Econ Commentary 3

The economic concepts raised in this article are:

• Demand-deficit Unemployment: Often called Cyclical Unemployment, is when the economy goes into a downturn where it has a period of slower growth. This usually means that producers cut back on labor because aggregate demand starts to fall.
• Structural Unemployment: Occurs when there is a permanent fall in the demand for a particular type of labor. This is probably the worst kind of unemployment because the people who just lost their jobs lack the proficiency to move on to the newly created ones.
• Labor Market: Includes all the demand for labor (construction, teaching, etc.) and all the workers in an economy willing to work at an average wage rate. Also called aggregate demand and aggregate supply.

The article talks about these concepts in the following ways:

• Cyclical Unemployment: This is basically what the article is about. It labels these times as being a recession which is when the economy is experiencing negative growth and where jobs are being lost because the demand for various services has gone way down.
• Structural Unemployment: The article talks about Spain and Ireland having heavy jobs losses because they invested heavily in construction projects (building fancy hotels and expensive apartments). When people don’t have the money to afford to stay in these buildings it creates a huge unemployment for the workers that are building them.
• Labor Market: The article mainly focuses on aggregate demand for labor and how it has dropped. This means that there’s all around less work and more unemployed people. It has come about like this because people have less money and are spend less so companies have less profit that they can use to hire and maintain workers and their salaries.

        This article is very complete; all of its statements are back up with facts and dates. It doesn’t just focus all of its information on the US but includes many other countries that have been affected by this economic downturn and are facing unemployment issues of their own.  It’s written by The Economist which is a reliable source of information on the many parts of the world economy. I do wish it could have provided where it got its sources though, there aren’t any links or citations to find out where they got their facts. But it’s still and overall good article, I don’t see any bias towards any specific economies as it lists facts on many different countries.

        If I were to make a policy based on the information and strategies given in this article I would invest money in infrastructure projects so many people would become employed. This would increase the amount of money people have in their pockets which would imply more spending, increasing aggregate demand. That would get money flowing to normal businesses which would now have the ability to hire more people. Along with that plan I would also want to encourage companies to shorten the worker week for their employees rather than firing them. This would do about the same thing as the plan mentioned beforehand.