It’s amazing what he doesn’t get really

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?

11 thoughts on “It’s amazing what he doesn’t get really”

  1. Labour market flexibility is a factor. So might the world being blown up. The out break of the Korean War pushes demand up a tad.

    Also 2.5% ish of the workforce was conscripted.

  2. “the world has changed since 1958 (excepting the fact that’s when I arrived in it)”: my God, the daft old fart is only sixty.

  3. Wankpuffin now with less fisting, how many characters can go in the field. Oh?

    Dearime, yesh the TBI took a toll on da potato.

  4. If you look at the history of inflation rates we can state categorically that *we do not know* what NAIRU was in 1958 because the inflation rate was decelerating from the 4.9% during the Suez tragedy in 1956 (via 3.7% in ’57, 3% in ’58 ro 0.6% in ’59). Furthermore inflation was accelerating from 1945 to 1948, then again, after a sharp post-devaluation drop in 1949, up to 1952, when Conservative policies started to take effect. From 1952 to 1964 it oscillated before rising under Wilson.
    It is quite clear that NAIRU was more than 2% under Attlee since inflation accelerated despite unemployment being more than 2% which was assumed to be the minimum possible level by some academic economist.
    It is, of course, possible that “Danny” has revised the actual figures to exclude those who would have been on ESA instead of JSA from the Attlee figures, but not from the 1951-64 Conservative government figures.
    But, candidly, that would not be candid or honest.
    Why has NAIRU risen since the 1990s? Has anyone heard of the National Minimum wage?

  5. These figures are not comparable, much, and many factors have been involved in the historic evolution of the labour market. How about legal demise of casual cash-in-hand work? No reason to suppose it doesn’t happen now, but it isn’t recorded. How about the availability of an offshore pool of labour? Or the option not to work provided by the benefit system?

    I can’t see how with so many things going on that it is relevant to compare over six decades.

  6. moqifen said:
    “more like dunning kruger”

    He’s acted like that for many years, but there seems to be a concern that more problems have developed in recent years.

  7. Most 60 year old accountants are joining the Rotary club, playing golf or going on cruises. Ritchie would be well advised to join them.

  8. Bloke in North Dorset

    I’d rather he stuck to making an arse of himself rather than join my golf club, or any golf club blue I might come across him in a match or society.

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