Mitchell on Outmoded Fears of Wage-Price Spirals

In a series of articles, Chris Erickson and I have explored the idea of wage-push inflation and wage-price spirals that was commonly found in macroeconomic textbooks in the period from the 1950s to the 1970s. The concept involved the presence of powerful labor unions that would either initiate inflation or turn one-shot events, such as a rise in gasoline prices, into an ongoing inflationary process. Such ideas were reflected in economic policies and statements from Eisenhower through Carter in the U.S. We have also shown that the concept lingered even after the private union sector declined in the 1980s and beyond, using transcripts of deliberations of the Federal Reserve Open Market Committee and other sources. Macroeconomists still will sometimes use phrases such as "workers will demand..." or "workers won't accept..." that suggest a collective bargaining process. When we point out the use of such phrases, typically the defense is that the words are just metaphors. To that, we noted in one paper that you should be careful what you way; it might be what you mean. Links to some relevant papers can be found at http://www.anderson.ucla.edu/x2195.xml.
This video was conducted at the UCLA Anderson Graduate School of Management.

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News & Politics

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• inflation
• economy
• federal-reserve
• unions
• wage-price-spiral
• wage-push