Read more by James Ledbetter on Moneyblog.
I'm not in a position to verify Shimer's work, though it seems well-argued and surprisingly comprehensive. But even if mismatch is not the fundamental problem we're facing, even if the real problem is primarily a lack of demand, the Cycs could be doing more to explore how and why demand may have changed to the point at which it is at least partially immune to traditional attempts at stimulus.
Mark Thoma of the University of Oregon has taken a couple of steps in this direction: "There are other things fiscal authorities can do to encourage structural transformations, e.g., investment tax credits, incentives to bring new businesses and the unemployed together by moving labor to the jobs or encouraging new businesses to locate where unemployment is highest, retraining programs, etc." Those solutions are a little cookie-cutter—retraining programs, at least as currently implemented, do not seem hugely effective—but at least Thoma is trying to think about real solutions to what may well be structural problems. And we need that, because maybe the Great Recession has done something more than increase the number of unemployed Americans: Maybe it has opened a curtain onto modern unemployment that relative prosperity had kept shut.
So in the interest of peace between the camps—and of lowered unemployment—here's a plea to each. Strucs: You've got to be more specific about exactly how much of current unemployment you think is structural, and explain what those structures are, so that those who believe that government might be able to help fix it can at least offer some ideas. And Cycs: You can start by acknowledging what is different about unemployment in this recession and so-called recovery, and give us targeted policy proposals, instead of vague exhortations to pump up demand.