Today’s challenge is to explain this chart.
It shows that the US economy takes longer to recover from spikes in unemployment in recent times. (It also shows that the current high level of unemployment is really a disaster).
I can only think of two ways to explain this.
The first explanation blames regulation. Under this version of the story, the US economy has become more highly regulated over time thereby slowing recovery.
The second explanation blames a combination of free trade and open immigration (via not enforcing immigration laws). Under this version of the story, the US has been importing lots of unskilled workers while simultaneously exporting lots of unskilled jobs. (This explanation is outside of the realm of possibility for mainstream economics since it assumes that some people are unskilled and therefore different from other people (gasp!) and it further assumes that free trade is not a free lunch (even cheap chalupas aren’t free)).
I can’t think of a progressive explanation for the chart that doesn’t rely on foot-stomping about rising-inequality that – nevertheless – doesn’t create a coherent narrative.
My guess is that both explanations are true. Unfortunately virtually no one would agree with both explanations. The paleo-libertarians are few in number, but that doesn’t mean they’re wrong.