When All Else Is Out of Bounds, Zap Labor
From Nixon’s wage controls to today’s interest rate hikes, the fight against inflation has targeted labor.
This year's Nobel Prize winner in economics has just been announced: Edmund Phelps, a Columbia University economist, for his work on unemployment and inflation. Phelps is one of the economists of the "natural rate of unemployment" theory -- the theory that has provided the intellectual foundation for employing fear-mongering about inflation to fight job-creation policies.
In the current issue of D&S, Dr. Dollar offers a primer on the history of the unemployment-inflation tradeoff and a political-economy critique of natural-rate-of-unemployment theory (and of its recent demise -- in the late 1990s, the U.S. unemployment rate went well below what economists claimed was its "natural" rate without causing the accelerating inflation that they'd repeatedly warned would result): http://www.dollarsandsense.org/archives/2006/0906drdollar.html
If you're looking for a (brief) progressive analysis of Phelp's technical arguments about inflation and real-wage expectations, check out Dean Baker's Oct. 9 "Beat the Press" column: http://www.prospect.org/deanbaker/