Five years and 11 months have now passed since the U.S. economy entered recession. Officially, that recession ended in the middle of 2009, but nobody would argue that we've had anything like a full recovery. Official unemployment remains high, and it would be much higher if so many people hadn't dropped out of the labor force. Long-term unemployment — the number of people who have been out of work for six months or more — is four times what it was before the recession.
These dry numbers translate into millions of human tragedies — homes lost, careers destroyed, young people who can't get their lives started. And many people have pleaded all along for policies that put job creation front and center. Their pleas have, however, been drowned out by the voices of conventional prudence. We can't spend more money on jobs, say these voices, because that would mean more debt. We can't even hire unemployed workers and put idle savings to work building roads, tunnels, schools. Never mind the short run, we have to think about the future!
The bitter irony, then, is that it turns out that by failing to address unemployment, we have, in fact, been sacrificing the future, too. What passes these days for sound policy is in fact a form of economic self-mutilation, which will cripple America for many years to come. Or so say researchers from the Federal Reserve, and I'm sorry to say that I believe them.
I'm actually writing this from the big research conference held each year by the International Monetary Fund. The theme of this year's shindig is the causes and consequences of economic crises, and the presentations range in subject from the good (Latin America's surprising stability in recent years) to the bad (the ongoing crisis in Europe). It's pretty clear, however, that the blockbuster paper of the conference will be one that focuses on the truly ugly: the evidence that by tolerating high unemployment we have inflicted huge damage on our long-run prospects.