Wednesday, July 6, 2011

Lagarde again pollutes the economic-theory waters with dead red herring

NEW YORK (CNNMoney) -- Christine Lagarde, recently chosen as the new managing director of the International Monetary Fund, said that employment will be her key focus, even more than the fiscal deficits that have swamped the world economy.

"We cannot be only driven by the hope to reduce fiscal deficits," she said Wednesday in Washington, where the IMF is based. "The issue of employment is a critical one."

How's this: hire half of the unemployed to dig ditches with spoons, and the other half to fill them in with spoons (or whatever proportion is required to achieve balance). Voila! Full employment. No net production of anything but a small amount of loose dirt, but full employment.