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I hope that John Whittington hangs on to his 'lack of education' in economics. Economists have never really got to grip with the functioning of the labour market. And that perhaps explains why the discussion on this list about productivity has been so confused and confusing. Traditionally economics has been defined as the study of the allocation of scarce resources, so economists have always had a bit of difficulty in dealing with the existence of unemployment. If a resource is not scarce it does not really fall within the subject matter of economics. It took what is usually called the Keynesian revolution to persuade economists that letting markets rip did not solve unemployment problems. The economist faith in market forces effectiveness in the labour market is still strong. In recent decades economists have identified long-term unemployment as the main problem. They believed that the scale of long-term unemployment should have reduced the level of wages and have blamed the benefits system for encouraging people to remain unemployed. These beliefs are not consistent with the statistical evidence. Please do not read into this an attack on the 'new deal' and the welfare to work programme. These kinds of measures are best seen as part of what John Longsdon gallantly calls 'management and investment'. But, to go back to the starting point of the discussion, economists' difficulty in dealing with the labour market does help explain why they don't see any clear connections between increasing productivity and unemployment. Ray Thomas 35 Passmore, Tinkers Bridge, Milton Keynes MK6 3DY Email: [log in to unmask] Tel/Fax 01908 679081 *********************************** ****************************************************** Please note that if you press the 'Reply' button your message will go only to the sender of this message. If you want to reply to the whole list, use your mailer's 'Reply-to-All' button to send your message automatically to [log in to unmask] *******************************************************