Re: war, growth, inflation
The destruction of social security (via robbing peter to pay paul the war-monger) should finance the war for the ruling class. As for the unemployed, they can join the militree or go to prison. My question is, When is the inflation going to hit the fan? Mike B) --- Peter Bohmer [EMAIL PROTECTED] wrote: While the overall unemployment rate was slightly below 4% in the late 1960's, I remember that in a study of several black communities in major urban centers in 1967, the official unemployment rate there was 10% or more and the underemployment rate, which the labor department calculated at that time, was well over 20%. There was hardly full employment in these communities. When we get overly influenced by the official statistics and ideology, we sometimes deny the lived reality of many people. Pete Bohmer Doug Henwood wrote: Eugene Coyle wrote: I disagree with the assertion in this piece that in the Vietnam days unemployment was at rock bottom and with the attendant assertion that the economic engines were already revving hot when Vietnam spending slammed on the accelerator. The unemployment rate in the U.S. was 4% or less - mostly less - from 1966 through 1969. Over the same period, capacity utilization in manufacturing was 88% - it's never gotten anywhere near that since. Short of socialist revolution, how do you get numbers any tighter than that? Doug = * We have nothing that is ours except time, which even those without a roof can enjoy. Baltasar Gracián, Oráculo manual y Arte de prudencia http://profiles.yahoo.com/swillsqueal __ Do you Yahoo!? Yahoo! SiteBuilder - Free, easy-to-use web site design software http://sitebuilder.yahoo.com
Re: war, growth, inflation
Peter Bohmer wrote: While the overall unemployment rate was slightly below 4% in the late 1960's, I remember that in a study of several black communities in major urban centers in 1967, the official unemployment rate there was 10% or more and the underemployment rate, which the labor department calculated at that time, was well over 20%. There was hardly full employment in these communities. When we get overly influenced by the official statistics and ideology, we sometimes deny the lived reality of many people. I feel like I have this conversation about once a month, so maybe I should just program this into a script. Yes, sure, there are many flaws with the official unemployment rate. But they're probably more or less consistent over time, so the fact that the official rate was at an all-time low in the late 1960s suggests the labor market was as tight as it's ever been. The rate is not a measure of human deprivation, it's a measure of slack in the job market. And as everyone who's ever read Kalecki's great article on the political aspects of full employment knows, that couldn't last. Doug
Re: war, growth, inflation
The unemployment rate was NOT at an alltime low in the late 1960s. Scroll back a bit Doug. Gene Coyle Doug Henwood wrote: Peter Bohmer wrote: While the overall unemployment rate was slightly below 4% in the late 1960's, I remember that in a study of several black communities in major urban centers in 1967, the official unemployment rate there was 10% or more and the underemployment rate, which the labor department calculated at that time, was well over 20%. There was hardly full employment in these communities. When we get overly influenced by the official statistics and ideology, we sometimes deny the lived reality of many people. I feel like I have this conversation about once a month, so maybe I should just program this into a script. Yes, sure, there are many flaws with the official unemployment rate. But they're probably more or less consistent over time, so the fact that the official rate was at an all-time low in the late 1960s suggests the labor market was as tight as it's ever been. The rate is not a measure of human deprivation, it's a measure of slack in the job market. And as everyone who's ever read Kalecki's great article on the political aspects of full employment knows, that couldn't last. Doug
Re: war, growth, inflation
I disagree with the assertion in this piece that in the Vietnam days unemployment was at rock bottom and with the attendant assertion that the economic engines were already revving hot when Vietnam spending slammed on the accelerator. There was a lot of slack in the economy back then. Despite that, the anti-war movement embraced the easy claim that the economy couldn't afford the war. That was a good anti-war slogan but it played into the hands of the natural rate freaks who dominated -- and dominate -- economic discourse. Gene Coyle The economic backdrop of the Vietnam War is very different from the economy backstopping the fighting in Iraq. Back then, with unemployment at rock bottom, the economic engines were already revving hot when Vietnam spending slammed on the accelerator. Eubulides wrote: The War and the Economy Will Iraq Put Pressure on the Bush Tax Cut? By Jonathan Weisman Washington Post Staff Writer Tuesday, September 16, 2003; Page E01 In 1966, with spending in Vietnam on the rise, social programs growing and interest rates edging dangerously higher, Georgia's venerable Sen. Richard B. Russell Jr. asked whether this nation, for all its wealth and resources, can fight a war . . . and carry on a broad range of domestic spending -- without