I think we all intuitively understand what has happened (at least the readers here). By doing lockdowns and creating an enormous climate of fear, the government destroyed a big portion of the supply curve.
Then, they attempted to solve the problem by WAY overstimulating the demand side, which actually created even more supply side destruction.
What? My theory is that many people received a lot of money from the government at all levels such that they no longer needed to be employed, nor to even work as hard to produce a product. For example, I know of many people who just chose to stay at home and do occasional side gigs rather than go back to work, because unemployment was "no questions asked." For a long time, the federal government was subsidizing state unemployment. I had prospective employees making more on the government dole than I could pay them. When there was no one available, I ended up just paying a lot more. This cycle continues today.
What people also don't realize is that all wages will eventually come back to equilibrium relative to each other. I always shake my head at these "$15 minimum wage" movements, because they never work. The chef will always want to make X times his rookie cook. The senior police detective will always want to make more than the rookie patrolman, and by a certain amount. The attorney will not condone making less than 5X what a paralegal makes (or whatever), or, what their doctor makes. Everyone thinks relatively, which is why inflation will always be a danger. Because labor is often the largest input into any product, inflation is always subject to whatever wage rates are doing.
Kudos to Milton Friedman for his ability to explain this (and to you, Mr. Carter) simply. It is a hard subject to truly grasp for non-economics people. Friedman reminds me a bit of Thomas Sowell.
And, Friedman taught Thomas Sowell!!! (and lots of other brilliant economists). I don't have a best Milton Friedman story, but the Chicago Boys used to get together at cocktail parties and present theories to each other. When Coase presented his, Friedman said it was bunk. Then, they all ruminated on it a while and found it was brilliant. I think the entire Chicago school of economics has its roots in Coase Theory.
I just read the Jason Riley book about Mr. Sowell. It’s a great overview of his life’s work. I can heartily recommend the book, although I’d probably read Mr. Sowell’s autobiography first. He is such a great American.
65 years ago Dr. Milt lead a group of Econ Grad students called "The Chicago Boys'.They would be great economists. A second rate economist but first rate CONSERVATIVE talker is Dr. Tom; one of many "Chicago Boys".
Sowell defended Bork from Snarlin Arlen in the Senate. Big time
I think we all intuitively understand what has happened (at least the readers here). By doing lockdowns and creating an enormous climate of fear, the government destroyed a big portion of the supply curve.
Then, they attempted to solve the problem by WAY overstimulating the demand side, which actually created even more supply side destruction.
What? My theory is that many people received a lot of money from the government at all levels such that they no longer needed to be employed, nor to even work as hard to produce a product. For example, I know of many people who just chose to stay at home and do occasional side gigs rather than go back to work, because unemployment was "no questions asked." For a long time, the federal government was subsidizing state unemployment. I had prospective employees making more on the government dole than I could pay them. When there was no one available, I ended up just paying a lot more. This cycle continues today.
What people also don't realize is that all wages will eventually come back to equilibrium relative to each other. I always shake my head at these "$15 minimum wage" movements, because they never work. The chef will always want to make X times his rookie cook. The senior police detective will always want to make more than the rookie patrolman, and by a certain amount. The attorney will not condone making less than 5X what a paralegal makes (or whatever), or, what their doctor makes. Everyone thinks relatively, which is why inflation will always be a danger. Because labor is often the largest input into any product, inflation is always subject to whatever wage rates are doing.
Kudos to Milton Friedman for his ability to explain this (and to you, Mr. Carter) simply. It is a hard subject to truly grasp for non-economics people. Friedman reminds me a bit of Thomas Sowell.
And, Friedman taught Thomas Sowell!!! (and lots of other brilliant economists). I don't have a best Milton Friedman story, but the Chicago Boys used to get together at cocktail parties and present theories to each other. When Coase presented his, Friedman said it was bunk. Then, they all ruminated on it a while and found it was brilliant. I think the entire Chicago school of economics has its roots in Coase Theory.
I just read the Jason Riley book about Mr. Sowell. It’s a great overview of his life’s work. I can heartily recommend the book, although I’d probably read Mr. Sowell’s autobiography first. He is such a great American.
I had a chance to go to U of C, when I was applying for colleges in the early 90's. I didn't have enough money.
I would have loved to be a part of their economics program, but I didn't know what I didn't know. I should have said, "whatever it takes."
I still got a great education otherwise, and I didn't leave with too much debt.
Tradeoffs...but I wonder what could have been.
You'd have been a professor instead of an entrepreneur....the undergrads are geeks.
65 years ago Dr. Milt lead a group of Econ Grad students called "The Chicago Boys'.They would be great economists. A second rate economist but first rate CONSERVATIVE talker is Dr. Tom; one of many "Chicago Boys".
Sowell defended Bork from Snarlin Arlen in the Senate. Big time
The video is great. You missed your calling as an economics professor :)
I don't have those kinds of math skills.