| Subject: | [socialcredit] The NAIRU | | Date: | Friday, November 4, 2005 09:08:44 (-0800) | | From: | William B. Ryan <w_b_ryan @.....com>
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The Phillips Curve and NAIRU inform contemporary
macroeconomic thought. For perspective, I refer you
to the current series from The New York Times: "The
Greenspan Effect."
http://www.geocities.com/w_b_ryan/greenspan_effect/
The NAIRU - the nonaccelerating inflation rate of
unemployment.
The "accelerating" condition was described in Social
Credit Part II, Chapter II more than eighty years ago:
http://www.geocities.com/socredus/compendium/chap2part2.txt
"...An addition to both the numerator and denominator
of the fraction, such as is brought about by a rise of
wages, accompanied by a rise in price, has, of course,
the opposite effect; it brings the ratio of
purchasing-power to prices nearer, though never to
unity, with the result, seen in Germany in the
inflation period, of immense, though unstable,
economic activity, accompanied by great hardship to
the professional and rentier classes, both of whom
have claims to consideration, and a most undesirable
concentration of economic power, resulting infallibly
in the enslavement of the artisan."
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With NAIRU, the presumption is that if "unemployment"
is allowed to fall below a certain point (that is to
say if "employment" is allowed to rise above a certain
point), inflation must begin to "accelerate," causing
the economy to spiral out of control toward ultimate
collapse.
So the authorities deliberately hold the economy below
its potential. If you accept the theory you could not
in good conscious do otherwise. No need to look for
conspiracy here.
Social conservatives will therefore tolerate a certain
measure of welfare support mechanisms to accommodate
the forced "unemployment" required for economic
"stability."
Social liberals, inasmuch as they cleave to the very
same underlying economic theory, have had no ready
answer to address the permanment stagnation such a
policy necessarily entails, except perhaps to push for
a slightly higher rate of "employment" than is
presently permitted.
Properly presented, the A+B Theorem could suggest that
answer.
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The NAIRU
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