I tried really hard to ignore this, but I do have the business section of the Washington Post sitting on my dining room table staring at me. And it says, "You Might Have to Thank Him for Your Job." Yes, that is the headline of the Washington Post's article on Edmund Phelps winning the Nobel Prize. Let's see, as I recall Edmund Phelps said that we have to keep the unemployment rate at or above the "natural rate" in order to keep inflation from accelerating. This would seem to imply throwing people out of work, as in the Fed raises interest rates, thereby slowing the economy and job creation and raising the unemployment rate. This is pretty much what happened in both 1989-90 and 1994-95. This view could perhaps justify a headline like "You Might Have to Thank Him for Losing Your Job," but it is hard to see how you get from Phelps theory to the Washington Post headline. The best is yet to come for those real masochists among BTP readers -- last chance to get away and not have your day ruined. Okay, you have been warned. The subhead is "Professor Who Solved Stagflation Wins Nobel." Excuse me while I go put my head in the oven.
-- Dean Baker
