Past and Prospective Causes of High Unemployment

Twenty years ago, on the eve of the first of the great post-BrettonWoods recessions, unemployment did not appear to be a major problem for advanced economies. Among what would later be dubbed the G-7 nations, the United States had the highest unemployment rate at 5.5 percent; but very little of this unemployment was long-term, and the extent of short-term unemployment could be rationalized as the inevitable and even desirable result of a dynamic economy. Western Europe had an unemployment rate that, measured on a comparable basis, was only 3 percent. Japan's unemployment rate was a trivial 1.4 percent, a performance nearly matched by West Germany's 1.6 percent. Whatever their other economic and social problems, the world's industrial nations seemed to have left fears of mass unemployment far behind.