Challenging Inflation Targeting
Jobs No. 1
Re: Let’s Not Play Inflationary Game Again, Andrew Coyne, Aug. 30
During 25 years of inflation targeting, per capita growth in Canadian gross domestic product averaged a third less than during the prior quarter-century, business investment has been weak, unemployment high, and a massive financial crisis erupted.
We need to de-emphasize monetary policy, and use fiscal measures to target depressed regions. Jobs for skilled workers can be created through infrastructure renewal, and a job guarantee program delivered through non-profit and community groups (that includes paid training) would provide a minimum livable income for everyone across the country willing and able to work.
Inflation targeting may protect the assets of the rich, but evidence shows that when the economy is throttled, most Canadians pay the price.
1. Challenging Inflation Targeting, - Jim Stanford
"GDP growth per capita has slowed considerably during 25 years of inflation targeting: averaging 1.4 percent per year, a third less than in the quarter-century before targeting. Under the Bank’s current mandate, it’s been worse: 0.6 percent and falling. Business investment has never been weaker. It seems that stability in inflation means little to companies who worry about whether they can sell their products."
2. William Mitchell is Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), University of Newcastle, NSW, Australia
"The real costs of inflation targeting lie in the ideology that accompanies it such that fiscal policy has to be passive (that is, the pursuit of surpluses given the logic adhered to).
The failure of economies to eliminate persistently high rates of labour underutilisation despite having achieved low inflation is directly a consequence of this fiscal passivity. We thus need to move towards a new paradigm where inflation control can coincide with full employment.
This is where I argue for a Job Guarantee......"
Modern Monetary Theory in Canada