Hi, Please can someone fully edit my paper, I really need grammer help because english is not my first language. Please help me, I know it is a big paper....please help.
The first three pages are the summary of articles and then answer of three questions
two important things i learned from the articles
economy is on the right track or not in the articles.
is policy change needed and what is your suggestion and author suggestion.
Unemployment and inflation are two well-known topics that are often discussed. However, many people do not know that unemployment and inflation are interrelated. Unemployment is defined as the number of people who have no job and are seeking employment (Colander, 157). An increase in the overall "price level" is called inflation (Colander, 157). Unemployment and inflation are both indicators of macroeconomic health. This report will discuss the relationship between unemployment and inflation, and their effects on our economic system, our society, and on the population. This report is based on chapter six "Unemployment and Inflation" from the Real World Macro by Dollar and Sense Collective.
In to the article "The Natural Rate of Unemployment," Pollin discussed the idea of NAIRU "Non-Accelerating Inflation Rate of Unemployment." š Many orthodox economists think that if a decrease in the unemployment rate below the "natural" rate of unemployment, which according to economists is a little less than 6%, can cause inflation.š In 1968, Milton Friedman, a Nobel Prize winning economist, invented the theory of "Natural Rate of Unemployment." š Later the theory was adjusted by mainstream economists and named the "Non-Accelerating Inflation Rate of Unemployment" or NAIRU. š That is an achievable rate or target that does not cause inflation to increase.š Friedman also said that NAIRU changes over time and it depends upon workers, unions and capitalists.š
When the unemployment rate goes down, it increases workers' demand for higher wages.š As compared to the theories of Robert Gordon, Karl Marx, and Michael Kalecki, all agreed that although NAIRU changes over time, but capitalists purposely avoid full employment because it would weaken profits.š Friedman's view, on the other hand, was that mass unemployment results when workers demand wages more than their productivity.š After understanding the class conflict, some important issues can be seen clearly. For instance, workers' demand of increasing wages does not cause inflation directly because power is in the hands of the "capitalists" not the workers. š In contrast, inflation occurs when capitalists fulfill their workers' demand of higher wages by increasing the prices on the goods and services.š Pollin said that the worker's well-being can not be determined by the full employment.š From the 1990's workers could not increase in their wages, therefore, the United States needs a well-developed policy to maintain full employment and living wage levels while controlling the inflation.š
According to the article "When Wage Hikes Don't Mean Price Hikes," written by Arthur Macewan, there are certain circumstances where employers don't pass "wage hikes" to their customers.˛ For instance, according to the "Law of Demand" the quantity of demand decreases when the prices of goods increase (Colander, 91). For this reason, employers have more chances of decreasing their sales and revenue, thus they don't pass cost increase on to their consumers.˛ When workers' earnings increase, it causes a general increase in the demand for goods and services.˛ On the other hand, firms and employers are also consumers, and when companies increase their employees' wages, it affects the companies' "purchasing power".˛ As a result, prices do not rise as much as wages. ˛ In addition, there are some factors that affect employers' ability to increase their prices to maintain the profits such as "government monetary authorities, minimum wage policies, and strength of labor unions."˛
Bryan Snyder's article "What Are the Real Costs of Inflation And To Whom," states that inflation does hurt financiers; that is not "inaccurate". But, contrary to the popular view, it does not discourage investment.ł The interest rate are not the main factor of investments, the "sales growth and how much cash a firm has on hand" are the main determinant of investments. Therefore, inflation is not much negatively associated with the long run growth. ł For instance, during the period of 1953 to 1973, the inflation was very high, but the rate of the growth was also high in the Japan, Korea, Israel, and also in some other countries.ł Its means that inflation and growth could coexist, and a high inflation does not hurt long term growth.ł
According to the Thomas Michl of Colgate University, the real costs of inflation is a decrease in the real income, but it can be corrected.ł For instance, the rate of inflation fluctuates over by time, therefore, the government established COLA (Cost of Living Adjustment) to be applied to benefits payments.ł COLA is an adjustment made to the social security structure to adjust the benefits, so the people's "fixed Social Security benefit" could not be diminished in real terms by the inflation.ł Additionally, an increase in the wages meant that workers' have to pay more income tax, thus to adjust the wages in order to compensate for the inflation, the government has enacted "Tax Reform Act" to solve this problem.ł
