by Haberler
[Front Matter and Acknowledgments]: This segment contains the title page, copyright information, and acknowledgments for the German edition of Gottfried Haberler's work on economic growth and stability. The author expresses gratitude to the American Enterprise Institute staff and the translators. [Table of Contents]: A detailed table of contents listing the chapters and sub-sections of the book. It outlines the scope of the work, covering topics such as stagflation, the international monetary order, growth measurement, business cycle theories, the debate between monetarism and Keynesianism, and the relationship between inflation and unemployment. [Table of Contents (Continued) and Preface to the German Edition]: The author provides a preface to the German edition, analyzing the severe worldwide recession of 1974-75 and the emergence of stagflation. He argues that stagflation is a late stage of long-term inflation driven by expectations and the market power of pressure groups like trade unions. He critiques both Keynesian and Monetarist failures to predict the crisis and advocates for a combination of macro-monetary control and micro-economic 'Income Policy II' to restore competition. [The International Monetary Order]: Haberler discusses the collapse of the Bretton Woods system and the transition to flexible exchange rates. He defends floating rates against charges that they cause inflation, arguing instead that fixed rates under modern conditions force the export of inflation. He distinguishes between 'controlled' and 'dirty' floating, critiques the feasibility of a European Monetary Union without policy harmonization, and addresses the volatility of exchange rates like the DM/Dollar during the mid-1970s. [Preface to the American Edition and Note on the Oil Crisis]: This section contains the preface to the original American edition and a significant postscript regarding the 1973 oil crisis. Haberler critiques the U.S. government's use of price controls and rationing in response to the energy crisis, contrasting it unfavorably with the market-based approach in West Germany. He analyzes the transfer problem of 'petro-dollars' and argues that the crisis necessitates flexible exchange rates to facilitate international adjustment. [Chapter 1: Introduction]: Haberler introduces the core objectives of the book: economic stability and growth, framed within the fundamental value of personal freedom. He defines the instruments of macroeconomic policy (monetary and fiscal) and microeconomic policy (anti-monopoly measures). He argues that a free market is essential for these goals and distinguishes between the regulation of natural monopolies and the harmful effects of general price controls. [Chapter 2: Growth and Growth Policy]: This chapter explores the determinants of long-term economic growth, emphasizing the role of the entrepreneur, innovation, and capital formation. Haberler critiques the 'Limits to Growth' report by the Club of Rome and the anti-growth movement, arguing that environmental degradation is an 'externality' that should be addressed through the price mechanism rather than by stopping growth. He defines growth as the increase in real per capita social product, adjusted for environmental costs. [Chapter 3: Economic Stability]: Haberler defines economic stability and the nature of the business cycle. He distinguishes between frictional, structural, and cyclical unemployment. He argues that while the business cycle has become milder in the post-war era (often appearing as a 'growth cycle' in rapidly developing economies), it remains a persistent phenomenon characterized by the parallel movement of real and monetary flows. [Chapter 4: Strategies of Stabilization]: The author examines various strategies for economic stabilization, contrasting the 'New Economics' with classical views. He discusses the role of automatic stabilizers and the limitations of 'fine-tuning' due to diagnostic, administrative, and operational lags. A central debate is presented between Monetarists (advocating steady monetary growth) and Fiscalists, with Haberler concluding that both monetary and fiscal tools are necessary but must be used with caution regarding their timing and side effects. [Chapter 5: Stability, Growth, and Inflation]: This chapter analyzes the trade-offs between stability, growth, and inflation. Haberler categorizes types of unemployment (frictional, structural, institutional, and cyclical) and argues that while creeping inflation might seem like a 'lesser evil' for maintaining employment, it eventually leads to accelerated inflation or 'stagflation' as money illusion fades. He critiques 'Structuralist' theories of inflation in developing countries and emphasizes that price stability is the best long-term foundation for