a tax increase or a dangerous deficit. The president apparently believes that we can, the Democrat told his state's legislature. For the sake of the country, . . . I hope and pray that he is right. Within two years, inflation was galloping, the federal deficit was climbing, and Lyndon Baines Johnson was forced to slam on the brakes with an unpopular tax hike to finance the war and slow the economy. In Johnson's experience, some see a cautionary tale for President Bush. Again, a president is pursuing his domestic priorities -- in this case, tax cuts -- even as he tries to finance a war that he insists will be limited and affordable. Administration officials say neither the amount of war spending nor the size of the budget deficit is enough to damage an economy they are still trying to push into high gear. But some economists and historians see enough of a parallel between the guns and butter debate of the 1960s and the nascent guns and tax cuts debate of today to raise the question of whether the administration is right. Right now we're in our unrealism phase, said historian Robert Dallek, author of the Johnson biography Flawed Giant. But they're going to have to face reality. There is the Lyndon Johnson moment coming down the road. The economic backdrop of the Vietnam War is very different from the economy backstopping the fighting in Iraq. Back then, with unemployment at rock bottom, the economic engines were already revving hot when Vietnam spending slammed on the accelerator. Now, the engine is just coming out of idle, with plenty of room for acceleration. Most economists say that under these conditions, the extra war spending probably will have an overall positive effect on the economy in the coming year. But whether the impact turns sour over time will depend on how long the war in Iraq lasts and how much it costs, they say. No one knows just how much slack is in the economy or how quickly it could give way to a blown gasket. Economists are notoriously bad at predicting turning points, said Lee Price, an economist at the liberal Economic Policy Institute in Washington. We can tell you the underlying factors that will push the change, but we can't say when it's going to happen. War spending has already become a driver of the economy, most economists agree, although they disagree over its relative importance. Defense expenditures surged in the April-to-June quarter of 2003 by 45.9 percent over the first quarter, to an annualized rate of $519 billion, according to the Bureau of Economic Analysis. The economy expanded at a surprisingly brisk 3.1 percent annual rate in the second quarter, of which 1.75 percentage points were attributed to defense spending. Bush's $87 billion request to fund the wars in Iraq, Afghanistan and elsewhere will push defense spending near $500 billion in the fiscal year that begins next month, well over the height of Ronald Reagan-era defense buildup, in today's dollars, and considerably higher than the inflation-adjusted $433 billion spent at the peak of the Vietnam War. Although employers shed 93,000 jobs in August, it may well have been worse but for the war. The military's mobilization currently has called into active duty 174,403 National Guardsmen and reservists, 20,000 of them in Iraq and Kuwait. Those troops are guaranteed their jobs when they return, but while they are on duty, someone else may be filling their post who otherwise would be jobless. It's fair to say what [growth] we've seen to date is largely defense driven, said Dean Baker, co-director of the Center for Economic and Policy Research. The theoretical fear is that once the economy is growing at a healthier pace, large, sustained increases in defense
Re: war, growth, inflation
Eugene Coyle wrote: I disagree with the assertion in this piece that in the Vietnam days unemployment was at rock bottom and with the attendant assertion that the economic engines were already revving hot when Vietnam spending slammed on the accelerator. The unemployment rate in the U.S. was 4% or less - mostly less - from 1966 through 1969. Over the same period, capacity utilization in manufacturing was 88% - it's never gotten anywhere near that since. Short of socialist revolution, how do you get numbers any tighter than that? Doug
Re: war, growth, inflation
While the overall unemployment rate was slightly below 4% in the late 1960's, I remember that in a study of several black communities in major urban centers in 1967, the official unemployment rate there was 10% or more and the underemployment rate, which the labor department calculated at that time, was well over 20%. There was hardly full employment in these communities. When we get overly influenced by the official statistics and ideology, we sometimes deny the lived reality of many people. Pete Bohmer Doug Henwood wrote: Eugene Coyle wrote: I disagree with the assertion in this piece that in the Vietnam days unemployment was at rock bottom and with the attendant assertion that the economic engines were already revving hot when Vietnam spending slammed on the accelerator. The unemployment rate in the U.S. was 4% or less - mostly less - from 1966 through 1969. Over the same period, capacity utilization in manufacturing was 88% - it's never gotten anywhere near that since. Short of socialist revolution, how do you get numbers any tighter than that? Doug
