Re: What is Full Employment?

[paul davidson <pdavidson@xxxxxxx>]

At 11:43 AM 4/28/03 , you wrote:


> Warren Mosler wrote:
> > > You cannot be half Keynesian any more than half
> > > pragnant. Go all the way with full employment
> >
> > Of course that implies you can get anyone to agree on
> > the definition of full employment.
>
> It would be useful to have an agreed and precise definition of full
> employment.  Care to start the first volley, Warren, Paul?


As I said beforea precise definition is when anyone  willing and able
(qualified) to work at a specific job at the going market wage rate for
that job is able to find a job readily.

Statistically we should initially aim to maintain an aggregate unemployment
rate of 2.5 to 3.0 per cent.

During WWII, the unemployment rate fell as low as 1.9 per cent -- while
millions were removed from the civilian labor forces to the armed
services.  At  that point, the entrepreneurial system drew many others into
the civilian labor force -- e.g., housewives who at that point of time did
not often pursue employment -- and taught them any skills they needed to do
the job-- e.g., Rosie the Riveter was a famous song of the day. (In those
days an example of full employment was when a worker on the assembly line
who did not like his supervisor could quit and find a job across the street
the next day!)

In 1960, Gene Smolensky and I wrote an article entitled "The Popular appeal
of 5 % Unemployment" arguing that such a HIGH rate of unemployment was
politically popular (under an Eisenhower Administration) to fight inflation
(wage-price spiral in those days) but was economically unsound for it far
exceeded  the full employment goal.

Paul