Over the weekend, I ran across a short article at American.com, the site of The American Enterprise Institute. It was relevant, because my class had only recently discussed the types of unemployment and we're about to delve into policy impact on economic problems.
The piece, by Arnold Kling of George Mason University, contends that the fiscal policy approaches advocated by John Maynard Keynes may not be appropriate for the current economy - largely because the current system is structured differently.
That relates to what we've been talking about and what we will be talking about in class. Policies to address cyclical unemployment should be different from policies that affect structural unemployment. And most economists would agree that frictional unemployment is a good thing. The Great Depression was mostly a cyclical downturn but very large. There were some structural aspects. The current recession is what? Cyclical? Structural? How much of each? And even if we contend that it is largely cyclical, the structure of the current economy is different. The institutional aspects that set up various incentives are vastly different after 70 years. Consequently, stimulating manufacturing and agriculture will not have the effect it did in the 1930s, while stimulating services of various kinds will also be different.
What are your thoughts?