Thursday, June 23, 2011

On Unemployment and Calderón's Economic Policy

From Rogelio Ramírez de la O:
It's possible that with the rise in output toward the end of 2010 and in 2011, employment continues to recover. But the main portion of the recovery from the drop of 2009 has already happened, and in the future it will grow at more modest rates.

Given that, the ample figure of unemployment and underemployment that reached 26 percent of the population deemed economically active won't fall but gradually. And it won't drop much, because before the crisis it was high, which is to say, 22 percent.

This is a topic that shouldn't be forgotten when judging the results of the government in responding to the crisis that began in 2008. Its fiscal as well as monetary policy, as a governmental priority, bet on stability and not employment or economic growth.

Every political decision implies favoring some priorities and ignoring others, because it's not possible to cover every objective at once. That's why selecting one priority has costs. In particular, Congress must ask itself if the simplification from the government that it presents as its political economy is explicit regarding its effects on employment and if these are tolerable. Especially because even with the economic bounce of 2010, unemployment and underemployment continued to rise and it's not clear how they will fall.

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