In the article "Is The "New Economy" More Productive?" by the author, Phineas Baxandall is "sorting fact from fiction" in the old and new economy, and doubting that there is really an information-age "productivity revolution". The information-age played a great role in the new economy, particularly, in the gain of productivity. Productivity measures the "output per unit of input" (Colander, 190). And Gross Domestic Product (GDP) is "the market value of final goods and services produced in an economy, stated in the prices of a given year" (Colander, 141). In recent decades, information technology development has helped to enhance the productivity and so resulting in higher GDP. On the other hand, in the 1980's average growth of the GDP was 2.9%, and in the 1990's it was 3.1%, so if we compared 1980's with 1990's average growth of the GDP, there was not so much difference. And also, from the year 1990's, average workers only gained minimal of 0.5% increased in their wages each year. However, the technology has increased the workers' expenditure because in order to be more productive and update their skills with the new technology, their need for having new technology has become essential for them. In relation to the new economy, productivity will continue to increase as the information technology continues to grow, but in reality there is not a new technology "productivity revolution". As economist Robert Gordon said "productivity growth has been lagging in precisely the industries that form the information technology vanguard." Therefore, it will be necessary for employers and government to pay attention to the worker's education and industry of the information technology.
As Arthur Macewan explained in his article "Productivity, Bargaining Power, And Wages" productivity is the amount of output over per unit of input, and the workers' or unions' power of demanding increase in compensation (wages and benefits) is called bargaining power. The bargaining power of workers in last ten years has weakened due to government policies. Workers at the lowest level are affected most by this. Moreover, outsourcing of jobs is also decreasing the workers bargaining power particularly low-skilled workers who are at the lower economic levels. They are already getting less facing competition with workers who are even being paid less than they are. For example, in East Asia and Mexico the average worker's income is much lower than the U.S. Technology changes are also an issue for workers who are lacking the skills that are essential for their jobs. According to past evidence, productivity increases faster than wages increase, so "It would be hard to explain the rise and fall of wages-by the changes in productivity."
I learned two important things after reading the chapter "Unemployment and Inflation". The first was how unemployment and inflation affect each other and the second was NAIRU (Non-Accelerating Inflation Rate of Unemployment). I realized that there is a tradeoff between inflation and unemployment, and low unemployment and low inflation can occur at the same time. I had never thought about this point of view before, so it really amazed me. There is a theory called NAIRU "Non-Accelerating Inflation Rate of Unemployment. This theory was also new for me. Under this theory, when employment goes below its "natural rate", which is also adjustable over the time, inflation begins to rise. It means that unemployment at some value is beneficial to the society.
All the authors in my bibliography were discussing the same timeframe (1990's to 2000's) as in the chapter "Unemployment and Inflation" of the Real World Macro. In this period U.S. economy was apparently on the right track. The U.S. economic growth was accelerating consistently. Technological developments increased productivity and also caused the phenomenon of globalization. The U.S. stock market was booming and investors were willing to invest in this significant growth. In this period inflation was pretty stable. According to Robert Pollin's article, "The "Natural Rate" Of Unemployment", the unemployment rate in the U.S. dropped to 4.9% in the year 1997 after declining for a decade, but the inflation rate was stable and controllable.
However, I would like to change the two things in our system. First the class conflict and second the fair wage system, which is obviously related to class conflict. According to this chapter, one thing was pretty clear that class conflict exits and it dominates the poorest members of the society most. Capitalists do not let allow full employment to occur because it raises the workers' demand for higher wages. If productivity is growing, then workers should have a good basis for demanding increases in their wages, and capitalists should not deny workers from getting what their true worth is.
