Thursday, April 17, 2014

George Osborne Provides The Reason For High Unemployment

The Chancellor of the conservative government in the UK, speaking at the conservative American Enterprise Institute, offered his explanation for high unemployment.  His explanation is fairly consistent with those popular with conservatives in the US.  The basic argument is that the economy has shifted in the direction of high technology and there is a shortage of skills.  The solution to this problem is better education and training.

Unfortunately, President Obama tells a similar story.  His is a bit more nuanced.  He is promoting an underfunded training program as the solution for high unemployment.  However, he also places some blame on businesses that are hoarding cash instead of investing in growth.

Focusing on education as the solution to high unemployment is popular with governments because it makes sense to many voters, and it enables them to avoid the real problems in their economies.  The only exceptions to this rule is when governments offer tax incentives to businesses in the hope that the tax incentives will stimulate investment.

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