The Inflation Monster Is A Pussycat…Now, How About A Jobs Strategy?

The Wall Street Journal published a short article that should be read by every policy maker in the country. In fact, a simple glance at the accompanying graph should be enough to settle any debate about what it is that policy makers in the federal government and in the various state governments should be focusing on in 2014: jobs, jobs, jobs. Just look:

inflation graphAs you can see, inflation has been trending downward and there has been very little of it this year. Thus, the loose monetary policies of the Federal Reserve, which have helped keep the economy afloat, have not done what conservatives, for many years now, have warned us they would do: create crippling inflation. (Exactly how many times can right-wingers be wrong before media types stop paying attention to them?) Without those loose monetary policies I’d hate to think what shape this economy would be in. But obviously what the Federal Reserve has been doing isn’t enough, even though it should keep doing it. Without the fear of inflation (oh, I know there are those who fear it no matter what the actual numbers say) the Fed should continue stimulating the economy by keeping interest rates low (they’re essentially at zero right now) and by continuing to purchase bonds (known as “quantitative easing”).

But more important is what the fiscal policy makers in Washington should be doing, you know, those legislators who are supposed to be doing things that help job growth, not hurt it. It is past time for them to get off the laps of their donors and get to work at getting more Americans back to work. It is past time for Democrats to express public outrage—real disgust and outrage—at the refusal of Republicans to do anything that might contribute to reducing the amount of unemployment in the country.

And the expression of that public outrage should begin with President Obama.

11 Comments

  1. ansonburlingame

     /  December 18, 2013

    OK, Duane, let’s start with the President. But first, would you please help him get his priorities straight!

    He recently said that income distribution was the “defining issue” in our time. So he will obviously have his first priority to redistribute income, from the top 10% down to the bottom, what 20%, 30%, 50%. Take money away from the rich and give it to the poor, through government decree, taxes, fees, you name it.

    Opps, what happens to job growth when that happens?

    Perhaps the greatest engine to create wealth, unevenly, today in America is the stock market, all those greedy capitalists. Well do something about that “engine”. Make it “fair” so eveyone can benefit from such wealth creation, right. OR, if you can’t force the “market” to fairly distribute money, then just do away with an unfair “market” right? Opps there goes your pension fund, etc., etc. As well forget any capital generating IPOs for business startups as well. Just let the government make those decisions for which businesses get startup money, like Solyndra, et. al., right?

    Seems to me that you progressives keep doing the same thing, demonstrate the inablity to get your priorities straight and instead just demand ALL you priorities get funded. Well which is more important, income redistribution through government decree or job creation through government funding. Pick only one and then see what you can do about either of them using only government tools!

    But I will admit, you have a way out. Just forget “protect and defend” and use all that money to hire more workers, including a vast horde of government employees to oversee taking money from the rich and giving it to ………, which according to President Obama is HIS “defining issue” today.

    As for your “curves”, would you care to guess how those curves might look after the FED stops pumping in some $85 Billion a month. The President’s attempt to infuse a full $1 Trillion in one fell swope seemed to not achieve his goals, increasing employment on a sustainable level. So now with the Fed’s help, government has been “sneaking in” about $1 Trillion a year in “quantitative easing”, for what, about 4 years now.

    Anson

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    • Anson,

      First of all, the last place to put money into the economy is in the stock market. The exceptions are initial and secondary offerings that companies issue to raise money for operations or new projects. And those funds may or may not create jobs.

      The stock market is merely a mechanism that allows buyers and sellers to negotiate the value of one or more stocks. Since 2009, the stock market has gone from almost a crash to record levels today. No jobs were created here. GPD hasn’t grown at a record pace either. In fact, investments aren’t even part of GDP.

      The stock market is only relevant because, if it goes up, that increases the net worth of those who own stocks; pension funds, mutual funds, banks, individuals like you and me, and even many foreigners: Europe, China.

