Saturday, May 9, 2015

One newsbit - NAIRU and black Americans

WSJ RTE - jobless rate for black Americans finally falls into single digits. Seriously:
The seasonally adjusted unemployment rate for black workers was 9.6% in April, the Labor Department said Friday. That was down from 10.1% in March and the lowest reading since June 2008, when it was 9.4%.

For whites, the unemployment rate was steady in April at 4.7%.
It seems funny, then, that the Fed would think the NAIRU is around 5%: that would essentially be a policy statement that they want blacks to continue suffering the equivalent of a deep recession. Forever.

Really? Hasn't the US done anything in the past 40 years to improve the employability of black people? Haven't there been any strides in education, health care, crime reduction, employment equity, and reducing racism?

Because the concept of NAIRU was first invented in 1975. Anyone who "calculates" a NAIRU number seriously must take into account the shifting structure of American society, and not just assume that today's economy grows out of the same societal structure that we had even 10 or 20 years ago.

The Krugginator has, in the past, made note of how so much US economic policy is deeply informed by racism (see, for example, The Conscience of a Liberal), so I'd love to see his take on this idea that raising rates at 5% unemployment is a policy decision aimed at keeping blacks in poverty. Then again, I'm pretty sure it's him who asserted recently that a 5.0% NAIRU is just a number randomly pulled out of someone's ass one day, and that the US saw extremely low unemployment in the noninflationary 90s.

Well, I guess til I see proof otherwise, I'll have to put my faith in Janet Yellen being a person who actually cares about the citizens of the US.

PS - Conflict Theory is a thing in sociology. So is there such a thing as "conflict economics"?Yeah, okay, there's Marxist economics, but sociology was already way the hell beyond Marx's sociology 100 years ago. It'd be interesting to graft conflict theory (and Foucault and post-colonialism and so on) into economics. Maybe I'll become a prof after all.

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