Ivins’ economics

Molly Ivins’ May 22 column, titled, “It’s the economists, stupid, not the economy,” enraged me. You would think a nationally syndicated columnist could get her economic philosphies straight, but the way she confuses things, I doubt her column will be running in The Wall Street Journal any time soon.

First, she should not have ranted on about all her political views in the first half of the column if it was supposed to be about economics, because politics and economics do not mix: Good politics is bad economics, and good economics is bad politics. Second, she claims that Milton Friedman (winner of the 1976 Nobel Peace prize for economics and founder of monetarism) and his “Chicago school” of monetarists, along with other new classical economists, such as rational expectation theorists and supply-siders, believe high unemployment requires low inflation and that low unemployment necessitates high inflation. This relationship is known as the Phillips curve, named after economist A. W. Phillips.

The only people who believe in the mythical beast known as the Phillips curve are Keynesians. Monetarists like Friedman, supply-siders like Arthur Laffer, Jack Kemp, and former President Ronald Reagan, and any other new classical economists, or “contemporary disciples of Adam Smith,” do not believe in the Phillips curve. In fact, the curve was thoroughly discredited by our economic experiences in the 1980s.

Finally, to explain why “wages going up” might be interpreted as a predicator of inflation, remember that wages for workers are costs for producers. Therefore, rising wages for workers means rising costs for producers, and producers are simply not going to eat their losses for a while so consumers can enjoy higher wages and a stable price level. Producers are going to pass their costs on to consumers, in the form of higher prices, or inflation.

Before attempting to write another column that deals with economics, I recommend Ivins take an introductory class in Macroeconomics so she does not confuse, befuddle or mislead readers. Unless, of course, it is her intention to do so. Gabriel Tarr East Holden