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The economics of unemployment: a comparative analysis of Britain and the United States.

The Economics of Unemployment: A Comparative Analysis of Britain and the United States.

The main theme of this book is that unemployment is mainly a consequence of inadequate demand, the only cure therefore being stimulation of aggregate demand. Through this work, James J. Hughes and Richard Perlman attempt to spark renewed interest in the subject, which they feel has been given short shrift in the two countries studied.

The reader is asked to accept at face value the premise that demand is indeed inadequate. Many, however, will find that a difficult idea to accept. In the United States, for example, we have the following phenomena; consumer debt per capita continues to break records; ditto government spending; the dollar is too strong for its own good, as spending on foreign goods skyrockets. In addition, the economy has performed remarkably well in employing the legions of baby-boomers, and their spouses. Indeed, the proportion of the population which is in the labor force has continually been increasing. If demand needs to be expanded, just where will it come from? Unfortunately, this question is not addressed by the authors.

It should by now surprise no one that the authors are of the Keynesian persuasion, a gutsy proposition these days. They feel that ". . . there needs to be a renewed attempt to develop a spirit of international Keynesianism . . ." And they come to bat for the beleaguered Phillips curve.

The authors of The Economics of Unemployment provide an excellent consolidation of recent research, presented in their theoretical frameworks. Opposing viewpoints are aired. There are separate chapters on unemployment statistics, unemployment categories, macroeconomic issues, relationship with inflation, effect of minimum wage legislation, unemployment insurance, experience since World War II, high-incidence population groups, costs, and the authors' prescription. The book suffers from a paucity of punctuation, which makes the going rough in some places. Also evident is the authors' penchant for the use of both tautology and understatement.

The reader will find The Economics of Unemployment heavier with polemic and politics than the title would indicate. The current

U.S. and UK administrations are accused of ". . . creating unemployment to dampen down wage inflation . . .," for example. to a large extent, the book is a call for the revival of Keynesianism, which leads one to question the objectivity of the analysis.

The book concludes by advocating an expanded scope for the federal Government. The author's program features expansionary demand policies, together with a flexible incomes policy and an active manpower policy. No evidence or argument is presented to support central government's increased role in economic decisionmaking. Apparently, the authors assume that the reader shares their distrust of free markets.
COPYRIGHT 1986 U.S. Bureau of Labor Statistics
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1986 Gale, Cengage Learning. All rights reserved.

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Author:Weinert, Michael
Publication:Monthly Labor Review
Article Type:Book Review
Date:Jul 1, 1986
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