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Supply and Demand (in that order)
The basic tools of supply and demand -- presented and extended in Chicago Price Theory -- help immensely to understand and predict everyday events in our world. These events relate to, among other things, macroeconomics, fiscal policy, health and labor markets, and industrial organization.
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About Me
- Casey B. Mulligan
- Chicago, IL, United States
3 comments:
By default, if the supply of labor decreases, the demand will increase. And since this market has consistently had an excess supply (for the last 10-15 years), then there will be NO decrease in the amount of jobs offered. Perhaps you have other concerns, but this slack MUST be eliminated if you are truly a proponent of efficient markets. And as the demand increases, so will the buyer's price offered to labor's sellers, i.e. wages will rise. If there is a downside to any of this, they do not in any way redound to the job seekers; at least not until the unemployment rate drops to the 4% range, and the involuntary labor participation rate decreased considerably from it's current level. We are quite a ways away from either of those occurrences. Though I don't believe my analysis can be challenged, I am interested to hear your refutation.
Casey, your last point in the video above is the key to reality, understanding the distinction between purchases and transfers. I am going to post this on my blog in the hope more people will view the clip.
I consider myself a compassionate person who wants to help other people suffering economic distress. However, transfer payments are charity and can never be honestly portrayed as investment in any sense of the word.
The honest political question is whether we are prepared to forgo work, job creation, and economic growth in exchange for increases in perpetual charity. Our President's response to the February 4, 2014 CBO report on changes in work expected from ACA subsidies is, "yes."
The honest policy tradeoff that serves the long term interest is jobs over charity with an understanding that a safety net is not the same thing as perpetual charity.
Your work helps us all see more clearly.
Thank-you, Pete Weldon
americanstance.org
Yes charity, what a heinous concept. It's interesting how a subsidy for health insurance is derided as a welfare entitlement devoid of any positive economic value, but a tax rebate for activities and businesses (energy, agriculture, carried interest, etc.) are noble and productive investments.
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