Perry L. Gardner: Private Journal #10
Saturday, April 16, 1988
An inspired thought regarding unemployment as an inflation fighter: Conventional wisdom says that if we went for full employment, it would increase inflation pressure because ?. I’m not sure why, but one reason could be an increase in supply from all that extra work output? I assume that depends on what work is being done. Is the other excuse for high unemployment to keep pressure on wage demands? And what is a proper unemployment rate? If 7% is acceptable, wouldn’t 10% be better; or 3%? I don’t see the case being made.*
* Insight: The labor pool is not homogeneous—Unemployment could be up in one sector and down in another—Some get high wages because of Sector One, which is inflationary, while other sectors are depressed and unemployed—How can it be lumped into a big generalization?
John Anderson has some good ideas. One is the concept of national trust funds from such revenues as oil import taxes to be used for construction and maintenance of infra-structure, and to be used counter-cyclic to boom and recession. Another important thought was to get rid of the “beggar thy neighbor” negative economic competition between regions by transferring transfer payment functions such as Medicaid back to the Federal government so that local taxes and energy could be used for positive competition in making each place a good place to live and do business.