In helping fellow conservatives accept their shaky array of presidential candidates and their extreme economic prescriptions, conservative pundits must paint the status quo in flaming colors. Presumably, it’s easier to do something reckless in terrible times.
Conrad Black used this tactic in a friendly column about Herman Cain’s candidacy and the glories of Ronald Reagan. America, Black divines, “wants radical reform and lashings of panache.”
But, are these radically bad times? Here, Black goes too far:
“Underemployment afflicts nearly 20% of the work force, and inflation in those areas that have not been flattened by deflation, like housing, is in double digits.”
The first part about underemployment is not inaccurate. It’s only hypocritical. Under-employment—holding a part-time or low paying job that doesn’t require your skills and experience and doesn’t pay you enough to be financially secure—is a long-term structural problem that has increased steadily with free trade and the rationalization of American industry. It is a 30-year-old problem that Republicans ignore in their opposition to federal measures to re-train workers and support education, and in their boundless faith that small business “job-creators” will restore the American Dream.
The second part is plain wrong.
Inflation doesn’t happen in some “areas” and not in others. Some prices go up and some go down. Inflation is only the overall net increase in the monthly prices of all those goods and services people typically purchase. Inflation and deflation are not measures of some things and everything at once.
Today, US inflation—with or without housing—is not near double digits as it was in the 70s. Energy price increases — not housing price decreases — has been the wild card this last summer.
“The 12-month change in the all items index, which was 3.8 percent in August, edged up to 3.9 percent in September. The 12-month change for all items less food and energy remained at 2.0 percent for the second straight month. The energy index has risen 19.3 percent over the last year, while the food index has increased 4.7 percent.”
The economist Arthur Okun created a catchy term for the sever stagflation of the 70s—the Misery Index. It was simple — like most things that hurt. The index just added up the pain of high unemployment and the pain of high inflation. Happily for Ronald Reagan, this simple tool made Jimmy Carter look terrible.
The suggestion in Conrad Black’s statement that the United States' economy has returned to the stagflation—double-digit unemployment and double-digit inflation—of the late 1970s is entirely wrong, and only confuses necessary thinking about sustaining and expanding economic recovery and job creation.
The policy response then — extreme monetary contraction to curtail inflationary expectations — is uncalled for today and would only precipitate a depression.