A Benjamin Cole post
Flash report: Latest stats from U.S. are that hourly wages in May are up 2.0% YOY.
Readers bear with me, I will start with an analogy.
So, there was a married lady, who disliked sex, and thought marriage counseling was needed—for her husband. She thought he should appreciate her more-elevated virtues, her intellect, her taste in furnishings, her hostess skills, and her career. He should forget base gratifications.
Which brings to mind Martin Feldstein, Harvard econ prof, who has been preaching Inflationary End Times since at least 2009, as I pointed out in my last post here. In his last missive (June 29, for Project Syndicate) Feldstein warned wage hikes were going to run wild, threatening “accelerating” inflation. (Please note that inflation never threatens to rise to a higher level, such as 2.5%, and stay there. It always threatens to “accelerate.”)
But, the BLS just reported May wages were up a galloping 2% YOY. Even wages are not accelerating, let alone prices.
Why The Married Lady Story?
What do employers and employees really want from the economy? They want to make money, lots of it. Call it base gratification, if you will.
The Feldsteins of the world say there is a higher virtue that should be honored in the marketplace: that of zero inflation.
Feldstein is the married lady of macroeconomics.
Let me pose this question: In a modern democracy, how will voters feel about free enterprise and capitalism if there are chronic “tight” labor markets?
How will voters feel if there is chronically high unemployment and weak labor markets and stagnant wages?
The Feldsteins of the world may wish to ponder the question.
Because a marriage should be about mutual gratification.
The “scene” that Feldstein supposedly is looking at: