Stocks and flows, stocks and flows

The estimation of how many unemployed there will be:

But even without having to extrapolate the data very much it is apparent that if most companies took Covid loans and maybe 10% think they might close then with the private sector engaging approximately 25 million people in the UK at present that might be 2.5 million jobs to go, and more given that many other companies are warning about their growth plans. My suggestion that more than 5 million people might be unemployed still looks to be depressingly realistic,

Snippa’s failing to distinguish between a stock and a flow. The stock is the total number unemployed at any one time. The flow is those moving into that state – and also the number moving out of it. It’s possible to note the occasional story about this or that company hiring people to work in warehouses for example.

So, what Snippa is doing is saying that all those made unemployed will be unemployed, all those currently unemployed will also be so and that’s that, he gets to his stock. And he’s completely ignoring the flow of people out of unemployment.

Just to give a rough idea of the size of those flows, around 10% of all jobs every year are destroyed, around 10% of all jobs every year are newly created. That’s just something an economy does.

Or, you know, 3 million new jobs every year. That flow out of unemployment will rather cut the stock of it, no?

8 thoughts on “Stocks and flows, stocks and flows”

  1. “… if most companies took Covid loans and maybe 10% think they might close then with the private sector engaging approximately 25 million people in the UK at present that might be 2.5 million jobs to go”

    His model works perfectly if every company employs the same number of people.

  2. “3 million new jobs every year”

    Not so sure about that, Tim. New jobs are created by change. Employers reacting to changing circumstances. New employers coming into the market in response to change.
    Well Coronapanic’s certainly provided enough change. And a lot of businesses have responded by changing. But Coronapanic’s also loaded a lot of extra costs onto running businesses. Costed enough to enter the market with a new business before Coronapanic. Trying to do so now with all the extra costs to meet…?

  3. Heh, yes, of course unemployment is likely to go up. Change takes time an all that. But he’s entirely ignoring the idea that anyone, anywhere, will create one single new job at all.

  4. There’s theory & there’s practise, Tim. Here in Spain I reckon you can forget about your theories. Spanish don’t react well to change. Particularly the change Coronapanic’s forced on them. I wouldn’t be surprised if there hasn’t been one new job created in the entire economy. And you certainly wouldn’t be trying to start a new business. It was hard enough before. Pretty well the entire public sector shut down for August. Despite having been largely dysfunctional since March.
    UK’s more adaptable. But how much more adaptable? Try & start something new & half the people you need to deal with are unreachably working from home? I know what happened when I’ve tried to contact a couple of Brit companies. Past the person fielding phonecalls there’s a vacuum.
    The Murph’s no doubt got his reasoning wrong. But I wouldn’t necessarily argue with his estimates.

  5. BiS is correct. Some businesses are open–private dentists for example. But they are seeing far fewer people and even charging them double wont be enough to keep them going if the British Dental Association mandated treatment farce continues.

    Many businesses will fail and thus wont be job creating. Sure some jobs WILL be created but the old “Not The Nine o’clock News” sketch springs to mind . Where zillions of jobs go but the good news is that their is a new job in the Spud U Like in Inverness.

  6. “…and maybe 10% think they might close then with the private sector engaging approximately 25 million people in the UK at present that might be 2.5 million jobs to go,”

    10 percent of the companies [even, perhaps, of those going bust] employ 10% of those employed? I believe Spud owes us a citation or two there…

  7. I doubt it. There ‘s a shops opposite my apartment. During lockdown they were shut. The first day they were permitted to open there were queues on the pavement waiting at 9AM. They opened as normal at 9:30. Because only a limited number of customers could be allowed inside, there were queues outside until 2:30. When the shops closed for their 3 hour lunch. After not making a cent for 12 weeks. Following week there was a public holiday. Everything stopped for the day. And so it’s gone on. Businesses & the public sector usually either close or work reduced hours during August. This August was no different.
    Whole country’s the same. It may be in deep economic shit but there’s little appetite to do what is necessary to get themselves out of it. Not if it requires interfering with their way of life. Why anyone would want to be in an economic union with the Spanish defeats me.

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