Contrasting views on unemployment and inequality

An OECD report about international unemployment released yesterday isn't overly optimistic

“The recent deterioriation in the economic outlook is very bad news for the labour market,” said OECD Secretary-General Angel Gurría, presenting the report in Paris. “It is imperative that governments use every possible means at their disposal to help jobseekers, especially young people, by removing barriers to job creation and investing in their education and skills. The young are at most risk of long-term damage to their careers and livelihoods. Targeting the most cost-effective policies is essential.”

I can't agree with much of the rest of their prescription - far too much weight on what governments should do. Calling for job subsidies, subsidised training investment, etc ignores the opportunity cost. That is every dollar the government spends can't be spent privately. (Actually for every dollar government spends probably $2 can't be spent privately.) But I can agree that it is paramount the young are not allowed to become permanently detached from the labour market. This then caught my eye:

The OECD also calls for action to tackle other labour market challenges such as rising inequality. The labour share of national income has fallen, often sharply, in most OECD countries in recent decades. This trend is closely related to the overall increase in inequality and is being driven, among other factors, by technological change and greater international economic integration. Enhanced investment in education and skills and better targeted tax and transfer programmes can help to ensure that the fruits of economic growth are more broadly shared, says the OECD.

Just a couple of days back I was reading a review which claimed inequality neither caused nor is aggravating the recession.

The Inequality Fetish

According to liberals, either the 2008 financial crisis and its attendant recession, or the sluggish recovery -- and maybe both -- can be attributed in large part to the high level of economic inequality in the United States. In this view, inequality is an economic malady on its own, even in times of prosperity, says Patrick Brennan, a William F. Buckley Fellow at the National Review Institute. This narrative has been latched onto by many in the field of economics, who then attach their names to the legitimacy of the narrative. The problem, however, is simply this: there is no real evidence that a nation's income inequality either dampens economic growth or worsens financial crises.

Now if you go back to the projection chart above you see that the US - regarded as a rich but unequal society - looks more promising than Europe.

Back to the OECD statists who seem superficially sensible but are actually at the core of the problem.

Individuals operate best under the condition of freedom. Communities and larger societies are only collections of individuals. The freer they are, the more productive and happy they will be.  Government does not represent or embody freedom. It can protect freedom to a degree but it can't create it. Just like it can't create jobs without destroying greater numbers of potential private sector jobs. Similarly government can't create equality without damaging a lot more in the process. Frankly, I don't know why they keep peddling this stuff.