the gini coefficient where green is better and red is worse
Everywhere one looks in US main stream media, predictions of unemployment eventually rising to 20% are often mentioned. I can say that I've never seen 20% unemployment on American soil. Such a calamity would be a first for me, my generation, and my children. The stories of 25% unemployment that befell my grandparents' generation during the Great Depression are mere historical footnotes from my scholastic days of yore.
But I have also lived in foreign countries. I lived in Switzerland where I witnessed what 0.5% unemployment looks like. It was utopian. For the first time, I met professionally unemployed people. These are people who work for a minimal amount of time and then take full advantage of the unemployment laws. They would work for six months, get fired, and then receive government unemployment benefits which were 95% of last salary for up to 18 months. I'm sure the rigors of the law were more severe, but that was the general consensus of the crowd I moved in.
I also lived in Mexico. When I lived there, they had 35% unemployment and 90% annual inflation. They had a currency that devalued daily. I remember full well the chore of going to buy groceries once a week and having to stand outside while my Mexican wife went to purchase the supplies. I knew full well that my presence inside would double or triple the final cost. And already, each week saw a doubling of prices on almost all goods. I also remember very well when my boss told me that my promotion, the one I had been filling for two years unofficially because the company needed it but didn't have the wherewithal to place me there, was to go to a Mexican because it wouldn't look right to put a foreigner in that spot due to the high unemployment rate. He did, however, ask me to train the person because I was the only one who knew how to perform the job, even though I was essentially training my boss-to-be.
So I can talk about full employment and chronic unemployment from personal experience. I don't need to reference Harvard acting professors, or Oxnard intelligentsia emeriti. I have lived it and can speak to it. What we are living in the US is the first act of an unemployment crisis that will continue for at least 12 more months if not longer. Though it is almost impossible to predict what will take place when the US reaches the 20% plateau, it is possible to review known cases of huge unemployment and their effect on society. So let me start with full employment and work my way through the rates.
I can tell you that 0.5% unemployment is an amazing experience. To see employers begging for people is rare. Switzerland is a unique country in many respects and it's movements through the rigors of world economy are particular indeed. While I lived there I knew foreigners who married Swiss citizens in order to obtain work permits and were subsequently presented with a list from the government of jobs that most suited their abilities. "Pick a job, any job," was the task assigned to the foreigner.
It must also be mentioned that the disparity between the salaries of top CEOs and regular workers is much less than in the US. The Gini Coefficient which measures income disparity within a given country puts the US at number 44 with a rating of 45 out of 100. Wage disparity in the US has been growing over the past few decades as union strength is watered down and more emphasis is placed on perks and bonuses for only top management. In the same CIA study, Switzerland ranks 93 with a coefficient of 33.7.
Another important aspect of Swiss-style businesses is the way they treat their top executives. The sharing of UBS's losses as company wide bonuses is but one demonstration of the Swiss form of egalitarian distribution of good times and bad times. According to a Business Insider article, in January, 2009, "[Union Bank Swiss] (UBS) is getting medieval with its compensation for top managers, according to CNBC. The bank will give no bonuses this year, and future bonuses will be subject to a severe clawback. If the company reports a loss in any of three years following the bonus, the employees lose the whole." (sic)
But full employment doesn't necessarily mean that everyone employable has a job. Usually, anything below 4% is considered to be full employment. In other words, if 96 out of 100 employable people have full time employment, everyone's employed. Of course, the remaining 4 might have a beef with this idea, but as a general rule of thumb, if a country can keep 96 out of 100 employed at any given time, then the country is performing at an optimal level. Taxes and government programs can usually handle the 4 who are less fortunate. Some examples are people who are patently unemployable, others who are going through emotional times and still others who have skills that are deemed unnecessary in the region in which they seek employment.
Not long ago, the US was flirting with full employment. Throughout most of the Clinton and W. Bush years, the magic threshold was well within sight. But from a comfortable 3.9% unemployment in December, 2000, we have passed to 10.2% in October, 2009. The strain is palpable and every sector of the US economy has shown the effects in some way.
Yet the difference isn't really that much. If you look around at the US today, you will see the US of yesterday with but a few changes. There are more homeless, more empty stores and fewer shoppers, but the Hoovervilles of old have yet to manifest in the same numbers and the scenes of hundreds of unemployed jumping on boxcars and heading for greener pastures are nowhere in sight. The employment situation of today has not yet reached the levels of the Great Depression of yore.
Europe has been living with high numbers of unemployment for decades. Yet even though Europe's unemployment record is consistently higher than the US's, with some countries at double the rate, major unrest and strife as a result is nowhere in sight. At the same time, Europe has seen to it that these less fortunate citizens are taken care of and are not marginalized. In fact, Spain, with an unemployment rate of about 20%, shows few signs of major unrest nor antigovernment movements populated with the anger of the jobless. Clearly, even though 20% unemployment can be a major burden on any economy, it is by no means the guaranteed catalyst of political unrest that so many Americans pretend it to be today.
Even though the US is approaching these numbers, and may well achieve them within the next twelve months, historical, empirical data suggests that there will probably be little movement in the way of civil unrest or popular revolt as a direct result of this. Stated differently, the US government still has a lot of leeway in this regard before having to face a populace angry enough to overthrow them. Trust me, the US government is even more aware of these facts than we could ever be.