growth. [Chapter 6: Demand Inflation and Cost Inflation]: Haberler distinguishes between demand-pull and cost-push inflation, focusing on the role of 'market power.' He argues that while industrial monopolies have limited inflationary impact, trade unions exert a powerful 'wage-push' that creates a dilemma for monetary authorities: either finance the inflation or accept unemployment. He critiques the pure monetarist view that denies union influence and discusses recent developments in the US and UK where institutional changes have strengthened union bargaining power. [Chapter 7: Wage Guidelines and Income Policy]: The author evaluates 'Income Policy I' (generalized guidelines/controls) versus 'Income Policy II' (measures to restore market competition). He argues that guidelines and price/wage stops (like those in 1971 and 1973) are generally ineffective or harmful. Instead, he advocates for structural reforms to curb union power, such as modifying minimum wage laws and removing legal privileges that shield unions from competition. A postscript analyzes the failure of the 1973 U.S. price freeze. [Chapter 8: Growth and Stability from an International Perspective]: This extensive chapter is divided into two sections. Section A discusses the vital role of international trade in economic growth, critiquing extreme protectionism and 'import substitution' in developing countries while acknowledging a limited 'infant industry' argument. Section B analyzes international monetary systems, comparing the Gold Standard, Bretton Woods, and flexible exchange rates. Haberler argues that flexible rates are necessary in a world of divergent national inflation rates to prevent the 'export' of inflation and avoid trade controls. [Appendix A: Why Growth Policy?]: Haberler justifies state intervention in growth policy even from a pro-market perspective. He argues that the state is never truly neutral due to the impact of taxes and social spending. Furthermore, intergenerational decisions (saving for the future) create conceptual difficulties for pure laissez-faire, as the preferences of future generations cannot be expressed in the current market. He advocates for growth policies that work through, rather than against, the market mechanism. [Appendix B: Recent Developments in the Theory of Underemployment]: This appendix reviews modern microeconomic theories of the labor market, specifically 'search theory' and information costs. Haberler critiques the attempt by Leijonhufvud and others to reinterpret Keynes by downplaying the role of unions and wage rigidity. He maintains that while search costs explain some frictional unemployment, the institutional power of unions remains the primary cause of persistent involuntary unemployment in modern economies. [Appendix C: The Phillips Curve]: Haberler provides a critical analysis of the Phillips Curve. He argues that while a short-term trade-off between inflation and unemployment may exist, it is unstable. As inflation expectations adjust and money illusion disappears, the curve shifts upward. He supports the 'equilibrium' or 'natural rate' theory, suggesting that attempting to push unemployment below its natural level through inflation only leads to accelerating price increases without long-term employment gains. [Notes to Chapter 1]: Footnotes for Chapter 1, defining 'informal rationing' and its prevalence in communist versus western countries. [Folgen von Preis- und Lohnkontrollen]: Discusses the negative consequences of price and wage controls, emphasizing how they lead to market evasion, quality deterioration, and a decline in economic efficiency and public respect for the law. [Vergleich von Wirtschaftssystemen: Individualismus vs. Kollektivismus]: Analyzes the performance differences between individualistic and collectivist economic systems using historical examples like East/West Germany, Cuba under Castro, and Chile under Allende. It also addresses Churchill's aphorism on poverty, noting that while communism aims for equality, it often results in significant income inequality and the need for performance incentives. [Definitionen von Geldmenge und Verdrängungseffekt]: Briefly addresses the definitions of money supply, referencing Milton Friedman's work, and introduces the concept of the 'crowding out effect' (Verdrängungseffekt) where public spending displaces private spending. [Anmerkungen zu Kapitel 2 (Fußnoten 1-10)]: Detailed endnotes for Chapter 2 covering topics such as budget deficits, the distinction between growth and development, labor productivity versus capital stock, and a critique of Keynesian growth theories. It references thinkers like Friedrich List, J.E. Meade, and the Harrod-Domar 'knife edge' model, tracing the return of growth theory to its neoclassical roots. [Wachstumsfördernde Ausgaben und