Economic Ramblings, or First Draft

The foundational notion of full employment is ludicrous. Output potential is consistently growing due to improvements in technology and worker productivity. The concept of a boom time outstripping the full employment capabilities negates the notion of full employment. In pure Keynesian terms according to the short run aggregate supply one cannot produce over the long term aggregate supply curve. This makes no sense because the average supply produced cannot equal out to the LRAS curve if it cannot go past the LRAS curve at any point. In Friedman’s eyes we are always by mistake producing more than we should. In the opposite way, how does a LRAS curve exist that is smaller than the consistent SR average? In my view the immobile and vertical LRAS curve is a facade. The LR is extremely significant because it is the indicator of current economic conditions.

What are the assumptions integrated into the LRAS curve?The first is demand. The human capacity for greed would result in, prices and employment aside, unlimited demand, in theory. Price, of course, limits demand. However, long term prices of goods are relatively consistent in comparison to other goods, albeit one condition. Full employment matters to the LRAS curve by imposing the idea of a limit of possible production. From the nice word full (hazily defined as 4% unemployment) we get ideas such as low and high unemployment.

These limits give us the idea of a steady, inevitable long term supply of goods. These limits truly are based upon one thing: scarcity. So now that I mentioned the first word one learns in economics give me a half second to explain this. We have misconstrued what scarcity means. Scarcity does not mean we should increase profit on things such as energy until it runs out. Also, this does not mean that because of limited resources we should employ less people. Scarcity means that efficiency services will become the top job creating industry in the nearing future. I am not saying the same thing as “green jobs.” Those jobs are primarily rhetoric driven. How can making farmland produce plastic (those cute little plastic corn cups) be good for the environment? How can inputing fossil fuels and receiving less food energy be green? No, the efficiency will have to be different. In a word, the green jobs concept must cease to be a political ideological scheme and be efficient. People can be employed and fed without reducing the, gasp, supply of humanity (single child, abortion, forced use of contraceptives, reduction of elderly care, etc.) Instead people have to find ways to serve them.