Re: Full employment: How?

["schulte-baeuminghaus" <cresscourt@xxxxxxxxx>]

Title: Re: Full employment: How?

John,

There's no doubt that full employment, high real investment, rising productivity, increasing production, with low inflation, are all possible simultaneously.
In fact, they're perfectly natural partners.
We had them for 25 years.
All we need is the will - and an understanding of what policies work and how brilliantly they can be made to work for everyone - except those relatively few who thrive on instability and speculation.
For example, we can't get what we're looking for if we think that a hike in interest rates will, in most circumstances, lower inflation.
As we should have learned from past experience - we've had plenty of it - a hike in interest rates  intensifies inflation.
Have a look at Geoffrey Gardiner's book, TOWARDS TRUE MONETARISM, in which he explains the three-pronged tendency for a hike in interest rates to intensify inflation.
That lift in interest rates will almost certainly increase unemployment, hit investment and turn down productivity and production.
But it won't lower inflation, only - at best? Or worst? - transfer it by creating other disequilibria which are much more unpleasant than the original inflation or threat of it.
Economic history is a great aid to understanding.
Unfortunately, we rarely look at what we've gone through until it's too late - or we misinterpret it when we do.
But it's there whenever we want to take advantage of the guidance it offers.
So, if the will is there and we educate ourselves - in practical terms - in the way the modern economy - and society - work, then we'll quickly be back on the way to genuinely and CHRONICALLY full employment.
That's all we need.
Simple, isn't it?


James


----------
>From: "John Gelles" <johng@xxxxxxxxxx>
>To: "Post Keynesian Thought" <pkt@xxxxxxxxxxxxxxxx>
>Subject: Full employment: How?
>Date: Sat, Mar 31, 2001, 1:31 pm
>

>         "If any central banker sets his goal on full employment,
>          ... he can achieve ... it.  There is no mystery in how to
>          achieve it, only denial."
>                     -- Henry C.K. Liu, Mar 29 on Pkt.
>     
>         "In his speech early this week, Greenspan stated that
>          monetary policy can not permanently affect the rate
>          of unemployment, thereby implicitly accepting the
>          concept of a natural rate of unemployment.  
>         "No wonder he can't see 'full' employment as a worthy
>          objective, when his conservative monetarist vision is
>          clouded by the Friedmanic concept of  a 'natural rate
>          of unemployment'."
>                     -- Paul Davidson, same subject, Mar 30 on Pkt
>
>         Both of our colleagues above suggest that the mystery
>         of believing in and achieving full employment (without
>         inviting unacceptable inflation) is solved. Yet they do
>         not say how.
>
>         Most on PKT appear to accept PSE (public service
>         employment) to ensure the last man looking for work a
>         job-- as "how".
>
>         Most would also allow the central bank, simultaneously
>         with PSE-zero-unemployment, to reduce aggregate
>         demand via higher interest rates.
>
>         Most also stop short of supply side action. But maybe
>         not. If an appropriate agenda called for government
>         lending and investment directed to supply side goals--
>         to raise ouput of necessary goods and services-- these
>         PKT'rs might say "yes".  Such supply side strategy
>         has always governed  my agenda for full employment.
>
>         Which leaves unanswered why Friedman, Greenspan
>         and the majority of both the elites and the voters do
>         not take us to full employment-- with  all the benefits
>         jobs would bring -- all the power they would exert--
>         to prevent formation of an underclass and excessive
>         anxiety in the middle class. Why?
>
>         In part because the money to pay for PSE and anti-
>         inflationary supply side actions appears to opponents
>         as coming out of their pockets.
>
>         Yet we on PKT believe money is not neutral -- that
>         money spent and lent to reach full employment would
>         increase, not reduce, aggregate profits-- to be enjoyed
>         by our opponents, more or less as they enjoy it now.
>          
>         We see full employment as also making our own and
>         our opponent's lives better for safer streets, a smarter
>         work force, and reduced anxiety over a  future change
>         in jobs.
>
>         I, for one, would be willing to entice support from
>         these opponents for a full employment strategic plan
>         by giving them a sweetner. Perhaps a tax break they're
>         looking for? If money is not neutral, we can all afford
>         the deal.
>
>             John Gelles
>
>         P.S.  How many of you react with, "hell no" to the
>         above.  "That would leave disparity even worse.
>         We would move the bottom up, but the top would be
>         further away from ME.  If we don't tax the bastards
>         more, I will only have more to envy."   These may be
>         thoughts beneath the surface that compel us to keep
>         our opponents enemies -- to screw the poor even
>         more because we hate the rich. Well it's only a
>         possibility. The supply side strategic plan can also be
>         rejected because we're sure the rich will never buy
>         it. They stink and always will. Class war to the end.
>
>
>