Re: Economic reform policy: Some views and proposals

[pdavidso <pdavidso@xxxxxxx>]

>===== Original Message From Warren Mosler <mosler@xxxxxxxxxxxxxx> =====

>
>Apart from the technicality that most jobs are service
>jobs, and therefore wage increases *are* productivity
>increases, seems this would be dealt
>with with the same policy options as today?

Not if they produce the same volume of services(e.g., haircuts per hour; or an
orchestra taking a minute to play the minute waltz, etc)

>>
>> In the past, it is my understanding that elr
>> advocates argued that if
>> inflation is occurring, then the government should
>
>Could...
>
>> reduce aggregate demand
>> for the products of private enterprise, until labor
>> unions, etc become less
>> truculent --
>
>Point was, the govt. would have exactly the same
>tools at its disposal as currently,but with employed
>vs unemployed as a bufferstock.
>

THE IMPORTANT QUESTION IS: CAN WE PUT ANOTHER TOOL AT THE DISPOSAL OF THE
GOVERNMENT TO FIGHT WAGE-PRICE INFLATION AS UNEMPLOYMENT IS REDUCED TO 2.5 TO
3 PER CENT. I believe we can provide another policy tool.

\
>>
>>   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.
>
>Right.  An employed human face.
>Also, elr workers make a more fluid buffer stock than
>unemployed workers.  So it would likely take fewer
>of them to 'fight inflation.'
>>

 -- you apparently are happy with the mainstream argument that the only way to
keep labor in its place is unemployment in the private sector!! I disagree --
for it is possible to invoke social value (INTERNAL)incentives to fight
inflation via an incomesw policy -- see G. Davidson and P. Davidson, ECONOMICS
FOR A CIVILIZED SOCIETY, 2nd edition (Macmillan overseas or M. E. Sharpe in
North America, 1992)

> 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?
>
>It is 'an' option.  Point being, we would be no
>worse off than today, except we'd be dickering around
>with questions like these with 10 million more
>employed human faces.

The point is we should be MUCH BETTER OFF than we are -- and have been since
the Kennedy- Johnson years. That's almost 35 years where the economy has
performed at an unnecessary sub-par level when we could have doner better.  If
we want to restore the GOLDEN AGE of the 1950-1972 for the entire global
entrepreneurial economy, then there are additional policy programs that can be
developed to provide GOLDEN AGE performance.
.  So there is no excuse for not
>doing elr NOW and dickering about all this at the same
>time, as we will surely do anyway.

Unfortunately we will not have full employment - -elr or otherwise -- until we
have adopted these additional policy tools for as I said before " 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.]
>
><fine, promise I won't, if that helps...>

Yes that is a great help and an improvement of outlook from the past.

Paul

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 503
Knoxville, Tennessee 37996-0550
office phone #;(865)974-4221; office fax# (865)974-1686 or (865)974-4601
home phone and fax # (865)692-0802
email pdavidson@xxxxxxx
http://econ.bus.utk.edu/davidsonextra/Davidson.html