Re: Full Employment is what?

[Paul Davidson <pdavidson@xxxxxxx>]

At 03:40 PM 5/27/01 -0400, you wrote:
> Surely we can define full employment without
> recourse to such a dubious
> concept as "marginal utility" (or disutility). 


surely not! Unless one wants to be arbitrary  and appeal to some
arbitrary empirical rate of unemployment-- but what rate would that
be?

After all the unemployment rate is based on a small sample--- so that 2
standard deviation (at least it was at one time) 0.2.  Surely an
unemployment rate of 0.00 is  more than full employment. 
During the second world war the unemployment rate got down as low as 1.9
per cent.  

Now some people thought that when the economy got to 4.1%
unemployment  last year we were at full employment. What do you
think?

How about defining full employment as when a disgusted worker can spit in
the employer's eye and walk across the street and get as god a job? 
Is that related to the MARGINAL DISUTILITY  of working for the first
employer??

Warren Mosler's ELR would offer to employ all who were willing to work at
a government wage rate BELOW the market wage rate as full
employment?

But if one asks what would happen if the private sector syphoned off all
the skilled workers from the government ELR labor force and still had the
expectation of making more profits if they expanded further.  If
some private sector  employers raised the market wage rate relative
to the government wage (a sort of wage inflation)  in order to
pirate workers from other private sector entrepreneurs  -- would
that mean that we  were at more than full employment with ELR?

At least the Mosler ELR concept has as definition of full employment that
has  some meaning -- but the problem is that thre government wage
rate MUST be significantly lower than the private sector wage rate. 
Thus there may be many workers who would be willing to work at the market
wage rate but who could not find a job -- and still not be willing to
work at the government wage rate?  Is that what we mean by full
employment??

Paul


Paul

Paul Davidson

Editor, JOURNAL OF POST KEYNESIAN ECONOMICS

Holly Chair of Excellence in Political Economy

Economics Department - University of Tennessee

523 SMC

Knoxville, Tennessee 37996-0550

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