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Archive for May 11th, 2005

Disenchantment

with 24 comments

Know I’m being a bit of a jerk, but it’s hard not to find it a bit funny to watch the atrios crowd discover that there’s only one thing their other hero, Brad Delong, hates more than the economic policy of Bush administration. Apparently, to offer even the mildest criticsm of global capitalist hegemony – criticism mild enough to make it on to the op-ed page of the NY Times forgodsake – is to expose yourself as "Crypto-Nazi scum." Take a look – especially at the comments – here.

Anyway, calls to mind an charming passage from Bob Woodward’s book about Greenspan. We could subtitle it, borrowing a phrase from Hobsbawm, "Clinton Learns the Rules of the Game." The game in question being the relationship between full employment and inflation.

All the economic models built
on years of history showed there was a limit to how high growth could go
without triggering inflation. To complicate matters, the economists believed –
and recent American economic history showed – that there was a level of
so-called full employment. There was a limit on how low the unemployment rate
could go without triggering inflation, and it was thought that the range was 6
to 7 percent. This lower limit was called the NAIRU – the non-accelerating
inflation rate of full employment. The unemployment rate had started the year
above 6 percent and was heading down.
    Even [Robert] Rubin insisted that there was an
optimum full employment rate of growth.
    The president [Clinton] was skeptical and even outraged. So the problems were too much economic growth and too many people working! It was ridiculous, he seethed.

But you know how the story ends.

 

 

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May 11, 2005 at 12:28 am

Posted in Current Affairs