Monday, December 8, 2008

Fiddling while Rome burns


I have added Paul Krugman to my American blog listings this morning.

This is Paul Krugman the Princeton, Professor of Economics and International Affairs who is picking up his Nobel prize for economics this week.

Unlike his weekly New York Times, political opinion pieces his blog entitled The Conscience of a Liberal consists of shorter posts on economics and the economy.

Economics by definition is the branch of knowledge concerned with the production, consumption, and transfer of wealth, so I figure if you are going to listen to any of these economists it might as well be a liberal one that looks at the numbers and mathematical equations with some concern about workers and not just balance sheets.
Here’s Krugman’s Saturday post on November’s unemployment numbers released last week where everyone is in shock at the 500,000 plus jobs lost last month in the US (70,000 plus in Canada),

He brings up the point that the way we calculate the unemployment rate does not take into consideration the number of people who are no longer looking for work.

These are people who no longer qualify for unemployment insurance. After all not everybody gets a new job after the 26 weeks in the US or the 33 weeks in Canada. Therefore the unemployment rate is understated.

To illustrate this he reproduced the chart above from US Bureau of Labour Statistics showing the employment-population ratio, the ratio of employed Americans to the adult population.

Krugman’s take is that it’s been a weak economy all along and now it’s falling off a cliff.
Hey, I didn’t say it was going to be a fun read, but the point is that it has been bad for a longer period of time than our current political leaders will admit and it is going to get worse.

The same economic assessment applies to Canada, when you take away the inflated oil prices for the last two years and similar to Krugman’s focus in the US, our Canadian politicians need to start looking beyond the balance sheets of corporations when considering a bailout and start focussing on keeping Canadians employed and supporting them if they aren’t.
Bailing out the automotive industry, the forestry or which ever industry lines up next is about jobs, not corporate executive compensation and perks.

Expanding the capabilities of the BDC (Business Development Corporation) to provide domestic small business loans instead of just those dealing with export is about saving small Canadian businesses and lots of Canadian jobs.

Expanding the terms of unemployment insurance coverage beyond thirty three weeks is about supporting workers until we get through this mess.
But, unfortunately this rant is falling upon deaf ears as we are now entering the second phase of our last election and by all signs, starting the third and final phase upon the return of parliament in late January.

Talk about fiddling while Rome burns.

Meanwhile check out Krugman's blog if economics are of interest.



JAWL

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