Sunday, September 25, 2016

Does the IMF Not Understand Supply and Demand?

In a Staff Concluding Statement of the 2016 Article IV Mission just released on Greece, the report states (my emphasis):
 Recurrent political crises and confidence shocks associated with the inability to sustain the reform effort resulted in a high cost for society, with output having declined by 25 percent and still stagnating, and unemployment and poverty rates remaining much higher than before the crisis. Looking forward, growth prospects remain weak and subject to high downside risks, and unemployment is expected to stay in the double digits until the middle of the century.
Does the IMF not understand supply and demand? Markets clear, including labor markets, unless there are price controls (specifically minimum wage laws in the case of labor) or other regulations which prevent hiring.

Remove the minimum wage laws and other regulations which prevent hiring and the unemployment crisis will disappear immediately.

The fact that the IMF staff paper simply assumes double-digit unemployment in Greece until the middle of the century provides insight about the idiotic technocrats operating at these global bankster institutions.


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