There is a need to stabilize full employment with low inflation and fair wages. In the last decade, productivity was higher, but workers were not able to benefit from this as much as they should have. Definitely a policy change is needed because there is a fundamental inequality between the productivity gain and distribution of fair income. The government should impose a policy where full employment, productivity gains, and distribution of income remain stable. I would suggest that government should control class conflict because this is the main reason of instability. If government tries to agree those capitalists, who increase their profits by lessen the cost of workers' income or who has a fear that low unemployment will increase workers' demand for higher income. By making a deal or policy of a stable increase which can help to solve this problem for both the employers and employees.
In the chapter "Unemployment and Inflation" all the writers have same explicit suggestion to develop a policy that helps to maintain the productivity growth with fair distribution of income. For instance, Robert Pollin, clearly suggested that in the United States a well-developed policy is required, where full employment can be controlled and stabilized and at the same time maintaining a fair income. He also advocates healthy unions can protect the rights and benefits of the workers such as, living wages, reasonable job security, and a healthy work environment.š
Work Cited
1. Pollin, Robert. "The 'Natural Rate' of Unemployment: It's All About Class Conflict." Dollars and Sense, Real World Macro, Cambridge, MA: Economic Affairs Bureau, 2003. 93-96
2. Macewan, Arthur. "When Wage Hikes Don't Mean Price Hikes." Dollars and Sense, Real World Macro, Cambridge, MA: Economic Affairs Bureau, 2003. 96
3. Snyder, Bryan. "What Are The Real Costs Of Inflation-And To Whom?." Dollars and Sense, Real World Macro, Cambridge, MA: Economic Affairs Bureau, 2003. 97-98
4. Baxandall, Phineas. "Is The "New Economy" More Productive? Sorting Fact From Fiction." Dollars and Sense, Real World Macro, Cambridge, MA: Economic Affairs Bureau, 2003. 99-100
5. Macewan, Arthur. "Productivity, Bargaining Power, And Wages." Dollars and Sense, Real World Macro, Cambridge, MA: Economic Affairs Bureau, 2003. 100
6. Colander, David C. Macroeconomics. New York: McGraw-Hill/Irwin, 2005.
The first three pages are the summary of articles and then answer of three questions
two important things i learned from the articles
economy is on the right track or not in the articles.
is policy change needed and what is your suggestion and author suggestion.
Unemployment and inflation are two well-known topics that are often discussed. However, many people do not know that unemployment and inflation are interrelated. Unemployment is defined as the number of people who have no job and are seeking employment (Colander, 157). An increase in the overall "price level" is called inflation (Colander, 157). Unemployment and inflation are both indicators of macroeconomic health. This report will discuss the relationship between unemployment and inflation, and their effects on our economic system, our society, and on the population. This report is based on chapter six "Unemployment and Inflation" from the Real World Macro by Dollar and Sense Collective.
In to the article "The Natural Rate of Unemployment," Pollin discussed the idea of NAIRU "Non-Accelerating Inflation Rate of Unemployment." š Many orthodox economists think that if a decrease in the unemployment rate below the "natural" rate of unemployment, which according to economists is a little less than 6%, can cause inflation.š In 1968, Milton Friedman, a Nobel Prize winning economist, invented the theory of "Natural Rate of Unemployment." š Later the theory was adjusted by mainstream economists and named the "Non-Accelerating Inflation Rate of Unemployment" or NAIRU. š That is an achievable rate or target that does not cause inflation to increase.š Friedman also said that NAIRU changes over time and it depends upon workers, unions and capitalists.š
When the unemployment rate goes down, it increases workers' demand for higher wages.š As compared to the theories of Robert Gordon, Karl Marx, and Michael Kalecki, all agreed that although NAIRU changes over time, but capitalists purposely avoid full employment because it would weaken profits.š Friedman's view, on the other hand, was that mass unemployment results when workers demand wages more than their productivity.š After understanding the class conflict, some important issues can be seen clearly. For instance, workers' demand of increasing wages does not cause inflation directly because power is in the hands of the "capitalists" not the workers. š In contrast, inflation occurs when capitalists fulfill their workers' demand of higher wages by increasing the prices on the goods and services.š Pollin said that the worker's well-being can not be determined by the full employment.š From the 1990's workers could not increase in their wages, therefore, the United States needs a well-developed policy to maintain full employment and living wage levels while controlling the inflation.š
