We Americans are quite happy to welcome a shortage of high-quality jobs. Consider this fact. According to the U.S. Bureau of Labor Statistics, according to the CBO, according to the OECD, according to the ECB, the U.S. has way too many people in low-skilled jobs that barely pay anything. According to the NBER, the United States experienced stagflation in the 1970s. In the last quarter, Gallup’s Economic Confidence Index suggested that Americans had had enough of stagflation.
Not that the folks at Gallup are fools. They know that Americans, as a group, are turning cynical about the U.S. economy. And they know that Americans are, as a group, very frightened about the economy. The voters spoke last month; many of those voters voted against Democratic congressional candidates who, in the eyes of many voters, seem to favor very high taxes and high spending programs.
As a conservative economist who has been writing about the economic prospects of the United States for decades, I hear more doubts and complaints than I ever did from my colleagues in the academic world or my fellow conservatives. Never in my life have I felt so pained to be a conservative and a Republican. The facts don’t really matter. The gamesmanship of our president and his fellow partisans has so skewed public opinion and law that the facts and the law must be borne up to us.
The original sin is of this administration, the perverse brand of populism that treats facts as insidious and seductive. That brand now dominates the minds of many Americans.
Unfortunately, the Trump administration has proven more than happy to conflate facts with party. And those two mutually incompatible but sometimes indistinguishable concepts comprise a fundamental problem for the economy. So today, we bring you David Olive’s new book on stagflation: Bad Things Happen When Economists Don’t Speak the Truth. Mr. Olive is a conservative economist who leaves his politics at the door when he goes into a classroom. In this book, he examines a perplexing yet great range of economic phenomena from the recovery to inflation to the tightening of monetary policy to monetary policy. These topics, coupled with his great deal of research in these areas, make for a lively, entertaining and insightful primer on stagflation.
Stagflation is a difficult concept to grasp in any American context. These issues are not immune to the echo chamber that obtains when partisans use discussion forums to substitute scripted talking points for genuine debate. So please, when reading Mr. Olive’s book, remember that economic indicators such as consumer spending, job creation, inflation, real gross domestic product, the unemployment rate, stock prices, and exports and imports have not been neutral to one another during the more than four decades from 1970 to 2018. The country’s weak demand for high-paying jobs and inattentive high-interest rate policies created a vicious cycle of rising prices and low demand that has contributed mightily to stagflation.
But it is an overstatement to say that stagflation is a threat to the economic well-being of the United States. It has been clear for a long time now that the secular economic trends already underway — globalization, technology, decreasing labor productivity, and the aging of the population — would create real competition for U.S. workers, raise wages for a larger and larger share of Americans, and distort the distribution of earnings.
To borrow a famous phrase, the group of professional opinion analysts who compose the consensus of U.S. economists — over 95 percent of them — have not been able to create a consensus among them on these critical matters.
Mr. Olive, who is a senior fellow at the Hoover Institution, deserves a great deal of credit for staying grounded in the facts and honest in his analysis and his questions. We could use more of that, all around.