Comments on: Politics, priorities, and the Phillips Curve http://welkerswikinomics.com/blog/2008/03/31/politics-priorities-and-the-phillips-curve/ for students and teachers of Economics Wed, 08 Feb 2012 23:39:55 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: mina.song http://welkerswikinomics.com/blog/2008/03/31/politics-priorities-and-the-phillips-curve/comment-page-1/#comment-4853 mina.song Tue, 15 Apr 2008 02:51:32 +0000 http://welkerswikinomics.com/blog/2008/03/31/at-last-china-looks-ready-to-inflation-with-a-stronger-rmb/#comment-4853 May be... I think .... this is the one thing that I saw what chinese government is doing right. as we studied unemployment rate has relation with inflation. even though there will be some high inflation rate, this will lower the unemployment rate. May be… I think …. this is the one thing that I saw what chinese government is doing right. as we studied unemployment rate has relation with inflation. even though there will be some high inflation rate, this will lower the unemployment rate.

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]]> By: Jessica http://welkerswikinomics.com/blog/2008/03/31/politics-priorities-and-the-phillips-curve/comment-page-1/#comment-4824 Jessica Sun, 13 Apr 2008 22:24:19 +0000 http://welkerswikinomics.com/blog/2008/03/31/at-last-china-looks-ready-to-inflation-with-a-stronger-rmb/#comment-4824 I guess it makes sense to choose employment over inflation. If Wen decided to take the middle class and to try to reduce inflation while also trying to reduce unemployment, he would be overwhelmed and who knows what the results would be. The inflation created now is definitely both demand pull and cost push. With so many Chinese people who are getting richer, the demand for goods is increasing exponentially. Also, the prices of gas and oil are HIGHHH now. Reducing unemployment means that people will at least have some money and will be able to scrape by. If Wen had decided to deal with inflation instead, then prices would be lower but half the country would still not have the money to buy the goods. I guess it makes sense to choose employment over inflation. If Wen decided to take the middle class and to try to reduce inflation while also trying to reduce unemployment, he would be overwhelmed and who knows what the results would be. The inflation created now is definitely both demand pull and cost push. With so many Chinese people who are getting richer, the demand for goods is increasing exponentially. Also, the prices of gas and oil are HIGHHH now. Reducing unemployment means that people will at least have some money and will be able to scrape by. If Wen had decided to deal with inflation instead, then prices would be lower but half the country would still not have the money to buy the goods.

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]]> By: alicesu http://welkerswikinomics.com/blog/2008/03/31/politics-priorities-and-the-phillips-curve/comment-page-1/#comment-4765 alicesu Thu, 10 Apr 2008 22:19:08 +0000 http://welkerswikinomics.com/blog/2008/03/31/at-last-china-looks-ready-to-inflation-with-a-stronger-rmb/#comment-4765 The effects of making the trade-off between inflation and unemployment are sure to create problems in this case with the issue of soaring inflation. However, I believe that choosing to prevent unemployment rather than curb inflation is the correct choice in this case, at least for the time being; what's harder, trying to deal with rice that's too expensive, or realizing that you don't even have any job income to buy rice in the first place? True, inflation is a problem that needs to be dealt with, but in any case the political issue of maintaining the nation's security comes first and foremost before any economic philosophy. The effects of making the trade-off between inflation and unemployment are sure to create problems in this case with the issue of soaring inflation. However, I believe that choosing to prevent unemployment rather than curb inflation is the correct choice in this case, at least for the time being; what's harder, trying to deal with rice that's too expensive, or realizing that you don't even have any job income to buy rice in the first place? True, inflation is a problem that needs to be dealt with, but in any case the political issue of maintaining the nation's security comes first and foremost before any economic philosophy.

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]]> By: howard lin http://welkerswikinomics.com/blog/2008/03/31/politics-priorities-and-the-phillips-curve/comment-page-1/#comment-4752 howard lin Thu, 10 Apr 2008 20:22:55 +0000 http://welkerswikinomics.com/blog/2008/03/31/at-last-china-looks-ready-to-inflation-with-a-stronger-rmb/#comment-4752 Holding on to price levels only assures a little bit more time staying in authority. However...is that really good for the public?! It would just create shortages like the scene outside the gas stations around november...and holding on to rice price might result in shortages ( caused by rise in input cost - however, a price celing, -> reduce in Q produced ) and may eventually cause starvation. Holding on to price levels only assures a little bit more time staying in authority. However…is that really good for the public?! It would just create shortages like the scene outside the gas stations around november…and holding on to rice price might result in shortages ( caused by rise in input cost – however, a price celing, -> reduce in Q produced ) and may eventually cause starvation.

