Last week, in The New York Times, Paul Krugman wrote about “Bernanke’s Unfinished Mission”. His first few paragraphs are worth another look.

“Ben Bernanke, the Federal Reserve Chairman, recently had some downbeat things to say about our economic prospects. The economy, he warned, ‘confronts some formidable headwinds.’ All we can expect, he said, is ‘modest economic growth next year – sufficient to bring down the unemployment rate, but at a slower pace than we would like.’

“Actually, he may have been too optimistic: There’s a good chance that unemployment will rise, not fall, over the next year. But even if it does inch down, one has to ask: Why isn’t the Fed trying to bring it down faster?

“Some background: I don’t think many people grasp just how much job creation we need to climb out of the hole we’re in. You can’t just look at the eight million jobs that America has lost since the recession began, because the nation needs to keep adding jobs – more than 100,000 a month – to keep up with a growing population. And that means that we need really big job gains, month after month, if we want to see America return to anything that feels like full employment.

“How big? My back of the envelope calculation says that we need to add around 18 million jobs over the next five years, or 300,000 jobs a month. This puts last week’s employment report, which showed job losses of ‘only’ 11,000 in November, in perspective. It was basically a terrible report, which was reported as good news only because we’ve been down so long that it looks like up to the financial press.

“So if we’re going to have any real good news, someone has to take responsibility for creating a lot of additional jobs …

“But there’s also, I believe a question of priorities. The Fed sprang into action when faced with the prospect of wrecked banks; it doesn’t seem equally concerned about the prospect of wrecked lives.
And that is what we’re talking about here. The kind of sustained unemployment envisaged in the Fed’s own forecasts is a recipe for immense human suffering – millions of families losing their savings and their homes, millions of young Americans never getting their working lives properly started because there are no jobs available when they graduate. If we don’t get unemployment down soon, we’ll be paying the price for a generation.”

Mr. Krugman hasn’t gotten around yet to telling us what kind of a price we’ll be paying if America doesn’t “return to anything that feels like full employment,” but David Osler at Lloyd’s List gives us a subtle hint. We must make sure we find “proper work for idle hands to do”, he warned, “otherwise, we subcontract the work to the devil.”

[And it won’t be pretty.]