I tuned into a rebroadcast of this morning’s the CBC’s the Current while cleaning the kitchen this evening which had an unusually good documentary on the problem of youth unemployment; specifically, the problem of university undergrads in finding jobs. As someone who suffered the 90s recession in spades (really you should see my work history I can sharpen your kitchen knives and the teeth on your chainsaw to a fine edge of efficiency*) I was very much in sympathy with these newly minted baccalaureates. Personally I pursued my education as an end in itself. If I had become a logger full time I would a least be able to attempt to make sense of something beyond the hill. That said I can totally understand why so many of those interviewed in the documentary felt let down: they did what they were told; they followed the path as laid out by parents, teachers and councillors; they volunteered; they studied hard and upon graduation the ambitious among them took jobs as servers.
One of the newly minted graduates arrived to a jobs fair with 40 resumes in hand, another paid a months rent to get a professionally designed CV worked-up. All for nigh.
In any event a very sobering documentary about the problems facing the educated unemployed youth. That was until they finally interviewed the economist Kevin Milligan from UBC. In true Victorian form, Milligan’s bottom line was that however this documentary might tempt you to think something can be done for these wayward educated unemployed forget about it: Denmark tried it in the eighties and it was a disaster.
Let us just forget about the fact the eighties and early nineties brought all kinds of ideas to the rocks of reality and let us similarly forget that Denmark is a small open economy (this will work in my favour below), what Milligan fails to do and what an economist ought to be able to do and suggest the form that public policy could take to ameliorate the situation. But that is the rub, the mainstream of the profession takes a do nothing position as the default optimal policy stance with respect to unemployment. As a nod to their objectivity I suppose I should say their glib nature is not particularly directed at the youth: if the 55+ cohort was suffering above average unemployment rates Milligan’s response would be FIF you too.
Ok so those are the preliminaries. What Milligan fails to mention is that instead of admitting defeat Denmark learned from its mistakes and doubled down and developed a different strategy to combat youth unemployment. This time they coupled income support with training and an integration of training with private sector demand. In short they revamped both their retraining regime and welfare state institutions to match incentives and crucially demand. So at the height of the down turn in 2009 the youth unemployment rate was fully 4% higher (12 vs 16) in Canada with an overall unemployment rate of 7.2 vs 8.6. What does that mean? It means with some policy effort that both the general rate of unemployment and the youth rate of unemployment can be lower. In short, instead of throwing cake, you can have your cake and eat it too. Serious economists would do well to concentrate their efforts on making the world better rather then resting with lame ideological proclivities to leave it as is; and those of us who pay their salaries would be well advised to demand the same.
Cake just don’t cut it any more.
*In the abstract the sharpest blade would have a length but no width. It would therefore be a line.