Saturday, July 4, 2009

The Other Unemployment: Capital

Many articles are being published regarding the 9.5% unemployment rate. That unemployment will worsen. That June unemployment came is at 473,000 more losing their job (+100,000 more than predicted). That many States have unemployment rates of +11% and that pockets of unemployment exist that are approaching 20%.

What about the other unemployment? Unemployment of Capital. This economic phenomena never gets much attention in the mainstream media.

Production is made up of human capital and Physical and Monetary Capital. With absolutely, positively no incentive being offered for Private Capital Formation or activation of existing Capital, the other component of production , human capital, sits idle.

Human Capital will continue to sit idle for the very fact that no stimulus has been sent the way of Private Capital Formation leading to Private Sector jobs. The fact that no incentive exists for Private Capital Formation is compounded by the specter of an Energy Tax via Cap and Trade as well as the expectation of general tax increases by Federal, State, and Local Government Bodies. Furthermore, the specter of over-regulation threatens profits at the margin even if Private Capital Formation is employed.

Romer, Goolsbee, and Jared "The King of Spin" Bernstein (the non-economist Economist) have painted themselves right into a corner.

Recall the un-read-but-we-voted-on-it-anyway, 6000 earmark, Social Engineering Stimulus Goofiness. Try painting from the corners toward the doorway this time around.

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