http://www.friesian.com/stats.htm
"Vedder and Gallaway's simple thesis, well substantiated, is that unemployment is simply to be correlated with the level of wages. "Full employment," to the extent that this means anything, and historically it seems to mean unemployment at less than 2%, is achieved by allowing wages to fall to market clearing levels. (The freer economies in Asia, like that of Hong Kong, where unemployment was 1.9% in 1994, reflect this.) Why this produces the unprecedented prosperity of the turn of the century, the 20's, and the 50's, rather than some Marxist impoverishment of the masses, is explained by Say's Law. The observed secular increase in unemployment, as well as the anomaly of unemployment in the Depression, is mostly due to the political manipulation of wages and labor costs, either seeking to deliberately drive up wages (through the minimum wage, special powers for labor unions, or "prevailing wage" rules for government contracts) or by imposing costs that do not appear in wages (social security taxes, workmen's compensation costs, health insurance, OSHA requirements, ADA requirements, "family leave" costs, etc.). Since it continues to be the political strategy in the United States and elsewhere to increase the compensation of labor through legally mandated wages and benefits, the secular increase in unemployment can be expected to continue, as it has in Western European countries, where the European Economic Union as of 1994, with far more socialized economies than in the United States, still averaged unemployment above 11%.
Although the U.S. economy was very slow coming out of the 1990 recession, and the election of both a Democratic Congress and President in 1992 threatened the renewal of irresponsible taxing, spending, and regulation, the damage done was relatively mild, and the election of a Republican Congress in 1994 helped forestall some of the most grandiose threats. The failure of many promised Republican reforms does not bode well for the future, but meanwhile the comparative advantage of the U.S. economy has told against the European community.
In 1997 France still suffered from double digit unemployment, with low to negative real growth, while in the Spring of 1997, U.S. unemployment actually dipped below 5% for the first time in more than 25 years. A conservative government in France failed in its efforts to reform the mediaeval labor situation, with the stranglehold of the unions on the economy, and the voters curiously responded to this in 1997 by returning to power the socialists, who can only be counted on to make things worse (promising a shorter work week, public service jobs, etc.). Indeed, early in 1998, the French government had accomplished basically nothing, and the long-term unemployed began to demonstrate for their promised free lunch -- as they have begun to do in Germany, with similar levels of unemployment, as well. Following the example of the French, the British and, now (199
, the Germans have returned the socialists to power, with the expectation, apparently, that more socialism will improve their economies.
The prospect for continued stagnation in Europe compares favorably in the United States, even though the growth of burdens on American business has only slowed, not stopped, and the so-called "balanced budget" deal for 1998 negotiated between the Republican Congress and President Clinton was a fraud that merely postponed the day of reckoning behind a smokescreen of optimistic projections and postponed promises, as usual, for real spending reductions. Prosperity, sadly, defers the need for reform, while recessions bring out much of the same kinds of New Deal, anti-capitalist rhetoric and bogus nostrums."
Over the weekend one of the fellows I saw on the news said that in the 1950's black unemployment was very low. It was his contention that welfare has massively increased black unemployment. But then, he was black.
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