One Factor Behind the High U.S. Unemployment Rate

The following chart is the most recent sixty-five-nation Program for International Student Assessment (PISA), which shows the United States came in 15th in reading, 23rd in math and 31st in science.  This is one of the factors driving the high U.S. unemployment rate, much of which is structural, in our opinion.

We can argue about the lack of aggregate demand (AD) driving unemployment.  But how much AD over the past two decades was fake?   First a stock market bubble created fake and temporary wealth, which drove consumption and business investment via I.T spending.,  i.e., aggregate demand.  Then a massive housing bubble created fake and temporary wealth, which drove consumption via the housing ATM and investment via residential investment, i.e., aggregate demand.   Haven’t the economists and academics learned the lesson of history?

If the U.S. is going to pull out of its current funk it better focus on the structural forces driving the decline.  Does it want a nation of low paid retail clerks or engineers?

The government’s game plan?   More stimulus and quantitative easing in an attempt to generate more fake aggregate demand.   Until we become Greece, but without the deflation.

                          (click here if table is not observable)

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This entry was posted in Budget Deficit, Economics, Employment and tagged , , , . Bookmark the permalink.

One Response to One Factor Behind the High U.S. Unemployment Rate

  1. Pingback: Wednesday links: long financing | Abnormal Returns

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