正文
the greatest weakness in ka-poom theory. for poom to "work," in thesense of inflating away much of the burden of accumulated debt, itrequires that the predicted inflation find its way into incomes, notjust costs. but the mechanisms for this transmission are not, as yet,elucidated.
in the '70's inflation was novel, and strong unions demanded - and got - cola's, cost of living adjustments,written into their contracts. this played an important role in both therecursive amplification of inflation and the transmission ofinflationary expectations. the relative novelty of inflation wasimportant in the acceptance of such contract provisions by employers,and in the weak anti-inflationary actions of both monetary and fiscalauthorities.
in the current environment we can expect both monetary and fiscalauthorities to be pro-inflationary, albeit that they will neveracknowledge this bent. but employers are trapped by rising input costson the one hand, and weakening consumption and price resistance on theother. walmart is gaining sales mostly by selling cheap groceries tolure people into its stores. they have noted that christmas gift cardsare not being used now for electronic toys, but for groceries.
let us posit an infrastructure and alt energy bubble. i can see wageimprovements in that part of the construction industry which willparticipate in the infrastructure construction and repair effort. manytrades involved in commercial real estate, in particular, should haveskills which transfer -- heavy machinery operation and steel work cometo mind. but i don't see where the carpentry framer who's been knockingtogether 2x4's in suburban developments is going to find work otherthan using a shovel to spread asphalt. even many skilled workers incommercial real estate, hvac workers for example, don't have skillstransferable to the new bubble unless we believe that alt energy willinclude lots of new green construction of commercial buildings and/orlots of complicated retrofitted systems.
alt energy may provide some relatively highly compensated labor, asidefrom the highest level scientific and technical employment at ther&d level. maybe joe carpenter can learn to install rooftop solarunits of some kind, but such opportunities are to my eye fewer innumber than the jobs lost in construction trades.
getting back to the main question however: what is going to raise median incomes?
in the '70's inflation was novel, and strong unions demanded - and got - cola's, cost of living adjustments,written into their contracts. this played an important role in both therecursive amplification of inflation and the transmission ofinflationary expectations. the relative novelty of inflation wasimportant in the acceptance of such contract provisions by employers,and in the weak anti-inflationary actions of both monetary and fiscalauthorities.
in the current environment we can expect both monetary and fiscalauthorities to be pro-inflationary, albeit that they will neveracknowledge this bent. but employers are trapped by rising input costson the one hand, and weakening consumption and price resistance on theother. walmart is gaining sales mostly by selling cheap groceries tolure people into its stores. they have noted that christmas gift cardsare not being used now for electronic toys, but for groceries.
let us posit an infrastructure and alt energy bubble. i can see wageimprovements in that part of the construction industry which willparticipate in the infrastructure construction and repair effort. manytrades involved in commercial real estate, in particular, should haveskills which transfer -- heavy machinery operation and steel work cometo mind. but i don't see where the carpentry framer who's been knockingtogether 2x4's in suburban developments is going to find work otherthan using a shovel to spread asphalt. even many skilled workers incommercial real estate, hvac workers for example, don't have skillstransferable to the new bubble unless we believe that alt energy willinclude lots of new green construction of commercial buildings and/orlots of complicated retrofitted systems.
alt energy may provide some relatively highly compensated labor, asidefrom the highest level scientific and technical employment at ther&d level. maybe joe carpenter can learn to install rooftop solarunits of some kind, but such opportunities are to my eye fewer innumber than the jobs lost in construction trades.
getting back to the main question however: what is going to raise median incomes?
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