Produktiver Konsum]: Haberler discusses the distinction between consumption and investment, introducing the concept of 'productive consumption' where expenditures on education or health simultaneously provide utility and increase future earning potential. He also notes that technological inventions can be capital-saving, reducing the overall need for capital. [Bevölkerungswanderung und Gesellschaftliche Spannungen]: An analysis of the socio-political limits of immigration. While acknowledging the historical contribution of migration to Western progress (citing Rougier), the author notes that differences in race, religion, and culture can lead to serious social tensions and efforts to halt the influx of foreign labor. [Historische Fallstudien und Literaturhinweise zur Entwicklung]: Bibliographic references and brief commentary on the economic development of Brazil after 1956 and Malaysia, highlighting them as successful case studies for economic growth and international trade policy. [Externe Effekte, Umweltschutz und Staatsaufgaben]: The author suggests that reducing state administrative costs and focusing on the 'internalization' of external costs (like pollution) or external benefits can increase the social product. Environmental protection is categorized as a measure to address negative externalities. [Kapitalmarkt, Zinssatz und Wachstumstheorie]: Haberler critiques modern growth theorems that claim saving and investment cannot sustain growth without technological progress, arguing this depends on unproven assumptions about capital's marginal productivity. He emphasizes the necessity of the interest rate for economic efficiency, noting that even socialist planners had to reintroduce it 'through the back door'. [Pareto-Optimum und Soziale Wohlfahrt]: Discussion of the Pareto optimum and the discrepancy between private and social utility. Haberler explains that while the market mechanism defines a conditional optimum based on existing income distribution, attempts to redistribute income (e.g., through progressive taxation) often cause distortions. He also touches on the difficulty of assessing positive externalities compared to negative ones. [Ökologie und Unterentwicklung]: A brief reflection on the distinction between economic and non-economic environmental changes, such as the extinction of 'useless' species. Haberler critiques an ecological argument by Murdoch and Connell, questioning the arbitrary line between 'underdevelopment' and 'harmful abundance'. [Anmerkungen zu Kapitel 2: Kritik an Wachstumsgrenzen und Umweltdebatten]: This segment contains detailed footnotes (28-37) for the second chapter, focusing on the critique of the Club of Rome's reports and the 'Limits to Growth' study. Haberler references various scholars like Beckerman, Hayek, Nordhaus, and Tobin to argue that the price mechanism and private initiative are often overlooked in environmental models. He also discusses the statistical challenges of accounting for environmental costs in the Gross National Product (GNP). [Anmerkungen zu Kapitel 3: Konjunkturzyklen, Beschäftigung und Krisenphänomene]: These footnotes (1-9) for Chapter 3 define key concepts in business cycle theory and labor market analysis. Topics include the distinction between underemployment, full employment, and over-employment, the methodology of the National Bureau of Economic Research (NBER) for dating cycles, and the evolution of financial crises. Haberler also critiques the utility of complex econometric models of cyclical behavior that were popular among Keynesian economists. [Konjunkturelle Autonomie und wirtschaftliche Integration]: Discusses the relationship between national business cycles and international integration, specifically within the European Community. It argues that while small countries are heavily influenced by external factors, they still retain a degree of 'cyclical autonomy' for independent policy, which is absent in sub-national regions. [Defizite öffentlicher Unternehmen in Entwicklungsländern]: Briefly identifies the inefficiency and overstaffing of state-owned enterprises (such as railways, post, and oil refineries) as a primary cause of fiscal deficits in developing countries. [Historische Analyse der Inflation in den USA]: Refutes the argument that the US experienced 150 years of secular inflation prior to the Great Depression. The author clarifies that price increases were historically linked to wars and followed by deflations, whereas the post-WWII era shows a permanent shift toward non-declining price levels. [Rezession und Wachstumsraten]: Notes the first post-war recession in West Germany (1966/67) and discusses the relationship between labor potential and growth rates, suggesting that rapid labor growth can mask underlying economic shifts. [Anmerkungen zu Kapitel 4: Konjunkturtheorie und die Große Depression]: Detailed endnotes for Chapter 4 discussing the theoretical distinctions between healthy expansion and unstable booms. It provides a historical and critical analysis of the Great Depression, comparing the American New Deal with German economic policy under Schacht, and emphasizing the role of the fragile US banking system and monetary contraction as explained by Friedman and Schwartz. [Anmerkungen zu Kapitel 4 (Fortsetzung): Fiskalpolitik und Geldmenge]: Notes on the efficacy of tax cuts versus permanent fiscal changes, the 'balanced budget multiplier', and the limitations of economic forecasting. It references the failure of leading indicators during the 1973/74 stagflation and discusses the 'monetarist rule' for steady money supply growth. [Anmerkungen zu Kapitel 4 (Schluss) und Kapitel 5: Arbeitslosigkeit und Inflation]: Final notes for Chapter 4 and initial notes for Chapter 5. Topics include the Federal Reserve's policy errors in 1968, the theoretical debate between fiscalists and monetarists, and the definition of voluntary versus involuntary unemployment. It critiques Keynesian underemployment theories and introduces the concept of structural and institutional unemployment caused by minimum wages. [Anmerkungen zu Kapitel 5 (Fortsetzung): Mindestlöhne und Strukturalismus]: Notes focusing on the 'new unemployment' caused by welfare systems and minimum wage laws, particularly among youth. It also discusses the Latin American structuralist school of inflation and the concept of 'suppressed' (zurückgestaute) inflation versus open inflation. [Anmerkungen zu Kapitel 5 (Schluss) und Kapitel 6: Kosteninflation und Gewerkschaftsmacht]: Notes concluding Chapter 5 and starting Chapter 6. It examines the shift from demand-pull to cost-push inflation, the downward rigidity of wages, and the role of labor unions in driving the 'natural rate of unemployment' higher. It includes a critique of the Phillips Curve and references to the 1923 German hyperinflation. [Anmerkungen zu Kapitel 6 (Fortsetzung): Marktunvollkommenheiten und Monopole]: Notes analyzing the differential impact of corporate monopolies versus labor unions on inflation. It argues that union power is a more persistent inflationary force than corporate market power. It also discusses the role of government regulation (CAB, ICC) in keeping prices artificially high and the impact of the OPEC cartel. [Anmerkungen zu Kapitel 7: Einkommenspolitik und Lohnleitlinien]: Notes on the history and failure of income policies and wage guidelines. It discusses Arthur Burns' proposals, the Dutch experience with wage explosions, and the distortions caused by price controls (e.g., in the lumber and natural gas industries). It also contrasts the US labor market with the more flexible Japanese system. [Anmerkungen zu Kapitel 8: Internationaler Handel und Währungssystem]: Extensive notes on international economics. It covers the theory of infant industry protection (Hamilton, List, Mill), the failure of import substitution in Latin America, and the transition from the gold-exchange standard to the dollar standard. It also discusses the mechanism of imported inflation and the debate over fixed versus flexible exchange rates. [Anmerkungen zu Anhang B und C: Arbeitsmarktökonomik und die Phillips-Kurve]: Final notes addressing the microeconomic foundations of employment (information costs, search unemployment) and the evolution of the Phillips Curve. It highlights Irving Fisher's early contributions and the modern 'accelerationist' critique which argues that the long-run Phillips Curve is vertical at the natural rate of unemployment once inflation is fully anticipated.
This segment contains the title page, copyright information, and acknowledgments for the German edition of Gottfried Haberler's work on economic growth and stability. The author expresses gratitude to the American Enterprise Institute staff and the translators.
Read full textA detailed table of contents listing the chapters and sub-sections of the book. It outlines the scope of the work, covering topics such as stagflation, the international monetary order, growth measurement, business cycle theories, the debate between monetarism and Keynesianism, and the relationship between inflation and unemployment.
Read full textThe author provides a preface to the German edition, analyzing the severe worldwide recession of 1974-75 and the emergence of stagflation. He argues that stagflation is a late stage of long-term inflation driven by expectations and the market power of pressure groups like trade unions. He critiques both Keynesian and Monetarist failures to predict the crisis and advocates for a combination of macro-monetary control and micro-economic 'Income Policy II' to restore competition.
Read full textHaberler discusses the collapse of the Bretton Woods system and the transition to flexible exchange rates. He defends floating rates against charges that they cause inflation, arguing instead that fixed rates under modern conditions force the export of inflation. He distinguishes between 'controlled' and 'dirty' floating, critiques the feasibility of a European Monetary Union without policy harmonization, and addresses the volatility of exchange rates like the DM/Dollar during the mid-1970s.
Read full textThis section contains the preface to the original American edition and a significant postscript regarding the 1973 oil crisis. Haberler critiques the U.S. government's use of price controls and rationing in response to the energy crisis, contrasting it unfavorably with the market-based approach in West Germany. He analyzes the transfer problem of 'petro-dollars' and argues that the crisis necessitates flexible exchange rates to facilitate international adjustment.
Read full textHaberler introduces the core objectives of the book: economic stability and growth, framed within the fundamental value of personal freedom. He defines the instruments of macroeconomic policy (monetary and fiscal) and microeconomic policy (anti-monopoly measures). He argues that a free market is essential for these goals and distinguishes between the regulation of natural monopolies and the harmful effects of general price controls.
Read full textThis chapter explores the determinants of long-term economic growth, emphasizing the role of the entrepreneur, innovation, and capital formation. Haberler critiques the 'Limits to Growth' report by the Club of Rome and the anti-growth movement, arguing that environmental degradation is an 'externality' that should be addressed through the price mechanism rather than by stopping growth. He defines growth as the increase in real per capita social product, adjusted for environmental costs.
Read full textHaberler defines economic stability and the nature of the business cycle. He distinguishes between frictional, structural, and cyclical unemployment. He argues that while the business cycle has become milder in the post-war era (often appearing as a 'growth cycle' in rapidly developing economies), it remains a persistent phenomenon characterized by the parallel movement of real and monetary flows.
Read full textThe author examines various strategies for economic stabilization, contrasting the 'New Economics' with classical views. He discusses the role of automatic stabilizers and the limitations of 'fine-tuning' due to diagnostic, administrative, and operational lags. A central debate is presented between Monetarists (advocating steady monetary growth) and Fiscalists, with Haberler concluding that both monetary and fiscal tools are necessary but must be used with caution regarding their timing and side effects.
Read full textThis chapter analyzes the trade-offs between stability, growth, and inflation. Haberler categorizes types of unemployment (frictional, structural, institutional, and cyclical) and argues that while creeping inflation might seem like a 'lesser evil' for maintaining employment, it eventually leads to accelerated inflation or 'stagflation' as money illusion fades. He critiques 'Structuralist' theories of inflation in developing countries and emphasizes that price stability is the best long-term foundation for growth.
Read full textHaberler distinguishes between demand-pull and cost-push inflation, focusing on the role of 'market power.' He argues that while industrial monopolies have limited inflationary impact, trade unions exert a powerful 'wage-push' that creates a dilemma for monetary authorities: either finance the inflation or accept unemployment. He critiques the pure monetarist view that denies union influence and discusses recent developments in the US and UK where institutional changes have strengthened union bargaining power.
Read full textThe author evaluates 'Income Policy I' (generalized guidelines/controls) versus 'Income Policy II' (measures to restore market competition). He argues that guidelines and price/wage stops (like those in 1971 and 1973) are generally ineffective or harmful. Instead, he advocates for structural reforms to curb union power, such as modifying minimum wage laws and removing legal privileges that shield unions from competition. A postscript analyzes the failure of the 1973 U.S. price freeze.
Read full textThis extensive chapter is divided into two sections. Section A discusses the vital role of international trade in economic growth, critiquing extreme protectionism and 'import substitution' in developing countries while acknowledging a limited 'infant industry' argument. Section B analyzes international monetary systems, comparing the Gold Standard, Bretton Woods, and flexible exchange rates. Haberler argues that flexible rates are necessary in a world of divergent national inflation rates to prevent the 'export' of inflation and avoid trade controls.