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]]> By: kevinchiu http://welkerswikinomics.com/blog/2008/03/31/politics-priorities-and-the-phillips-curve/comment-page-1/#comment-4706 kevinchiu Wed, 09 Apr 2008 12:22:59 +0000 http://welkerswikinomics.com/blog/2008/03/31/at-last-china-looks-ready-to-inflation-with-a-stronger-rmb/#comment-4706 Hmm.. if excessive inflation occurs in the long run, as Yun Qi stated, isn't that what China wants? Increasing inflation at a faster rate than other nations makes the RMB less valued than other currencies right? (Not a rhetorical question, I actually don't know). I mean, if the RMB's value lessens, China's exports seem more cheap and more foriegn nations will continue investing, hence providing more job opportunities in China for workers. Is inflation really that bad if the nominal wage increases at a similar rate? Hmm.. if excessive inflation occurs in the long run, as Yun Qi stated, isn't that what China wants? Increasing inflation at a faster rate than other nations makes the RMB less valued than other currencies right? (Not a rhetorical question, I actually don't know). I mean, if the RMB's value lessens, China's exports seem more cheap and more foriegn nations will continue investing, hence providing more job opportunities in China for workers. Is inflation really that bad if the nominal wage increases at a similar rate?

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]]> By: Jack Lo http://welkerswikinomics.com/blog/2008/03/31/politics-priorities-and-the-phillips-curve/comment-page-1/#comment-4667 Jack Lo Mon, 07 Apr 2008 21:20:20 +0000 http://welkerswikinomics.com/blog/2008/03/31/at-last-china-looks-ready-to-inflation-with-a-stronger-rmb/#comment-4667 This is an example of where politics and economics cross paths. Although these sky high inflation rates will probably erode all of the wages away, the Chinese people will keep working. We humans are more than economic beings. We're not stupid enough to stop working just because an economic model shows that they're actually losing money by working. The Chinese government ain't stupid. They've seen what high unemployment can cause - a revolution. That's why the government is choosing to keep unemployment low rather than keep inflation low. This is an example of where politics and economics cross paths. Although these sky high inflation rates will probably erode all of the wages away, the Chinese people will keep working. We humans are more than economic beings. We're not stupid enough to stop working just because an economic model shows that they're actually losing money by working. The Chinese government ain't stupid. They've seen what high unemployment can cause – a revolution. That's why the government is choosing to keep unemployment low rather than keep inflation low.

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]]> By: Angel Liu http://welkerswikinomics.com/blog/2008/03/31/politics-priorities-and-the-phillips-curve/comment-page-1/#comment-4666 Angel Liu Mon, 07 Apr 2008 20:56:41 +0000 http://welkerswikinomics.com/blog/2008/03/31/at-last-china-looks-ready-to-inflation-with-a-stronger-rmb/#comment-4666 The power of a communist government is quite scary. I was wondering why Chinese laborers would be willing to work at a real wage rate below the inflation rate cause then they would be losing money the more they worked. But since people had no right to express free thoughts, they must keep working if the government commands its labor force to work for diminishing wages. In a democracy, the government cannot simply ignore inflation over employment. The power of a communist government is quite scary. I was wondering why Chinese laborers would be willing to work at a real wage rate below the inflation rate cause then they would be losing money the more they worked. But since people had no right to express free thoughts, they must keep working if the government commands its labor force to work for diminishing wages. In a democracy, the government cannot simply ignore inflation over employment.

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]]> By: yunqimok http://welkerswikinomics.com/blog/2008/03/31/politics-priorities-and-the-phillips-curve/comment-page-1/#comment-4650 yunqimok Fri, 04 Apr 2008 12:38:12 +0000 http://welkerswikinomics.com/blog/2008/03/31/at-last-china-looks-ready-to-inflation-with-a-stronger-rmb/#comment-4650 While it is true that China should be concerned about the unemployment levels, it should be wary of what occurs in the long run. The tradeoff between unemployment and inflation is in the short run, but once the long run Phillips curve kicks in, the only that will happen is crazy inflation, and decreases in AS. However, I think Wen Jia Bao is employing the correct policy at this moment. Even if prices are soaring, less unemployment will mean a better distribution of wealth, which is an important economic growth. Furthermore, the state will have less of a burden to help the unemployed, and can focus its fund on improving infrastructure, or other public goods. While it is true that China should be concerned about the unemployment levels, it should be wary of what occurs in the long run. The tradeoff between unemployment and inflation is in the short run, but once the long run Phillips curve kicks in, the only that will happen is crazy inflation, and decreases in AS. However, I think Wen Jia Bao is employing the correct policy at this moment. Even if prices are soaring, less unemployment will mean a better distribution of wealth, which is an important economic growth. Furthermore, the state will have less of a burden to help the unemployed, and can focus its fund on improving infrastructure, or other public goods.

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