Re: Economic reform policy: Some views and proposals

[paul davidson <pdavidson@xxxxxxx>]

At 06:51 AM 4/28/03 , Warren wrote:


> Paul, I think that you are saying for you, 'do both'
> is the answer?  Offer a 'minimum wage' govt job to
> anyone willing and able to work and at the same time
> expand agg demand so that govt is left with only
> 'essential' employees as above?  If so, that's exactly
> what the elr proposal is.  Let the economists and
> politicians debate/change, etc. the total size of govt
> for whatever reasons, through demand management, etc.
> (hopefully not incorrectly influenced by govt.
> 'finance,' as today) which also alters the elr pool,
> but leave the elr in place so there is at least some
> form of full employment while govt. fiddles.


But then there is one problem still unresolved -- namely how to deal with
money wage inflation --  the increase of most other money wages (above the
minimum wage of elr) exceeding productivity increments.

In the past, it is my understanding that elr advocates argued that if
inflation is occurring, then the government should reduce aggregate demand
for the products of private enterprise, until labor unions, etc become less
truculent --

 and those workers released from employment in the private sector as a
result of the decline in aggregate demand should be absorbed in the buffer
stock of elr-- .  If that is the anti-inflation policy of elr , then it is
the natural rate of unemployment with a humane face.

If the above is not the anti-inflation policy of elr, then what is the
specific anti-wage-price inflation policy to go along with elr?  For in the
absence of anti-inflation policy, elr would not fly in Peoria.
[ And one cannot argue that if all other wages other than the minimum wage
rise, then this is not inflation it is only a change in relative wages.]

Paul