Read full textHaberler justifies state intervention in growth policy even from a pro-market perspective. He argues that the state is never truly neutral due to the impact of taxes and social spending. Furthermore, intergenerational decisions (saving for the future) create conceptual difficulties for pure laissez-faire, as the preferences of future generations cannot be expressed in the current market. He advocates for growth policies that work through, rather than against, the market mechanism.
Read full textThis appendix reviews modern microeconomic theories of the labor market, specifically 'search theory' and information costs. Haberler critiques the attempt by Leijonhufvud and others to reinterpret Keynes by downplaying the role of unions and wage rigidity. He maintains that while search costs explain some frictional unemployment, the institutional power of unions remains the primary cause of persistent involuntary unemployment in modern economies.
Read full textHaberler provides a critical analysis of the Phillips Curve. He argues that while a short-term trade-off between inflation and unemployment may exist, it is unstable. As inflation expectations adjust and money illusion disappears, the curve shifts upward. He supports the 'equilibrium' or 'natural rate' theory, suggesting that attempting to push unemployment below its natural level through inflation only leads to accelerating price increases without long-term employment gains.
Read full textFootnotes for Chapter 1, defining 'informal rationing' and its prevalence in communist versus western countries.
Read full textDiscusses the negative consequences of price and wage controls, emphasizing how they lead to market evasion, quality deterioration, and a decline in economic efficiency and public respect for the law.
Read full textAnalyzes the performance differences between individualistic and collectivist economic systems using historical examples like East/West Germany, Cuba under Castro, and Chile under Allende. It also addresses Churchill's aphorism on poverty, noting that while communism aims for equality, it often results in significant income inequality and the need for performance incentives.
Read full textBriefly addresses the definitions of money supply, referencing Milton Friedman's work, and introduces the concept of the 'crowding out effect' (Verdrängungseffekt) where public spending displaces private spending.
Read full textDetailed endnotes for Chapter 2 covering topics such as budget deficits, the distinction between growth and development, labor productivity versus capital stock, and a critique of Keynesian growth theories. It references thinkers like Friedrich List, J.E. Meade, and the Harrod-Domar 'knife edge' model, tracing the return of growth theory to its neoclassical roots.
Read full textHaberler discusses the distinction between consumption and investment, introducing the concept of 'productive consumption' where expenditures on education or health simultaneously provide utility and increase future earning potential. He also notes that technological inventions can be capital-saving, reducing the overall need for capital.
Read full textAn analysis of the socio-political limits of immigration. While acknowledging the historical contribution of migration to Western progress (citing Rougier), the author notes that differences in race, religion, and culture can lead to serious social tensions and efforts to halt the influx of foreign labor.
Read full textBibliographic references and brief commentary on the economic development of Brazil after 1956 and Malaysia, highlighting them as successful case studies for economic growth and international trade policy.
Read full textThe author suggests that reducing state administrative costs and focusing on the 'internalization' of external costs (like pollution) or external benefits can increase the social product. Environmental protection is categorized as a measure to address negative externalities.
Read full textHaberler critiques modern growth theorems that claim saving and investment cannot sustain growth without technological progress, arguing this depends on unproven assumptions about capital's marginal productivity. He emphasizes the necessity of the interest rate for economic efficiency, noting that even socialist planners had to reintroduce it 'through the back door'.
Read full textDiscussion of the Pareto optimum and the discrepancy between private and social utility. Haberler explains that while the market mechanism defines a conditional optimum based on existing income distribution, attempts to redistribute income (e.g., through progressive taxation) often cause distortions. He also touches on the difficulty of assessing positive externalities compared to negative ones.
Read full textA brief reflection on the distinction between economic and non-economic environmental changes, such as the extinction of 'useless' species. Haberler critiques an ecological argument by Murdoch and Connell, questioning the arbitrary line between 'underdevelopment' and 'harmful abundance'.
