So in December 1989 I easily envisaged a book that would explain both the solution to the current mass unemployment in OECD countries and the stagnation in policy making that causes it. It was my perception at that time that under normal conditions it might take ten years before this analysis would be accepted by ‘the relevant circles’, i.e. some years to write the book, some years to allow my fellow economists to digest it, and some years for the percolation into public and political discourse.
But life is not such that if a scientist decides that a book should be written, that his environment will let him do it. Instead, there was the pressing need to find a proper answer to the abuse inflicted on me, and to collect and safeguard the evidence of that abuse. Given the triad of Voice, Exit or Compliance (‘compliance’ since ‘loyalty’ is the precondition - and the Exit and Compliance options already used by my two colleages) I decided to Voice. I filed an appeal, and started writing a paper where I clearly stated my conclusion as a scientist that the return to full employment could be much speedier if Parliament would have an enquiry in the policy making process. Not quite to my surprise, I saw myself moved to a separate room in April 1990, and my paper was blocked from circulation. Only after some trouble it was allowed to appear as an internal note Colignatus (1990ac), but was further blocked from internal discussion and eventual publication. And I was finally fired in October 1991. And neither quite to my surprise, the courts allowed the directorate to do all this. The court deemed it an abuse of power that the directorate had moved me to a separate room, but the dismissal was deemed acceptable. The legal position of a scientist within the government is not that strong, the popular stories to the contrary.
These lines clarify that this book has not been written under the conditions that benefit science. I have been mauled by the bureaucracy, I have been on the run from one short temporary job to another, always job hunting, a longer while unemployed and in dire financial straights. But I was happy that I had kept my integrity, and it was a joy to occasionally read some economics again and to write a piece of the analysis. I published a collection in 1992 and another collection in 1994. I discovered Mathematica, January 1993, and there was hope again. The internet became accessible to me, and I was able to enter my papers in the Economics Working Papers Archive (EconWPA) at the Washington University in St. Louis.
One factor that caused a shift in the plan of the book was that I no longer had the resources of the CPB at my disposal. No database, no model, no easy access to the literature, no participation in professional discussion, and no professional position that would give easier access to the other research institutes and organisations like the OECD, World Bank or IMF. It was curious, to say the least, not to have access to the model that I had helped designing and that I in fact normally maintained and had sitting at my computer. My situation caused me to rethink methodology. What could I prove, if I did not have the means that I had grown accustomed to ? But by 1991 I had solved that problem and life became a bit more agreeable. But of course, it took longer, much longer, to work it all out.
Please be aware that it was not all misery and gloom. Over these 15 years I could go to 7 Dutch economics ‘research days’, visit 3 European Economic Association congresses and visit the occasional colleague and professor. There are also nice events that happen when you approach people with some novel ideas. I still enjoy the tour of Cambridge that Richard Layard gave to Assar Lindbeck and me; this was in 1991 when Layard, Nickell & Jackman (1991), “Unemployment”, had just appeared. Mr. Emile van Lennep, former head of the OECD, then retired as Minister of State but still at the Dutch Treasury, agreed to talk to me, and afterwards helped me to get an interview at the US Treasury in the Summer of 1993: but to no avail, the person that I talked to was too absorbed by the Clinton Health Plan, and said something like ‘Well, if Europe wants to adapt its constitution, be my guest’. It also appeared that the OECD did not have information on tax exemption in the member states. It was worth a try, and fun to do. I also have had great fun developing my “Economics Pack”, applications for Mathematica. It is good software, it brings me in contact with interesting economists all over the world, and of course it includes, amongst other projects, also some of the material of this book - which should do something for the spread of the ideas as well.
So now the book is here. It collects and combines the various articles written since 1989, and gives the final twists that come from integration.
Note that I as a researcher claim ‘novel results’, while I at the same time say, at the risk of an inconsistency, that ‘either governments already knew how to solve unemployment and then neglected human suffering, or they could find out how to do it and then at least failed in co-ordination’. ‘Novelty’ and ‘it was known’ are at risk of being inconsistent. I have removed this risk (a) by making the novel results available since 1990, which was 10 years ago at the first edition of this book in 2000 and now in 2005 is 15 years ago, (b) by gathering information about the abuse afflicted on myself, and making this information available to others, and (c) by showing that important parts of the whole analysis (without my contributions) were already known before. Cohen Stuart in 1889, and policy makers in the 1950s already knew that tax exemption should be at the subsistence level. One does not really need a CWIRU concept to see that. While this was known, my novel contribution then has become to analyse the ‘loss’ of this information as an institutional and Public Choice problem - or bad co-ordination between the Treasury and the Ministry of Labour. As a ‘novel contribution’ it has its limits - though in the 1980s it took me a decade of eliminating other causes before I discovered, and indeed with surprise, how dumb and insensitive these bureaucrats can be. But other novel insights have a more enduring character, and that is a relief.
Yes, some friends have advised not to tell all of this, others have advised to do so. I once entertained the thought to skip my Dutch examples, and concentrate on, say, the US. This might enhance the argument, since readers would be less inclined to think that I am partial to the argument. I hesitated doing that, since (a) I am not partial anyway, and (b) it would eliminate that very example of the current structural deficiencies in economic policy making.
What is new in this analysis ?
‘New’ is taken here in comparison to others, and thus includes points also made in my earlier publications on this analysis. New is: