Worth remembering:
Of course the flipside of this is that blaming greedy owners only gets you so far. People mostly wouldn’t be running businesses if they weren’t greedy; they’d be in the Peace Corps or some such thing. And without greedy owners, nobody could find a job. Greed isn’t good, but it’s what we have to work with. But owners and executives — no matter how greedy — can’t get away with cutting wages in a tight labor market. Indeed, in a tight labor market greed dictates that you must raise wages to hold onto your workforce and keep selling stuff. That is the real story of the Bush economy. Not the sudden arrival of devious Chinamen come to steal your job or a new outbreak of greed. We’re seeing a lousy labor market. We’re seeing bad policies that are contributing to the lousy labor market — big deficits that make it hard to keep interest rates low without sparking inflation, and huge and hard-to-quantify levels of risk around the horizon that are depressing investment.
I agree, and I’d like to see an administration and a Congress that actually seeks policies for getting the most number of people employed at the best wages in the best circumstances (three different and often competing goals). BUT the tight labor market of the sort we saw during the end of the Clinton years might not be a normal or sustainable condition. At the very least we should remember how unusual and surprising it was at the time. Unemployment in the 3 percent range and no appreciable inflation? If there was anything substantive to "new economy" ballyhoo, it was that facts on the ground seemingly had changed; the "natural rate" or non-accelerating inflation rate of unemployment (NAIRU) had gone down. Have we really permanently gone to down to 3-something percent, so that current unemployment could drop?
This highlights an unspoken dirty (open) secret in public policy: there’s no feasible way to get jobs to everyone in a free market economy and democratic society. A significant percentage of the work force has to be unable to get work, else inflationary pressures become untenable. Now, part of this will be "frictional unemployment", i.e. people between jobs, but this is counterbalanced by those not even participating in the labor market (they don’t get counted in the unemployment rate quoted in the news). The implications of this structural unemployment are important: none of us like to see people mooching off the system through welfare transfer payments or other largesse (some get worked up over this more than others), but if an economy not only does not but never can provide enough jobs, what do we as a society do about those not provided for?
Mind you, for any current NAIRU, public policy becomes a battle between labor (who are willing to put up with more acceleration of inflation to have more employment) and capital (who want complete monetary soundness and bargaining strength in setting labor costs). Go too far one direction and inflation becomes a real problem, for everyone. Go too far the other and you get economic stagnation and reduced standard of living (not to mention extra anxiety) for workers. You can guess which side the current Republican powers have put their lot in with.
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