Inflation fears sacrifice vulnerable populations for economic mysticism

(Paul, HS teacher/Member of the Philadelphia Federation of Teachers, https://www.jacobinmag.com/2020/06/case-for-job-guarantee-review-pavlina-tcherneva)

The book offers a revealing history on the concept of the natural rate of unemployment. Mainstream economists warn that if unemployment is too low, employers will need to raise wages and prices. They’ve deemed this all-elusive “natural” sweet spot as the Non-Accelerating Rate of Unemployment (NAIRU). Federal Reserve chairman Jerome Powell unintentionally revealed the absurdity of this notion when he said, “We need the concept of a natural rate of unemployment. We need to have some sense of whether unemployment is high, low, or just right.” Since the postwar years the Congressional Budget Office has asserted the “just right” level of unemployment to be between 4.5 percent and 6.5 percent. In other words, if over 13 million workers are unemployed today we should be satisfied with this as “just right.” While traditional economists fret over the costs of inflation, this book paints a vivid picture of the social costs caused by unemployment. People who are out of a job have a more difficult time finding work, especially if they’ve been unemployed long term. It creates a dangerous cycle in the broader economy where people cut back spending and fuel further layoffs from businesses. The loss of stable, blue-collar work is the primary cause of the “deaths of despair” often mentioned when discussing working-class white Americans. Our country is plagued by phenomena like suicide, alcoholism, and depression. Unemployment cuts people off from social networks and a sense of usefulness, creating and fueling all these ills. Creating quality employment for all who want it should be the chief concern of the federal government, not the bogeyman of inflation.