In one of my earliest blog posts, I wrote about my thoughts on UI as mostly a practical matter. The way I look at it, if we are to have government with monopoly on money and empower the central bank to manage that monopoly as it sees fit there should be something that qualifies as a safety net. We simply cannot have unaccountable central bankers, in the absence of a nominal stability monetary constitution, experimenting on the public without any attempt at making them whole for the destruction wrought by bad monetary policy.
Just imagine the world like we had in 2009-10 with unemployment skyrocketing and persisting without end for no real reason except for the stubbornness of technocrats in ivory towers at the central bank who refuse to let go of a bad idea with nothing for the people impacted as charities are overwhelmed. That is not the kind of world I wish to live in, ever. Not only would it be a terrible tragedy, as it was in 1931, but it would be one in which our government bears ultimate responsibility. And so it is a social responsibility to see to it that bad monetary policy does not ever lead to heretofore self-sufficient taxpayers starving to death or having to drop their children off at orphanages because they cannot feed them.
If we cannot or do not wish to own our share of the responsibility for what happens to these people, we should not, and must not have government with a monopoly on money. There is far too much potential for destruction at the hands of unelected and unaccountable educated morons. It matters not the convenience of a single currency if it results in human calamity. It is not worth one life or resultant hordes of orphans to have the dollar as we know it when the same function can be facilitated by competing private currencies.
On the technical side, UI has been around since the Great Depression and only one other time was there a huge problem with wage stickiness – 2009-present. And nearly every deep recession has been caused by arrogance and stubbornness on the part of those at the central bank.
I’ve seen a chart like the I am posting (from Marcus Nunes’ blog – with government spending included)) below on several economics blog sites. It compares the recovery in employment for recent recessions, and the difference between this recession and the others is quite breathtaking. Currently, the average search time for employment is 46 weeks, up from 13 weeks five years ago. UI has been around in each recession and has been made elastic for at least three of the latest ones.
Looking at it makes it hard to buy that UI is a large enough problem to be worth discussing at this point in time. If I’m having a heart attack while being shot in the leg, I do not want to be treated for the gunshot wound before the heart attack once I make it the emergency room. Thus, bad monetary policy is the heart attack and, although I haven’t seen convincing evidence that UI causes a large enough inefficiency to matter, it can be regarded as the gunshot wound.
The bottom line is that the status quo near the turn of the last century, with all its warts, was far better than what we have now. Certainly it was much easier to live with than fight against, and for some reason the chaos that came with the Great Recession has brought out every Tom, Dick, and Harry political opportunist to dump over the apple cart of general political consensus that took decades to establish. It was, perhaps, the best balance between the power of corrupt politicians, commerce and the wellbeing of average folks that can be struck. It wasn’t perfect by any means, but likely the best that can be hoped for in a country as large and diverse as this.
I’d like to have it back. If that’s impossible and we can’t find some other relatively unimportant problem to argue about, then I would rather see the Fed go away instead – because that is the largest problem we have.