept-high-unemployment-and-social-security-cuts