For the first time in decades, we have a President in the White House who rejects the idea that workers' wages are the cause of inflation, and that we need deliberate recessions to stop inflation.
I don't need to tell you what a change this is from the past. For too long, too many Republicans blamed inflation on labor unions. And traditionally, labor unions have blamed inflation on excessive business profits and the Federal Reserve's high interest rates.
But inflation is not caused by too many workers working. It is not caused by business doing too much business. Inflation is caused by the government. With a combination of inflation and taxes, the government is driving a wedge between labor and management which does not have to be there.
You've got falling real wages, rising unemployment, a squeeze on profits and not enough investment to increase productivity. It's no wonder that the Phillips Curve doesn't work. Over the past 15 years, inflation has increased from 1 percent to 13 percent -- but the minimum unemployment rate achieved has risen from 3.3 percent to 5.6 percent. Lane Kirkland was right when he said that we'll never stop inflation until we put America back to work again.
It's clear to me that slow growth and high unemployment are not going to stop inflation. If anythin g, unemployment itself is inflationary.