According to the article "When Wage Hikes Don't Mean Price Hikes," written by Arthur Macewan, there are certain circumstances where employers don't pass "wage hikes" to their customers.˛ For instance, according to the "Law of Demand" the quantity of demand decreases when the prices of goods increase (Colander, 91). For this reason, employers have more chances of decreasing their sales and revenue, thus they don't pass cost increase on to their consumers.˛ When workers' earnings increase, it causes a general increase in the demand for goods and services.˛ On the other hand, firms and employers are also consumers, and when companies increase their employees' wages, it affects the companies' "purchasing power".˛ As a result, prices do not rise as much as wages. ˛ In addition, there are some factors that affect employers' ability to increase their prices to maintain the profits such as "government monetary authorities, minimum wage policies, and strength of labor unions."˛
Bryan Snyder's article "What Are the Real Costs of Inflation And To Whom," states that inflation does hurt financiers; that is not "inaccurate". But, contrary to the popular view, it does not discourage investment.ł The interest rate are not the main factor of investments, the "sales growth and how much cash a firm has on hand" are the main determinant of investments. Therefore, inflation is not much negatively associated with the long run growth. ł For instance, during the period of 1953 to 1973, the inflation was very high, but the rate of the growth was also high in the Japan, Korea, Israel, and also in some other countries.ł Its means that inflation and growth could coexist, and a high inflation does not hurt long term growth.ł
According to the Thomas Michl of Colgate University, the real costs of inflation is a decrease in the real income, but it can be corrected.ł For instance, the rate of inflation fluctuates over by time, therefore, the government established COLA (Cost of Living Adjustment) to be applied to benefits payments.ł COLA is an adjustment made to the social security structure to adjust the benefits, so the people's "fixed Social Security benefit" could not be diminished in real terms by the inflation.ł Additionally, an increase in the wages meant that workers' have to pay more income tax, thus to adjust the wages in order to compensate for the inflation, the government has enacted "Tax Reform Act" to solve this problem.ł
In the article "Is The "New Economy" More Productive?" by the author, Phineas Baxandall is "sorting fact from fiction" in the old and new economy, and doubting that there is really an information-age "productivity revolution". The information-age played a great role in the new economy, particularly, in the gain of productivity. Productivity measures the "output per unit of input" (Colander, 190). And Gross Domestic Product (GDP) is "the market value of final goods and services produced in an economy, stated in the prices of a given year" (Colander, 141). In recent decades, information technology development has helped to enhance the productivity and so resulting in higher GDP. On the other hand, in the 1980's average growth of the GDP was 2.9%, and in the 1990's it was 3.1%, so if we compared 1980's with 1990's average growth of the GDP, there was not so much difference. And also, from the year 1990's, average workers only gained minimal of 0.5% increased in their wages each year. However, the technology has increased the workers' expenditure because in order to be more productive and update their skills with the new technology, their need for having new technology has become essential for them. In relation to the new economy, productivity will continue to increase as the information technology continues to grow, but in reality there is not a new technology "productivity revolution". As economist Robert Gordon said "productivity growth has been lagging in precisely the industries that form the information technology vanguard." Therefore, it will be necessary for employers and government to pay attention to the worker's education and industry of the information technology.
As Arthur Macewan explained in his article "Productivity, Bargaining Power, And Wages" productivity is the amount of output over per unit of input, and the workers' or unions' power of demanding increase in compensation (wages and benefits) is called bargaining power. The bargaining power of workers in last ten years has weakened due to government policies. Workers at the lowest level are affected most by this. Moreover, outsourcing of jobs is also decreasing the workers bargaining power particularly low-skilled workers who are at the lower economic levels. They are already getting less facing competition with workers who are even being paid less than they are. For example, in East Asia and Mexico the average worker's income is much lower than the U.S. Technology changes are also an issue for workers who are lacking the skills that are essential for their jobs. According to past evidence, productivity increases faster than wages increase, so "It would be hard to explain the rise and fall of wages-by the changes in productivity."
