Notes from the Business section of Tuesday’s Washington Post: There’s some evidence in the lead story that both politicians and journalists do learn economics. Writing about the award of the Nobel Prize in economics to Edmund Phelps, reporter Nell Henderson writes:
In a series of papers in the late 1960s and early 1970s, Phelps, 73, challenged the prevailing belief that policymakers could lower the nation’s long‐term unemployment rate by accepting higher inflation.
That misguided notion contributed ruinously to Federal Reserve policies of the 1970s, which allowed easy credit to fan inflation to double‐digit levels. The result was high inflation and high unemployment, a combination that came to be called stagflation.
Free‐market economists often bemoan misguided economic assumptions in newspapers, not to mention bad policies promulgated by politicians, and they despair of getting basic economic concepts understood. But here’s a reporter who understands the failure of Phillips Curve economics in the 1970s, writing about a Federal Reserve that also came to understand that failure.
Inside the section, Vickie Elmer writes that “Some 77 percent of government workers say they’re happy at work, compared with 70 percent of those who work in private enterprise.” She offers some speculation about why that might be, including the fact that government agencies are hiring (but private‐sector employment is also growing). What she doesn’t mention is that it could be because federal employees make exactly twice as much money as private‐sector workers, as Chris Edwards wrote in the Post recently.
Finally, another story by Steven Mufson is headlined “Suspicion Surrounds Retreat in Gas Prices, Poll Finds.” It may actually be good news that according to the poll, only 30 percent of Americans think that gas prices are falling because the Bush administration is manipulating them in advance of the election. Last week Jerry Taylor praised Mufson’s previous story reviewing and deflating this conspiracy theory. It’s too bad that the idea is still alive.