Read full textThis segment contains detailed footnotes (28-37) for the second chapter, focusing on the critique of the Club of Rome's reports and the 'Limits to Growth' study. Haberler references various scholars like Beckerman, Hayek, Nordhaus, and Tobin to argue that the price mechanism and private initiative are often overlooked in environmental models. He also discusses the statistical challenges of accounting for environmental costs in the Gross National Product (GNP).
Read full textThese footnotes (1-9) for Chapter 3 define key concepts in business cycle theory and labor market analysis. Topics include the distinction between underemployment, full employment, and over-employment, the methodology of the National Bureau of Economic Research (NBER) for dating cycles, and the evolution of financial crises. Haberler also critiques the utility of complex econometric models of cyclical behavior that were popular among Keynesian economists.
Read full textDiscusses the relationship between national business cycles and international integration, specifically within the European Community. It argues that while small countries are heavily influenced by external factors, they still retain a degree of 'cyclical autonomy' for independent policy, which is absent in sub-national regions.
Read full textBriefly identifies the inefficiency and overstaffing of state-owned enterprises (such as railways, post, and oil refineries) as a primary cause of fiscal deficits in developing countries.
Read full textRefutes the argument that the US experienced 150 years of secular inflation prior to the Great Depression. The author clarifies that price increases were historically linked to wars and followed by deflations, whereas the post-WWII era shows a permanent shift toward non-declining price levels.
Read full textNotes the first post-war recession in West Germany (1966/67) and discusses the relationship between labor potential and growth rates, suggesting that rapid labor growth can mask underlying economic shifts.
Read full textDetailed endnotes for Chapter 4 discussing the theoretical distinctions between healthy expansion and unstable booms. It provides a historical and critical analysis of the Great Depression, comparing the American New Deal with German economic policy under Schacht, and emphasizing the role of the fragile US banking system and monetary contraction as explained by Friedman and Schwartz.
Read full textNotes on the efficacy of tax cuts versus permanent fiscal changes, the 'balanced budget multiplier', and the limitations of economic forecasting. It references the failure of leading indicators during the 1973/74 stagflation and discusses the 'monetarist rule' for steady money supply growth.
Read full textFinal notes for Chapter 4 and initial notes for Chapter 5. Topics include the Federal Reserve's policy errors in 1968, the theoretical debate between fiscalists and monetarists, and the definition of voluntary versus involuntary unemployment. It critiques Keynesian underemployment theories and introduces the concept of structural and institutional unemployment caused by minimum wages.
Read full textNotes focusing on the 'new unemployment' caused by welfare systems and minimum wage laws, particularly among youth. It also discusses the Latin American structuralist school of inflation and the concept of 'suppressed' (zurückgestaute) inflation versus open inflation.
Read full textNotes concluding Chapter 5 and starting Chapter 6. It examines the shift from demand-pull to cost-push inflation, the downward rigidity of wages, and the role of labor unions in driving the 'natural rate of unemployment' higher. It includes a critique of the Phillips Curve and references to the 1923 German hyperinflation.
Read full textNotes analyzing the differential impact of corporate monopolies versus labor unions on inflation. It argues that union power is a more persistent inflationary force than corporate market power. It also discusses the role of government regulation (CAB, ICC) in keeping prices artificially high and the impact of the OPEC cartel.
Read full textNotes on the history and failure of income policies and wage guidelines. It discusses Arthur Burns' proposals, the Dutch experience with wage explosions, and the distortions caused by price controls (e.g., in the lumber and natural gas industries). It also contrasts the US labor market with the more flexible Japanese system.
Read full textExtensive notes on international economics. It covers the theory of infant industry protection (Hamilton, List, Mill), the failure of import substitution in Latin America, and the transition from the gold-exchange standard to the dollar standard. It also discusses the mechanism of imported inflation and the debate over fixed versus flexible exchange rates.
Read full textFinal notes addressing the microeconomic foundations of employment (information costs, search unemployment) and the evolution of the Phillips Curve. It highlights Irving Fisher's early contributions and the modern 'accelerationist' critique which argues that the long-run Phillips Curve is vertical at the natural rate of unemployment once inflation is fully anticipated.
Read full text