I learned two important things after reading the chapter "Unemployment and Inflation". The first was how unemployment and inflation affect each other and the second was NAIRU (Non-Accelerating Inflation Rate of Unemployment). I realized that there is a tradeoff between inflation and unemployment, and low unemployment and low inflation can occur at the same time. I had never thought about this point of view before, so it really amazed me. There is a theory called NAIRU "Non-Accelerating Inflation Rate of Unemployment. This theory was also new for me. Under this theory, when employment goes below its "natural rate", which is also adjustable over the time, inflation begins to rise. It means that unemployment at some value is beneficial to the society.
All the authors in my bibliography were discussing the same timeframe (1990's to 2000's) as in the chapter "Unemployment and Inflation" of the Real World Macro. In this period U.S. economy was apparently on the right track. The U.S. economic growth was accelerating consistently. Technological developments increased productivity and also caused the phenomenon of globalization. The U.S. stock market was booming and investors were willing to invest in this significant growth. In this period inflation was pretty stable. According to Robert Pollin's article, "The "Natural Rate" Of Unemployment", the unemployment rate in the U.S. dropped to 4.9% in the year 1997 after declining for a decade, but the inflation rate was stable and controllable.
However, I would like to change the two things in our system. First the class conflict and second the fair wage system, which is obviously related to class conflict. According to this chapter, one thing was pretty clear that class conflict exits and it dominates the poorest members of the society most. Capitalists do not let allow full employment to occur because it raises the workers' demand for higher wages. If productivity is growing, then workers should have a good basis for demanding increases in their wages, and capitalists should not deny workers from getting what their true worth is.
There is a need to stabilize full employment with low inflation and fair wages. In the last decade, productivity was higher, but workers were not able to benefit from this as much as they should have. Definitely a policy change is needed because there is a fundamental inequality between the productivity gain and distribution of fair income. The government should impose a policy where full employment, productivity gains, and distribution of income remain stable. I would suggest that government should control class conflict because this is the main reason of instability. If government tries to agree those capitalists, who increase their profits by lessen the cost of workers' income or who has a fear that low unemployment will increase workers' demand for higher income. By making a deal or policy of a stable increase which can help to solve this problem for both the employers and employees.
In the chapter "Unemployment and Inflation" all the writers have same explicit suggestion to develop a policy that helps to maintain the productivity growth with fair distribution of income. For instance, Robert Pollin, clearly suggested that in the United States a well-developed policy is required, where full employment can be controlled and stabilized and at the same time maintaining a fair income. He also advocates healthy unions can protect the rights and benefits of the workers such as, living wages, reasonable job security, and a healthy work environment.š
Work Cited
1. Pollin, Robert. "The 'Natural Rate' of Unemployment: It's All About Class Conflict." Dollars and Sense, Real World Macro, Cambridge, MA: Economic Affairs Bureau, 2003. 93-96
2. Macewan, Arthur. "When Wage Hikes Don't Mean Price Hikes." Dollars and Sense, Real World Macro, Cambridge, MA: Economic Affairs Bureau, 2003. 96
3. Snyder, Bryan. "What Are The Real Costs Of Inflation-And To Whom?." Dollars and Sense, Real World Macro, Cambridge, MA: Economic Affairs Bureau, 2003. 97-98
4. Baxandall, Phineas. "Is The "New Economy" More Productive? Sorting Fact From Fiction." Dollars and Sense, Real World Macro, Cambridge, MA: Economic Affairs Bureau, 2003. 99-100
5. Macewan, Arthur. "Productivity, Bargaining Power, And Wages." Dollars and Sense, Real World Macro, Cambridge, MA: Economic Affairs Bureau, 2003. 100
6. Colander, David C. Macroeconomics. New York: McGraw-Hill/Irwin, 2005.