And, despite the long-term increase in the real wages of college graduates, their real starting pay has been falling for the past few years. The union share of the work force has declined year after year. In short, the natural cures that most economists hoped would improve the position of the lower paid have as yet not been effective. If the United States sustains full employment for the next five to 10 years, perhaps these cures will kick in with a vengeance. In such a situation the Federal Reserve Board will surely react by inducing or permitting a recession to curb inflation.
Economists are a dismal lot.
We worry when the economy booms and when the economy shrinks. We worry when the dollar goes up and when it goes down. It's part of the territory. Perhaps the best way to summarize current American economic policy is as a gamble. We have bet that we can maintain unemployment at lower rates than the Federal Reserve and most economists thought were compatible with stable inflation, and that we can avoid the business cycles that have historically devastated jobs and profits.