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> ...and that the primary risk once the economy reaches full employment is inflation, which seems to be precisely what has happened, no? Certainly, there is in

by IncRnd 5y ago

> ...and that the primary risk once the economy reaches full employment is inflation, which seems to be precisely what has happened, no? Certainly, there is inflation. There isn't full employment.

OGWhales 5y ago
MMTers argue that government spending at full employment will cause inflation, not that there must be full employment for there to be inflation.
dlp211 5y ago
Inflation has many inputs and looking at inflation strictly through a monetary lens will provide a distorted picture as to why there is inflation. Additionally, MMT states that it needs to use taxes to manage inflation, which the US federal gov't is clearly not doing, which undermines the testability of the theory.
zemptime 5y ago
MMT has seemed to me to be an academic fig leaf over the indirect taxation which occurs when more money is printed. MMT is fundamentally wrong, and everyone smart knows it is, but you as an individual can't make any sort of "respected" career as an economist unless you say the right things or are stupid enough to believe them.
ericmay 5y ago
Aren't there record job openings? I know "full employment" is a loaded term here, but at least in a general sense all who want a job could at least find something right? One thing I'd be interested in seeing a discussion on as it relates to this topic is what happens when there is a legitimate labor shortage.
- Mountain_Skies 5y ago
  Not all job openings exist with the intention of ever being filled.
standeven 5y ago
How do you define full employment? The unemployment rate in the USA is currently 3.8%.
- ummonk 5y ago
  There's no strict definition, but an unemployment rate <4% almost certainly corresponds to full employment, as frictional unemployment can be expected to be ~4%.
- IncRnd 5y ago
  BLS defines full employment as an economy in which the unemployment rate equals the nonaccelerating inflation rate of unemployment (NAIRU), no cyclical unemployment exists, and GDP is at its potential. [1] [1] https://www.bls.gov/opub/mlr/2017/article/full-employment-an-assumption-within-bls-projections.htm https://www.bls.gov/opub/mlr/2017/article/full-employment-an...
- chimeracoder 5y ago
  > How do you define full employment? The unemployment rate in the USA is currently 3.8%. 3.8% is near historic lows. More importantly: "full employment" doesn't mean unemployment is literally 0% - in fact, an unemployment rate of 0% would be actively bad, because it indicates that people are unable to leave their jobs (even temporarily) to seek better opportunities or life changes - usually because inflation is too high.
drexlspivey 5y ago
Unemployment < 4% is basically full employment. People that are changing jobs are temporarily unemployed. Another metric you can use to reach the same conclusion is that # of job openings > unemployed work force
- IncRnd 5y ago
  That's U-3. U-6 is at 7.2%. In general the claim that many people are not returning to work after COVID lockdowns is true. The reasons are up for debate, but that's not the point. The U-3 rate is an artificial rate to claim as the truth. That's moving the goal posts in order to get the win. Plus there are a record number of unfilled job openings.
  - deleted 5y ago
    [deleted]
  - hn_throwaway_99 5y ago
    Your argument is a non sequitur to me: > Plus there are a record number of unfilled job openings. Yes, which would basically imply that it's incredibly easy for anyone who wants a job to get one.
    - IncRnd 5y ago
      > Your argument is a non sequitur to me: For something to be a non sequitur, it must be a non sequitur to everyone, not just to one. This is not a non sequitur for two reasons. 1) The sentence you quoted was not intended to be a consequence of the earlier statement. Unemployment rate and number of job openings are connected, but not as you believe. Correlation is not causation. You are drawing inferences without cause. 2) Full employment depends upon the number of job openings as well as the unemployment rate, which you ignored from my comment. > Yes, which would basically imply that it's incredibly easy for anyone who wants a job to get one. No. That is your inference but is clearly not implied.
  - bskap 5y ago
    U-6's 7.2% is compared to 7.0% in February 2020 and 8.1% in February 2007. So even that is similar to pre-Covid levels and better the the peak before the last recession.

by IncRnd 5y ago

> ...and that the primary risk once the economy reaches full employment is inflation, which seems to be precisely what has happened, no? Certainly, there is inflation. There isn't full employment.

OGWhales 5y ago

MMTers argue that government spending at full employment will cause inflation, not that there must be full employment for there to be inflation.

dlp211 5y ago

Inflation has many inputs and looking at inflation strictly through a monetary lens will provide a distorted picture as to why there is inflation. Additionally, MMT states that it needs to use taxes to manage inflation, which the US federal gov't is clearly not doing, which undermines the testability of the theory.

zemptime 5y ago

MMT has seemed to me to be an academic fig leaf over the indirect taxation which occurs when more money is printed. MMT is fundamentally wrong, and everyone smart knows it is, but you as an individual can't make any sort of "respected" career as an economist unless you say the right things or are stupid enough to believe them.

ericmay 5y ago

Aren't there record job openings? I know "full employment" is a loaded term here, but at least in a general sense all who want a job could at least find something right? One thing I'd be interested in seeing a discussion on as it relates to this topic is what happens when there is a legitimate labor shortage.

Mountain_Skies 5y ago
Not all job openings exist with the intention of ever being filled.

standeven 5y ago

How do you define full employment? The unemployment rate in the USA is currently 3.8%.

ummonk 5y ago
There's no strict definition, but an unemployment rate <4% almost certainly corresponds to full employment, as frictional unemployment can be expected to be ~4%.
IncRnd 5y ago
BLS defines full employment as an economy in which the unemployment rate equals the nonaccelerating inflation rate of unemployment (NAIRU), no cyclical unemployment exists, and GDP is at its potential. [1] [1] https://www.bls.gov/opub/mlr/2017/article/full-employment-an-assumption-within-bls-projections.htm https://www.bls.gov/opub/mlr/2017/article/full-employment-an...
chimeracoder 5y ago
> How do you define full employment? The unemployment rate in the USA is currently 3.8%. 3.8% is near historic lows. More importantly: "full employment" doesn't mean unemployment is literally 0% - in fact, an unemployment rate of 0% would be actively bad, because it indicates that people are unable to leave their jobs (even temporarily) to seek better opportunities or life changes - usually because inflation is too high.

drexlspivey 5y ago

Unemployment < 4% is basically full employment. People that are changing jobs are temporarily unemployed. Another metric you can use to reach the same conclusion is that # of job openings > unemployed work force

IncRnd 5y ago
That's U-3. U-6 is at 7.2%. In general the claim that many people are not returning to work after COVID lockdowns is true. The reasons are up for debate, but that's not the point. The U-3 rate is an artificial rate to claim as the truth. That's moving the goal posts in order to get the win. Plus there are a record number of unfilled job openings.
- deleted 5y ago
  [deleted]
- hn_throwaway_99 5y ago
  Your argument is a non sequitur to me: > Plus there are a record number of unfilled job openings. Yes, which would basically imply that it's incredibly easy for anyone who wants a job to get one.
  - IncRnd 5y ago
    > Your argument is a non sequitur to me: For something to be a non sequitur, it must be a non sequitur to everyone, not just to one. This is not a non sequitur for two reasons. 1) The sentence you quoted was not intended to be a consequence of the earlier statement. Unemployment rate and number of job openings are connected, but not as you believe. Correlation is not causation. You are drawing inferences without cause. 2) Full employment depends upon the number of job openings as well as the unemployment rate, which you ignored from my comment. > Yes, which would basically imply that it's incredibly easy for anyone who wants a job to get one. No. That is your inference but is clearly not implied.
- bskap 5y ago
  U-6's 7.2% is compared to 7.0% in February 2020 and 8.1% in February 2007. So even that is similar to pre-Covid levels and better the the peak before the last recession.