Raising the Bar

Max Sawicky sawicky at epinet.org
Thu Sep 3 09:58:00 PDT 1998

>>A related note: what with the massive
>>breach of the "NAIRU"
>Don't be stupider than you have to be...
>Arthur Okun and company thought that the NAIRU had successfully been
breached in the 1960s--that they could run the U.S. economy without structural changes at 4% unemployment and 2% inflation forever. The result was the 1970s--and the fall of social democracy as a governing ideology.>

That the late 1960's high employment must have caused some inflation is obvious enough. That it caused the oil shocks and coincident price spikes, much less "the fall of social democracy" I find to be a pretty surprizing, not to say amazing, assertion. George Will thinks pot and rock-n-roll are to blame, which is more convincing, relatively speaking.

>Be very, very careful before you try to repeat their mistakes: better to
have 4.5-5.0% unemployment than to have a few years of 3.0-4.0% unemployment followed by OPEC Shock III, productivity slowdown II, and the second coming of Ronald Reagan.>

I don't mind 4.5% UE. I do mind what it might be in six months, in light of the fact that it might even be lower presently.

In terms of affirmative acts, as opposed to being in the right place at a good time, Clinton/Reagan is a closer call than I'm comfortable with. Reagan cut taxes in 81 but signed off on six or seven increases afterwards. Clinton rolled over on capital gains/estate&gift. Reagan tried to cripple Disability Insurance and took some bites out of AFDC. Clinton fucked AFDC real good. Reagan presided over the decay of domestic discretionary spending; Clinton's budgets foresee this continuing, albeit in an era of budget surpluses. Clinton's economic good deeds seem to come down to the EITC expansion (and for you, NAFTA). The minimum wage started in the Congress and was eventually supported by the GOP, so this isn't a Clinton deed. I admit this is largely grumpiness, since what Reagan might do with the present Congress is indeed scary. Which brings us to his main attribute: he's not somebody else.

>At least remember that this program worked badly the last times it was
tried--whether in the U.S. in the late 1960s or in France in 1981-82.>

The U.S., much less some kind of new international agreement on fiscal policy, ain't France.

>>A serious question is what additional,
>>simple (if major) actions, such as currency
>>and capital controls,
>Malaysia's in great shape right now, isn't it?

It was a question. Still unanswered.

Is this your way of saying you don't think the Fed should ease?

Stupid as I wanna be,


More information about the lbo-talk mailing list