No, no, no, no, no.


I do wish that these various think tanks on the lefty side of the street would just try and keep up with even the basics of the (few) true things that other lefties have managed to devise.

A study by the Centre for Regional Economic Research said it counterproductive to try to crackdown on the middle-aged jobless when unemployment was rising. Instead they should be left on benefits in order to concentrate on the young unemployed who had more chance of finding long term work.

No, absolutely not and the person who pointed this out was the impeccably left liberal M'Lord Layard.

As Milton Friedman pointed out the Phillips Curve (that there's a trade off between the inflation and unemployment rates) doesn't really work. For we might think that we can just move along the curve and trade higher inflation for lower unemployment: but once inflationary expectations get built in this no longer works. What Layard went on to point out though is that it is still possible to shift the curve.

Those people who are on the dole are trying to get jobs (no, stop sniggering at the back there, of course they are). In trying to get jobs, in being part of the potential labour force even if they're not actively in the labour force they produce a downward pressure on wages. If there's five people knocking on the door for every available job then wage rises aren't going to happen, are they? And yes, wage rises do have at least something to do with inflation.

However, the long term unemployed (in Layard's work) or here those shuffled into incapacity benefit don't produce that downward pressure on wage settlements. For they're not trying to get jobs and thus aren't even potentially part of the labour force. They're still there of course, rotting on the fringes of society, but we're not even getting the constraint of inflation out of their misery. If we insist that they at least attempt to compete for jobs then some (however few) will of course get some but we'll also have lower wage rises: and we all know what lower wage rises mean, don't we? Yes, labour is more affordable in relation to its production and other things being equal we'll have both more people employed and a lower rate of inflation for that level of unemployment. For that reserve army of the unemployed is putting pressure on wages rather than simply being shunted into the byway of societal obsolescence.

This is all quite apart from the ghastliness of turning to someone in middle age and proclaiming their life over: "there's nothing productive you can do you know". It's about making sure that we at least get something from those unemployed, if only a constraint on wages which will make a rise in employment more likely.