IMF Fears ‘Social Explosion’

Inquiring minds are looking to the Telegraph where America and Europe face the worst jobs crisis since the 1930s, and risk “an explosion of social unrest” unless they tread carefully:

“The labour market is in dire straits. The Great Recession has left behind a waste land of unemployment,” said Dominique Strauss-Kahn, the IMF’s chief, at an Oslo jobs summit with the International Labour Federation (ILO).

He said a double-dip recession remains unlikely but stressed that the world has not yet escaped a deeper social crisis. He called it a grave error to think the West was safe again after teetering so close to the abyss last year. “We are not safe,” he said.

From Mr. Strauss-Kahn lips directly to God’s ears! However, this seems to be wishful thinking.

With the number of jobs lost, the entire world is limping along:

A joint IMF-ILO report said 30m jobs had been lost since the crisis, three quarters in richer economies. Global unemployment has reached 210m. “The Great Recession has left gaping wounds. High and long-lasting unemployment represents a risk to the stability of existing democracies,” it said.

But notice this next little bias in statistics:

Olivier Blanchard, the IMF’s chief economist, said the percentage of workers laid off for long stints has been rising with each downturn for decades but the figures have surged this time.

“Long-term unemployment is alarmingly high: in the US, half the unemployed have been out of work for over six months, something we have not seen since the Great Depression,” he said.

What’s missing is an explanation of what is creating not only this ‘surge’, but the long-term trend. The difference each time has been that more and more statist, or socialistic, governmental systems have become law. If the population-at-large would like to shorten the duration of economic downturns, then governments must become less socialistic and more free-market oriented. If governments would just get out-the-way, the free market would explode.


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