Have U seen the news?

[Paul Mackin]

Inflation phobe Alan Greenspan must have thought full employment was
somewhere between 3 and 4 percent because he was always putting on the
brakes (raising the short term interest rates) in those years. Before the
90s full employment would probably have been around 5 percent--back in the
Phillip's curve years. The Phillip's curve in case anyone has forgotten was
the strict relationship that must exist between unemployment and inflation.
Inflation occurs when wage levels rise faster than productivity--too low a
level of unemployment promotes this.  I believe I read somewhere that 2
percent unemployment is now thought to be about the theoretical limit for a
very dynamic economy in which many firms are starting up and hiring and
other firms and industries are in decline. It would be the situation in
which workers are changing from one job to another with little or no
interval between. This 2 percent rate however would not be consistent with
price stability (lack of inflation) All of this of course might be counted
as one of the irrationalites of the capitalist system. A more major
irrationality would be that so much depends on consumer expectations and
psychology. The worry about the present rather slight increase in the
unemployment index is that consumers will panic, slow up on their spending,
and thow the economy into a cyclical decline that might last several
quarters. Rational, planned economies say there ought to be a better way.
However they of course  haven't worked. I respect Mike for working to make
socialism work on some scale though I personally believe the chance of
socialism coming to major economies like the U.S.  is about as remote  as
George Bush formulating a well wrought sentence

                P..


----- Original Message -----
From: "Jane O' Sweet" <lycidas2 at earthlink.net>
To: <pynchon-l at waste.org>
Sent: Saturday, May 05, 2001 8:33 AM
Subject: Re: Have U seen the news?


>
> OK, we can argue "till the cows come home"  about what full
> employment is and what full employment is not and so on,
> but I was only providing my opinion, not a professional
> opinion  or anything, I'm not an economist, just my opinion
> about the USA economy and the current state of
> employment/unemployment. It is my opinion that the USA is
> fully employed. The latest statistics have not changed my
> opinion.
>
> This is my working definition:
>
> Economists use the term full employment to refer to the
> unemployment rate that exists in the absence of cyclical
> unemployment -- i.e., when
> there is only frictional and structural unemployment
> (ignoring seasonal
> unemployment). That is, full employment occurs when the
> measured unemployment rate is
> equal to the natural rate of unemployment.
>
> Paradise on earth is when a seven-year old asks you how
> catdog takes a shit.
>
> I posted the article about the US loss of a human rights
> post from the FT or the NYT, can't remember.
>
>
> I just read the Village Voice and swear by every word.
>
> Jane
>