      So, the notion that making the wealthy wealthier benefits the economy is one of the great myths spread by the right wing nuts. It doesn’t. It never has. There is no evidence, no study worth the paper it’s written on, that says otherwise. Therefore, in terms of the redistribution of wealth, the stock market is irrelevant except as it affects buyers and sellers. And the government is pretty much out of the way.

      But tax breaks for the rich are relevant. According to a report from the CBO, the top 1% of earners will cost the U.S. Treasury 17% of an estimated $12 trillion in tax revenues over the next 10 years. (See http://www.cbo.gov/publication/43768) That comes out to $2.04 trillion in tax breaks for the top I%. The CBO estimate then shows that 13 percent of those tax breaks will accrue to households in the middle quintile, and only 8 percent will accrue to households in the lowest quintile. (See the charts in the report.)

      So, there’s your redistribution of wealth, but only a part of it. Our government has made sure, using the tax code, that the rich get the biggest portion of tax breaks, arguably, at the expense of the poor.

      In light of the above, you may want to rethink your comment, “Take money away from the rich and give it to the poor, through government decree, taxes, fees, you name it.” Looks to me like it’s just the opposite.

      That’s enough for now. More later on inflation and other stuff.

      Herb

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      • Herb,

        You can lead Anson to water, but you can’t make him think. At least about the distribution of wealth, as you have so elegantly laid it out. He is convinced that the tax code is skewed to take from the makers and give to the takers. Hogwash, as you demonstrated. But it is a very powerful meme, at least for those on the right, to think that liberals are trying to “steal” money from hard-working Americans in order to give it to social parasites.

        Good luck, though. I admire your willingness to try.

        Duane

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    • I hesitate to go beyond Herb’s excellent response, but I have tried to tell you many times that redistributing wealth is not an invention of liberals, unless you consider the Founders liberals. Anytime you tax one person and spend it on some other activity, like defense, you are redistributing wealth. And we have done that since John Quincy Adams was a baby.

      And you are goddamned right that we liberals “demand ALL” our priorities “get funded.” Why? Because it is your party who racked up all the debt by not directly paying for its priorities—tax cuts, wars, prescription drug coverage—and instead putting the funding on the national credit card. And then you guys have the nerve to fiddle with the debt ceiling every bleeping year because Barack Obama is in the White’s House. It’s a bleeping scandal, if only the goddamn press corps would report it that way.

      As far as those “curves,” don’t you understand that the right-wing argument has been that because of that $85 billion in bond buying each month that extraordinary inflation would result? Well, where is the bleeping inflation, Anson? Where is the inflation that your side has been forecasting for years now? Huh? How many goddamn times can your side make predictions that don’t come true, like, say, giving billionaires tax breaks so they will “create jobs” for non-billionaires? Many of your side’s economic theories have been thoroughly discredited, yet they keep right on espousing them and the press keeps right on treating them as if they have some validity.

      Here’s the &*$@& reality: until the job market tightens up, until the unemployment rate goes down significantly, we don’t have to worry all that much about inflation. We should be worrying about jobs, about the long-term unemployed, about doing something about income inequality. But instead, we are gearing up for another fight over the goddamned debt ceiling.

      It’s pathetic. And your side, the people you almost always support, are responsible for all of it.

      Duane

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  2. genegarman

     /  December 19, 2013

    I live in a town wherein I have, after retirement from two good paying union jobs, from which I receive monthly pensions and benefits, continued to work, by choice, part time for local millionaire owned companies which pay poverty level wages from the beginning and will add 25 cents per hour after each year you work for them. On one of those jobs, I spent break and lunch time with workers, from south of the border, teaching them English. My point is simple: much of the cheap labor problem in the USA is because of the massive influx of illegal immigrants which have been tolerated by our government and welcomed by our Chamber of Commerce millionaires. The obvious failure to stop illegal immigration has been, in my opinion, a major blow to the native born workforce. Our government refuses to secure the border and American businesses hire illegals at low wages. Of course, all of their children become citizens and cheap labor grows by the dozens as our millionaires prosper at the expense of the millions of workers who continue to get poverty level wages. In economics class it is the law of supply and demand. We need to significantly increase border patrol manpower and stop illegal immigration. Further, free trade is not fair trade and strikes an economic blow to the native American workforce. Regardless, nothing will change as long as voters continue to elect Republican Chamber of Commerce Religion Right politicians.

