Abstract
A synthesis of economic theory is presented, the solution to unemployment is restated, the intellectual need for a parliamentary inquiry is established, and as an example to such inquiry the performance of the Centraal Planbureau is evaluated.
Summary
In Holland, mass unemployment persists already for about twenty years, and will continue to do so for many years to come. Economists agree on the obvious solution, the reduction of labour costs. But for some reasons our decision making process doesn’t generate that decision. Policy measures that are taken, actually are troublesome, like the creation of a Centraal Bureau voor de Arbeidsvoorziening (CBA), or the recent ‘temporary and red tape’ ten percent subsidy on minimum wages (WLOM). The policymaking situation is analyzed in a more formal manner, to allow for more abstract reasoning. This requires a social welfare function, an income redistribution function, and a production function (for the unemployed cq. subsidized workers). In fact, we might attain the goals of high growth, price stability, full employment and a just income distribution, by means of monetary, fiscal and subsidy instruments. The conclusion however is that the present policy sclerosis derives from insufficient interest in and information about the form and location of those mentioned functions, and lack of interest In optimization itself; and this again may be caused by institutional weak spots. A review of the issue and of the policymaking process could be beneficial and actually logically needed. Among others, this would include a review of the Centraal Planbureau (CPB), that has not properly endogenised government behaviour in its models, projections and analyses. It is suggested that such review would be a task for parliament; and the logic for a so-called parlementaire enquete is compelling. Clarity on the issues is essential too for the European debate and our advice to the Eastern European countries.
*) The author is an econometrician at a government agency that has some involvement with the economic policy making process; the article expresses his own views only. This paper is adapted from a presentation at a parallel session at the conference in honour of prof. W. Albeda “The future of industrial relations in Europe” June 7-8 1990, Maastricht, The Netherlands
46. Final conclusion
Considering all these arguments, I think that it is best that economists advise their parliaments to investigate these matters. The television cameras should not focus on the debate between the parties, for a while, but on the didactic discourse between politicians and scientists.
Epilogue
I like to thank Guido den Broeder for publishing my earlier work (1992b). I want to thank my friends of the Samuel van Houten Genootschap, Eric van Stappershoef and Fred Kromhout, for my earlier publication “Trias Politica & Centraal Planbureau” (1994b). I thank Hans and Auke Hulst for their 1998 “Werkloosheid en armoede, de oplossing die werkt” (“Unemployment and poverty, the solution that works”), written with my assistance. Hans and I wrote “De ontketende kiezer” (“The voter unchained”) in 2003. All these books were good products and provided the encouragement of a work well in progress.
I thank Stephen Wolfram and the people at Wolfram Research Inc. (WRI) for creating Mathematica, a system for doing mathematics on the computer. Without this, this book would have looked quite different, or not have been there at all. I thank Leendert van Gastel and André Heck of the - now no longer existing foundation - Computer Algebra Nederland (CAN), and Dick Verkerk of the - very existent - CANdiensten for the opportunity to visit CAN at that time. I thank Asahi Noguchi (1993) and Silvio Levy for originally creating the Mathematica package on Applied General Equilibirum analysis, and for giving their permission to rework it and to include it in my own Economics Pack (1999), that this book uses.