In the US, where we would expect asset markets to be the most liquid for idled capacity, the capacity utilization rate is currently only 74%, and 71% in manufacturing. The average from 1972-2009 was 80.1%, so actually I was too generous. Capacity under-utilization worldwide is likely to be at least 20-40%, more than enough slack to pick up the hole in manufacturing that China might leave behind if it closed itself off to trade was was isolated from the world by conflict with the US. (Interesting, isn't it? Chronically unemployed capital is actually a much bigger figure than unemployed labor.)
Chronically unemployed capital is actually a much bigger figure than unemployed labor.
Labor, on the other hand, is almost exclusively unemployed involuntarily. Did the very wealthy not have a strangle-hold on government policy this would be a very good argument, in times like these, for either taxing their idle wealth. This is one of the situations about which Keynes wrote where actions entirely rational for an individual when taken simultaneously by almost all those in the position to act, collectively prove disastrous. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
