Quote:
Originally Posted by Emma21
This is what my friend texted.
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Your friend is not sufficiently competent to discuss such matters and is not very intelligent.
If your friend was sufficiently competent and had an IQ >75, your friend would be able to distinguish between work stoppage and job losses.
Recessions can have a single cause or multiple causes, and the causes may be systemic unemployment, Capital reallocation, Capital Flight, liquidity and a few other reasons.
For the period 1925 - 1950 you had seven recessions, 1925, 1928, 1930, 1935, 1937, 1946 and 1949.
The causes of the recessions were systemic unemployment (all of them), Capital reallocation (1925, 1928, 1937, 1946 and 1949) and liquidity (1930, 1935 and 1937).
You have unemployment, but it is not systemic and the cause of the unemployment is government-ordered shut-downs.
Those are temporary conditions.
Systemic unemployment occurs when your jobs ceases to exist or is supplanted by technology, and both of those were happening in the period prior to 1925 and continued through the 1950s.
There were many goods and services that ceased to exist, because no class of consumer needed or required those goods and services.
Wide-scaled introduction of electric technology permanently displaced 10s of 1,000s of workers.
You own a furniture company and you have 12 guys operating manual lathes. You buy 2 electric lathes that can do the work of 6 men, so you fire 10 guys.
Those 10 guys are systemically unemployed, because no one is using manual anything now. Everyone is using electric lathes, electric presses, electric planers, electric drill presses, electric grinders and such.
They will be unemployed for years on end, because the economy is growing fast enough to absorb them and because they'll need to be re-trained in a new field.
That is not what is happening now. People are unemployed only because government has shut down their jobs, or because government has ordered people to stay home.
Just as soon as those orders are lifted, everything will return to the way it was.
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