And this needs to be an international project, given the level of global inequality we now have.
Instead of encouraging growth, macroeconomic policy would do better to MANAGE growth, limit it in many sectors or geographic locations. And, these days, the final crunch: limited resources on the planet, causing what appears to be a race toward an uninhabitable Earth. There is inflation, which may be unbalanced, making some suffer while others prosper. But we’re learning all the time about costs of economic growth. This, after all, is what “entrepreneurship” is all about. Is it new opportunities for some to get rich? Most likely. Is it growth in employment? Maybe (see above). The key question in all accounting of employment: what portion of the labor force is unhappy?Įconomic Growth: What is economic growth, anyway? Is it growth of money supply? No.
#WARP AND WOOF FULL#
But who says I shouldn’t pay them more, anyway? If they do not want to work for me at the rate I’m willing to pay, and nobody else is willing to pay them more, they quit looking, leave the labor force – contributing to full employment! They count as unemployed only when their expectations are that somebody will pay them more! If labor and capital are interchangeable “ forces of production,” to use Marx’s term, workers will have bargaining power over wages – their labor literally BECOMES capital. If I don’t pay my workers more in an inflationary economy, their lives will be immiserated. The obvious alternative to all this anxiety about inflation is simply to declare: “who cares?” – in the end, inflation is only bad if it outpaces wage growth! There are many factors controlling wage growth, which leads to my next example of questionable macroeconomic indicators.įull employment: The standard definition of “ full employment” is if everybody stops looking for work at the “prevailing wage.” Oddly, that is also the motivation for strikes! In any case, labor economics clearly points at lower unemployment leading to greater worker power. Historically, the Fed has always vacillated between being too “soft” on inflation by not raising rates (discount rates, prime interest rate) or selling enough bonds (contracting the money supply), and too “hard” on inflation, causing rising unemployment due to lack of investment incentive (high rates for loans). But does the economy need further stimulus at all? Ultimately, in democracies, it depends on the preference of voters – we think – shooting us into the realm of political economy.Īctions of the Fed: This is all about that thing called the “ money supply.” There seems to be a continuous tension in actions of the Federal Reserve (which ripple throughout the banking system) between unemployment and inflation.
And one school of thought maintains that what government spends its tax revenues on is more important than the actual dollar value of tax receipts – less on defense, more on targeted consumer relief and job creation, is better. See below for my questions about economic growth in general. What if we took an alternative view of taxation, focusing instead on progressivity in the tax rate as the engine of economic growth? Meaning that lower taxes on consumers, rather than investors, would be the real stimulus. apparently an article of faith that the wealthy paying more somehow depresses economic growth (investment being the life blood of capitalism). Those who insist on balanced budgets place all the emphasis on the total amount of revenue collected vs. Taxation: It seems to me that the real issue of taxation is WHO pays and who doesn’t. They seem to be built on a house of cards! Way too abstract for a simple-minded bloke like myself. But I totally fail to comprehend what macroeconomic indicators are all about. I can usually wrap my head around political economy (politics a real part of my world) or microeconomics (interact daily with microeconomic decision-making). It is adjacent to the study of political economy (mostly ideology) and microeconomics (individual economic actors dealing with supply and demand, pricing, etc.). It includes fiscal policy, unemployment, monetary policy (cost of money), international trade, and things like that. Macroeconomics is supposed to be the side of economics that deals with “big” issues –policy issues for the national economy.
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