[lit-ideas] Unemployment (Re: The war is distracting from the good news!)

  • From: Teemu Pyyluoma <teme17@xxxxxxxxx>
  • To: lit-ideas@xxxxxxxxxxxxx
  • Date: Tue, 25 May 2004 07:41:38 -0700 (PDT)

I tend to agree with Krugman, but as a report from
Carnegie Endowment convincingly argues, we have a
global unemployment problem resulting from lack of
demand. Due to free trade, global unemployment lead to
US unemployment. It is not reasonable, given the trade
deficit, to expect US to generate more demand. Euro
zone countries could do more, but are hampered by
conservative fiscal policy.

The report outlines specific policy solutions to
increase employment and thus demand globally:
- Doing away with agricultural subsidies in USA (and
EU) would generate agricultural jobs in developing
countries currently being destroyed by subsidized
imports from US and Europe.
- Labor Rights as part of trade agreements, which in
effect means that workers in developing countries will
have some money to spend, that is they generate
The report gives bilateral treaties with Jordan and
Cambhodia as positive example, OTOH: "Since 2002 the
United States has adopted a much less rigorous
approach to labor rights in trade agreements. U.S.
negotiators now require only that trading partners
enforce their existing labor laws, even if those laws
are so flawed that workers are denied basic rights.
For example, if a country's labor law allows employers
to fire workers who try to organize unions, the
current U.S. trade model requires only that those laws
be effectively enforced."
- International co-ordinated macroeconomic policy.
That is G8 getting their act together (like Chinese
allowing their currency to rise in value.) However,
"(i)nternational macroeconomic policy coordination is
not easy, and it is likely to be particularly
difficult in the current international atmosphere
where trust is under strain." Which is putting it very
politely, and while there is much blame to go around
for failures of trade talks, etc. Bush and company
deserves heaps of it for destroying couple decades of
work on establishing international co-operation in

The point: Bush's failures internationally are the
root cause of his domestic failures.

Helsinki, Finland

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