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    • Gene,

      You make the case that unions used to make quite forcefully, but now not so much. In fact, unions now see the low-wage workers you reference as a chance to increase union membership and presence in the workplace. With the exception of so-called guest-worker programs, unions are by and large on board with comprehensive immigration reform.

      Duane

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  3. ansonburlingame

     /  December 19, 2013

    Herb,

    Sorting throught the fog of your reply, it seems we both agree that the stock market generates huge wealth for the “rich”. While never wealthy by today’s standards for sure, I did educate two kids from funds accumulated in that market over the course of about 20 years. No loans, etc., just checks written on my “money market account” each semester. As well I had NO infusion of money up front to begin such investing. It came right out of my small Navy salary, starting at about $25 a month when I was a budding Ensign.

    My (first) wife and I also greatly benefited from a booming and long running real estate market, through no “fault” of our making. I squeezed hard to purchase my first home for about $40K in 1970. When I “retired” I sold my home (about the 12th one I had bought and sold over some 35 years) for over $400K. Slow, incremental, steady “investments” in stocks and real estate (no speculative purchases either) resulted in good things for me and my family. And my salaries for most of those years were modest by any means of comparison.

    Well forget real estate today. Other than buying a home I would not touch it. Stop the Fed’s “quantitative easing”, see interest rates start going up and watch another real estate bubble, right in our laps, again, in my view. Our inflation rate, Duane, is low because we are printing money to keep interest rates low. We have to stop sometime!!

    But I don’t disagree at all that JOBS must improve to improve our economy. We need good, well paying jobs for lots of people. Raising the MW does nothing more than inflate the cost of jobs. It does not in any way create jobs that produce high quality goods and services that sell, around the world today. Print money to inflate the size of the money supply, inflate job costs to pay more money for nothing more produced in quality or quantity, and there you have the progressive solution to improving the economy! HA!!

    Well my solution, a long term one for sure is to “inflate” the number of smart, hard working people in the work force to take on “jobs” that produce more and better goods and services that sell, around the world. The only way to do that is to improve the education of the work force, making our supply of smart, hard working people increase. Do that and REAL GDP, forget inflation, goes up at a good pace and the quality of life improves across the board for all Americans.

    Go back to my old account of some critical long term numbers. REAL GDP goes up 300%, inflated GDP by 600% and DEBT by about 1000%, over the last 50 plus years. Now figure out how to “fix those numbers”. Keep your eye on REAL GDP if you want to see real value increase in jobs, style of living, comfort and ability to care for the poor and downtrodden as well. When only wages are increased, keeping the output of jobs at the same level of quantity and quality and “saleability” of goods and services and all you do is add fuel to the budding inflation pressures, all over America. Someday you won’t be able to print money fast enough or borrow enough of it to keep pace. Welcome back to Detroit, when that happens, state or nationwide!!

    Anson

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    • genegarman

       /  December 19, 2013

      Anson’s “solution, a long term one for sure is to ‘inflate’ the number of smart, hard working people in the work force to take on ‘jobs’ that produce more and better goods and services that sell, around the world. The only way to do that is to improve the education of the work force, making our supply of smart, hard working people increase. Do that and REAL GDP, forget inflation, goes up at a good pace and the quality of life improves across the board for all” Chinese, for example. Free trade is not fair trade, and neither is an economic system which does not provide decent living wages for labor, regardless of the nation involved. Further, I simply do not agree the American work ethic is substandard. The two collective bargaining unions from which I retired took the greatest pride in jobs well done. Greed in the business world is too often standard, certainly not according to the “golden rule.”

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  4. ansonburlingame

     /  December 20, 2013

    genergarman,

    If you don’t believe the American work force is becoming “substandard” then you haven’t seen what I have observed over the last ten years in public schools. Sure it is the traditional luxury of old men (I am 71) to criticize the “younger generations”. If they would only do what I did has been the advice of old men “forever” and of course is BS. Things change and people must adapt over time.

