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There was an interesting (propaganda) piece in today's Financial Times by
Edmund Phelps. To go from memory (the FT does not have a good website I
believe) : He argues that the US NAIRU has indeed been lowered due to
structural changes and a higher rate of business investment which are
enabled by the entrepreneurship encouraged by open US capital markets
while Europe remains structurally mired in high unemployment due to its
corporatist structure. He asserts a strong correlation between those
economies with a high market cap/GDP ratio and those economies which are
So it's an argument for the globalisation of the Anglo
American financial structure while not paying any real attention to the
deplorable conditions of labor in the US--labor intensity (Jane
Slaughter's work is excellent), turnover, rate of exploitation. All is
rosy if unemployment and income distribution look just a little bit
better--it's the simple Keynesian standards. Phelps also downplays the
props the US economy is getting from its imperial position (I still think
Marxists have a lot to learn about how political power and economic power
interact in the world market from Susan Strange, but Jerry has bitterly
resisted this) and instead attributes success mostly to its financial
structure on the grounds that open capital markets anywhere today means
high growth and low unemployment. Which I am sure is utter bullshit or
soon to be utter bullshit.
Even more astonishing was the piece by Anne Krueger and TN Srinivasan.
First they argued that third world debt should not be relieved because the
released resources would not mostly go to the poor. Surely true. That it
should be forgiven because third world bourgeoisies will otherwise impose
even more draconian tax regimes to pay off that debt and thus bleed the
poor to death was not considered a good reason. They then proposed more
aid directly to the poor without explaining why that couldn't be done with
debt forgiveness as well.
Aren't Phelps, Krueger and Srinivasan considered some of the leading
lights of the economics profession? I found them really scary.
All the best, Rakesh
On Wed, 9 Aug 2000, Patrick L. Mason wrote:
> I'm putting together a doctoral course in labor economics. Any citations on
> recent changes in US & European unemployment/natural rate hypothesis would
> be greatly appreciated.
> peace, plmason
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