>So why does the U.S. tolerate it now at
>all, with all the current, pervasive weakness
>of the working class? What's to be afraid of?
Because of the weak organization of the US working class, I think the ruling class will tolerate a lower rate of U than it would if the w.c. were stronger. But responding to this point: 1) Kalecki said *sustained* full employment, not a cyclical peak, and 2) if the world weren't teetering on the edge of a meltdown, the Fed would have tightened. See Greenspan's July 21 Humphrey-Hawkins testimony <http://www.bog.frb.fed.us/boarddocs/hh/> for an example. Here are the relevant paragraphs:
>As I have noted in previous appearances before Congress, economic growth
>at rates experienced on average over the past several years would
>eventually run into constraints as the reservoir of unemployed people
>available to work is drawn down. The annual increase in the working-age
>population (from 16 to 64 years of age), including immigrants, has been
>approximately 1 percent a year in recent years. Yet employment, measured
>by the count of persons who are working rather than by the count of
>jobs, has been rising 2 percent a year since 1995, despite the
>acceleration in the growth of output per hour. The gap between
>employment growth and population growth, amounting to about 1.1 million
>persons a year on average since the end of 1995, has been made up, in
>part, by a decline in the number of individuals who are counted as
>unemployed--those persons who are actively seeking work--of
>approximately 650,000 a year, on average, over the past two and one-half
>years. The remainder of the gap has reflected a rise in labor force
>participation that can be traced largely to a decline of almost 300,000
>a year in the number of individuals (aged 16 to 64) wanting a job but
>not actively seeking one. Presumably, many of the persons who once were
>in this group have more recently become active and successful
>job-seekers as the economy has strengthened, thereby preventing a still
>sharper drop in the official unemployment rate. In June, the number of
>persons aged 16 to 64 who wanted to work but who did not have jobs was
>10.6 million on a seasonally adjusted basis, roughly 6 percent of the
>working-age population. Despite an uptick in joblessness in June, this
>percentage is only fractionally above the record low reached in May for
>these data, which can be calculated back to 1970.
>
>Nonetheless, a strong
>signal of inflation pressures building because of compensation increases
>markedly in excess of productivity gains has not yet clearly emerged in
>this expansion. Among nonfinancial corporations (our most recent source
>of data on consolidated income statements), trends in costs seem to have
>accelerated from their lows, but the rates of increase in both unit
>labor costs and total unit costs are still quite low.
>
>Still, the gap
>between the growth in employment and that of the working-age population
>will inevitably close. What is crucial to sustaining this unprecedented
>period of prosperity is that it close reasonably promptly, given already
>stretched labor resources, and that labor markets find a balance
>consistent with sustained growth marked by compensation gains in line
>with productivity advances. Whether these adjustments will occur without
>monetary policy action remains an open question.
Doug