Re: Economic reform policy: Some views and proposals

[Paul Davidson <pdavidson@xxxxxxx>]

At 08:51 AM 4/29/03 -0700, you wrote:

> --- pdavidso <pdavidso@xxxxxxx> wrote:
> > >===== Original Message From Warren Mosler
> >
> >
> > 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.
>
> Fine, but can't you do that even with elr in place
> first?


This is a political question -- whether politicians will go for elr -- when
central bankers  and mainstream Nobel Prize winners will warn that reducing
unem[ployment below its "natural rate" --approximately 5.5 to 6.0 per cent
will automatically cause inflation -- and the elr will definitely reduce
unemployment below 5%.

But at least you and I are talking on the same analytical level -- which ,
in my view, is great.


> >  -- 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)
>
> Agreed, there are other options.  But elr vs no elr as
> we have today doesn't change that, or prevent those
> options from being considered, just as they are today.

Absolutely!!

> >
> > > 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


AGREED -- if you can get governments to install elr policies  -- in the
face of opposition by central bankers worldwide.

Paul
Paul Davidson
Editor, Journal of Post Keynesian Economics
Economics Department - 523 SMC
University of Tennessee
Knoxville, Tennessee 37996-0550
phone # (865) 974-4221
fax # (865) 974-1686
home phone  (865) 692-0802
http://econ.bus.utk.edu/davidsonextra/Davidson.html