The REAL Unemployment Rate: 100%!

Discussion in 'Economy' started by Toro, Sep 4, 2009.

  1. Toro
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    Toro Diamond Member

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    Ha, top that!

    Defining what the "real" rate of unemployment is nonsense.

    For all those trying to analogize the current economy to the Great Depression, here is the ratio of total employed to all people who are able to work.

    [​IMG]

    As you can see, the ratio is still higher today than it was at any time before 1980.

    Of course, the logical question one should ask is if one believes that this is similar to the Great Depression, was 1945 to 1980 also similar to the Great Depression? After all, fewer people were working relative to the population then. Isn't that the "real" rate of unemployment?
     
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  2. PLYMCO_PILGRIM
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    PLYMCO_PILGRIM Gold Member

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    Good Points.
     
  3. eagleseven
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    eagleseven Quod Erat Demonstrandum

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    Your chart does not support your argument because you fail to consider that, from 1940-2010, the number of women in the workforce has dramatically increased.

    Of course there was far fewer people working in the 1950s...because 1/2 of the "potential workforce" were housewives!

    If you control for this social change, however, this current 2009 drop is remarkable in its magnitude, compared to all previous recessions on the chart.
     
    Last edited: Sep 4, 2009
  4. Toro
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    Toro Diamond Member

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    Of course.

    That should clue you into how ridiculous the argument is that today is like the Great Depression. Today is nothing like the Great Depression because the proportion of the population that is generating the total amount wealth in the country is far higher than 80 years ago. Unless, of course, you believe people didn't have to eat or be clothed or sheltered back then.
     
  5. eagleseven
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    eagleseven Quod Erat Demonstrandum

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    In other words, we have more to lose.

    I think we would agree on at least this:

    1. The magnitude of this recession can be honestly compared with the Great Depression.

    2. The drop in our standard of living from this recession cannot honestly be compared with the Great Depression, because standard of living does not have a linear relationship with wealth.
     
    Last edited: Sep 4, 2009
  6. Toro
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    Toro Diamond Member

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    The magnitude of this recession thus far is closer to 1980-82, not 1930-32.

    GDP fell by 29% during the Great Depression. It has fallen 4% this time, and growth will likely resume this quarter.

    [​IMG]

    Here is the rate of job losses now versus then.

    [​IMG]

    Heck, the rate of job declines isn't even as great as in 1946!

    The conditions that got into this current mess are similar to the 1930s, but the response has been dramatically different.

    If it is to be like the Depression, there must be enormous shocks much greater than we have already seen coming down the road. That may be the case but so far, there is no evidence of it.
     
  7. eagleseven
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    eagleseven Quod Erat Demonstrandum

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    We've been through this before, so I'll just post alternative charts and leave it at that. I am glad that things are finally looking up, for a change.

    [​IMG]

    [​IMG]
     
  8. Toro
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    Toro Diamond Member

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    The industrial economy has been hammered but the industrial economy is far less of the economy than it was back then. The rest of the economy is down slightly.

    Also, agriculture was a bigger part of the economy in the 1920s than it was now, and farming was going through a brutal deflation starting after WWI.
     
  9. Vast LWC
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    Vast LWC <-Mohammed

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    Of course that drop did begin in early 2008...
     
  10. Vast LWC
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    Vast LWC <-Mohammed

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    Funny thread Toro. Good stuff.
     

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