But that brought us to another theme, where again I bow to Danny’s expertise. This is the so-called NAIRU – that is the non-accelerating inflation rate of unemployment. It’s not that long ago that the bank thought this was 8%. Then it was 7%, then 5%. Now it’s about 4.5% on their opinion. But why? As Danny explained, when researching a new book out next year from Princeton entitled ‘Not working: where have all the good jobs gone?’ he looked at NAIRU since 1945. He says as a result that it’s quite fair to argue that from 1947 to 1958 it was 1.5%. Of course the world has changed since 1958 (excepting the fact that’s when I arrived in it). And the profile of employment has changed radically too. But why has NAIRU changed? Or has it? Could it be argued that it is now no more than 2.5%? I think that plausible.
The actual purpose of most labour market reform over the past few decades – ever since Thatcher started to rush the unions – has been to lower Nairu.
If you asked Snippa whether that had worked he’d indignantly insist not.
But there he is insisting it did work.
The important thing being that he’ not even understand the conflict, would he?