For over half a century, American men have been dropping out of the job market. As a percentage of the population, men have fallen. This is a long-term trend.
This change in men’s work patterns is partially caused by retirement. Retired people are out of the labor force. This is normal. So, the long decline is heavily influenced by an increased number of retired men. But the sharp declines during recessions are not. When the recession ends, younger men go back to work. Retired men do not.
Not this time.
Beginning in 2008, the ratio had the sharpest and longest decline. There has been no rebound.
This indicates that the U.S. economy has entered a new phase. It will be marked by unemployed men and men dropping out of the labor force.
When someone ceases looking for work, he is no longer counted as being in the labor force. When this happens, he is no longer officially counted as being unemployed. An unemployed person is defined as someone who has no job and who is looking for work. When he stops looking for work, he is no longer counted. So, the unemployment rate officially goes down.
The labor market is not recovering. The Obama stimulus of $787 billion has failed to create jobs. The Federal Reserve’s expansion of the monetary base from $900 million to $2.9 trillion has failed. Keynesianism has failed.
The #1 Keynesian spokesman among economists in America, Paul Krugman, keeps calling for more deficits (stimulus) and more Federal Reserve money creation. In short, he wants more of the same. In his May 3, 2012 column, he wrote:
Which brings us to the question of what it will take to end this depression we’re in.
Many pundits assert that the U.S. economy has big structural problems that will prevent any quick recovery. All the evidence, however, points to a simple lack of demand, which could and should be cured very quickly through a combination of fiscal and monetary stimulus.
Note that he calls this economy a depression. He does not regard it as “business as usual.”
The federal government is running deficits over $1 trillion a year. This is surely a Keynesian stimulus. The monetary base has tripled — the greatest increase in peacetime American history. This is surely a stimulus.
What will it take to meet Krugman’s standards? A federal bankruptcy and hyperinflation. Then he will blame Republicans.