Transatlantic viewers have been riveted by a TV series called Downton Abbey, about a British pre-First World War stately home with dozens of servants. The below-the-stairs intrigues, jealousies and rivalries of the servants have gripped viewers quite as much as the goings-on of the aristocratic owners of Downton Abbey.

What is the connection between Downton Abbey and the current economic crisis? Well, it starts with a puzzle. The puzzle is: why is unemployment seems to be going down (though not by much) at the same time as the economy is shrinking? On past expectations, unemployment should be growing. In the last quarter of 2012, GDP declined by 0.3%, but unemployment fell by 0.1%.

But this puzzle is not a large one. The reason is that today, with a more flexible labour market, a fall in output is not necessarily, or immediately, reflected in a fall in employment. It may simply lead to a movement of workers into lower-paid, part-time or intermittent jobs or work training schemes, none of which count towards recorded unemployment. This has certainly been happening. It also explains why the Government can claim success in increasing private sector employment faster than the public sector is shedding employment.

If the free market fanatics had their way, the Chancellor of the Exchequer should be cutting even faster and deeper than he is. What would be the result? Those of us left with decent jobs or incomes will be able to have as many drivers, gardeners, trainers, cleaners, nannies, domestic servants, chefs, butlers and waiters as we can possibly want, and, no doubt, at the equivalent of Victorian wage levels. In other words, back to the world of Downton Abbey. It took the British a century of growth to escape the world of Downton Abbey. Now it beckons us as a wonderful solution to the unemployment problem.

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