    My step son is a “rich doctor”. But I see him (and his wife who manages his office) struggle month to month to keep a quality staff of 5 women working in his office. It is a nightmare for them to find reliable people to bill insurance, keep records, provide technical services to patients before they are seen by the doctor. That ever changing workforce is in constant and uncertain flux today and that is just one doctor’s office in Joplin.

    Sure, he and his wife could pay them $50 an hour for their labor and ensure that no one would quit over “bad pay”. But try doing then when insurance claims routinely get fouled up, patients wait forever, phone calls are not made, etc, etc.

    At LEAST 50% of JHS graduates today do not have the skills and work ethic to “man the phones in a doctor’s office” and do it reliably and consistently for a “career”. And that figure does NOT account for the dropouts, who will have a hard time “cutting the grass” reliably for customers in the future. Do you really think paying them more money will solve that problem of “behavior” or “work ethic” or what ever term you care to use?

    Anson

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    • genegarman

       /  December 21, 2013

      Anson, are you kidding me? I was in the first grade when Pearl Harbor was bombed and am old enough to comprehend your argument traps you into acknowledging At LEAST 50% of JHS graduates today do … have the skills and work ethic to “man the phones in a doctor’s office” and do it reliably and consistently for a career. I dare say that if the good doctor were to offer the wage you assert, his problem, by your own definition, would be history, as in the flood of applicants from the upper 50 per cent. Furthermore, you make my point even more significant. If an employer wants dedicated and capable professional employees, then follow the “golden” rule as taught by the wisest “teacher” in Christendom. Of course, if you prefer a different response, I am a retired pipefitter and have worked on projects like construction of an atomic power plant, the one at Zion, Illinois, with qualified welders who earned a significant wage for their very important work, as I did, like three or four times above the state minimum. Regardless, your argument fails logically and apparently the doctor’s pay is appealing only to the lower half of JHS grads.

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  5. ansonburlingame

     /  December 21, 2013

    Ok, we have something in common, working around nuclear things. I managed such work and you did it, both of us successful I suspect. And I hope we both agree that doing such work is only for the well trained and very careful workforce, whatever level they may work.

    Now go to any high school class room today and find good students ready to begin such efforts today. They will be very hard to find, period, in my experience. Sure the AP students, hard workers, ready and wiling to study hard, learn new things every day, etc. will make that cut, to command a nuclear submarine or be a great petty officer standing watch on a critical reactor plant. But again those that are willing to perform academically and behave themselves to the extent demanded are few and far between, in today’s HS classrooms. Hell 50% of them cannot read, write of do math at grade level in HS with any proficiency. Then add in the 25% that drop out of HS and the pool of “performers” left is ever smaller.

    My step son pays a good wage. Money is not the issue in his work force. It is performance by that work force that is the issue. And I can go to almost any doctor’s office, or other “store” in town and observe the lack of such skills at the working level today.

    I had 2000 steel workers under my employment in the mid 1990’s, almost all of them having to work around nuclear materials in a “bomb factory”. Some of them were good men and women. Some were real slugs, only there for the money, good money negoiated fairly. They were a danger to themselves and the surrounding environment and changing their work practices was a HUGE task for sure.

    Finally, I accept your experience in the work force as a union man. But I seriously doubt you have been in High School classrooms in the last few years, observing what goes on therein today. It is an unmitigated mess, in my view, a terrible situation that cannot compare in any way what I endured in my little one horse town, small country school 60 years ago. I had 52 classmates that graduated from Georgetown (KY) High School in 1960. At least 90% of them went on to great lives, productive lives, good jobs many on farms or in local factories. Only 5 of us went to college and all of us certainly “made it” in our lives.

    Now go check the success rate of high school graduates (and drop outs which did not exist in my little school) today. Then blame it on the “government” or greedy capitalists, right!!

    Wrong, dead wrong for such blame, in my view.

    Anson

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