"... much of the recent [noninflationary] economic growth [in the US] has
been caused not by productivity gains but by new jobs and by the greater
number of hours worked by those already employed. Workers 'are coming out
of the woodwork' as jobs become available, so the pressure raise wages and
therefore prices has been dampened. The work force seems to be other larger
and more flexible, than was previously realized, which is another way of
saying that the unemployment rate was really higher tan reported, and may
still be. Two decades of surplus labor have also kept workers too docile to
demand serious wage hikes. We are also all aware of what has happened to
the power of organized labor, which once represented one third of all
workers and now represents about one tenth of them.
"In addition, prices of imported goods, which account for nearly 15 percent
of what Americans buy, have been falling for several years, and are
currently well below their 1992 level. Just as important but rarely
commented on is that there may be an oversupply of services in the US.
Consider the large number of health are and financial institutions, in
addition to retail outlets such as coffee shops and department stores. The
highly competitive environment keeps companies from raising prices rapidly.
The problem for future rates of growth is that none of these conditions is
permanent. The unemployment rate cannot fall indefinitely, for example.
This is why few economists believe that a rate of growth of more than 2.5
percent [or real GDP] or slightly higher at best can be sustained
indefinitely."
-- Jeff Madrick, NEW YORK REVIEW OF BOOKS, March 26, 1998, p. 30
("Computers: Waiting for the Revolution.") Madrick is the editor of
CHALLENGE, a magazine with a social-democratic tilt.
He also points to the unsustainably high stock market and consumer
indebtedness as signs of instability. I would add to his list...
in pen-l solidarity,
Jim Devine [EMAIL PROTECTED] &
http://clawww.lmu.edu/1997F/ECON/jdevine.html
"he who is unable to live in society or has no need, because he is
sufficient for himself, must be either a beast or a god." -- Aristotle
