Unemployment Crisis: Pride and Prejudice
30 Nov 2022
Unemployment Crisis: Pride and Prejudice
The country is facing a catastrophic crisis of unemployment in the business analysis, and the current turmoil in the financial sector has brought a discussion on the current account deficit (CAD), depleting foreign exchange reserves, and falling exchange rates into focus.
Yet the issue of growing unemployment receives very little attention. On "defending the rupee" is the focus. This is somewhat odd because, through labour arbitrage, free trade is a very effective and efficient instrument for moving jobs to regions with high unemployment rates in the business news.
Between the two World Wars, there was a downturn in both the victorious and defeated industrialised nations. To increase employment and manufacturing, several countries began to depreciate their currencies in financial news today.
But it soon prompted rival devaluations by others, undermining commerce, and earning the repulsive moniker of "beggar my neighbour" policy, which is still in use today.
The general consensus on international commerce is that exports are good and imports are bad. A robust rupee is successful, whereas a feeble rupee is disastrous.
These and other widespread economic myths have the effect of making economic policy makers sweat and work extra hard to defend the rupee through interest rate manipulation and depleting reserves when instead they should be creating jobs and raising GDP by observing the declining real exchange rate of our rupee and contentedly allowing the market exchange rate to match the real rate in the business analysis.
What is preventing this? The response is "hesitancy toward devaluation."
This is extremely comparable to the vaccination hesitancy that has slowed public health advancement for several decades. The battle against this took the medical community two centuries to win, and it is still ongoing in the business news.
The role of the economist is made much more difficult by the widespread "devaluation hesitation" that exists among all segments of the public, including senior policymakers.
For the past 75 years, every political leader in India has preached that any devaluation of the rupee is as terrible as or worse than lowering the triangular value and is a definite way to lose the next election.
Who among the government employees or Reserve Bank employees would have the guts to advise that we allow the rupee to depreciate to its true value in order to attract more jobs and lessen the suffering of the masses of unemployed people in economy business?
India should take note of this because of the enormous burden of sustaining its large unemployment population. Instead of "defending the rupee," it must get over its "devaluation hesitation" and modify its exchange rate to fully capitalise on labour arbitrage opportunities. Although it is fairly late.