Feldstein as Ruling Caste Sahib

On Monday of this week, the Wall Street Journal published an op-ed piece by Martin Feldstein, who as some of you will remember was chairman of the Council of Economic Advisers in the Reagan administration.   His essay has brought my anarcho-capitalist blood to a boil.

The gist of it is that the US dollar will lose value vis-a-vis other currencies in coming years, and this will be a good thing, because it will help our exporters. 

That line of thought in itself isn't surprising or especially infuriating.  Nor is the first of the reasons that Feldstein gives for this expectation.  He says that various "sovereign wealth funds and other international holders of large dollar balances" will diversify the currencies of their holdings, and this will have the effect of reducing the value of the dollar.  I can't argue with that.

The second reason he gives for this expected fall, though, is what lights a fire under my sanguinary kettle. He says the dollar will fall in value because the Fed will engineer such a fall, and that will be a good thing becauise the Fed can do so without setting off wage-price inflation.

"In the U.S., where only 7% of private workers are unionized, there is now little danger of an inflationary wage-price spiral.  The Fed can therefore counter the current economic weakness by promising to keep short rates at a near-zero level for an extended period of time," Feldstein writes.  Of course, if the Fed keeps rates near zero while the ECB raises its rates, then people will convert their dolars into euros to take advantage of the latter.  Which will help our exporters. Get it?

Why is this offensive?  It asks us to believe that inflation is only a problem if workers are organized and can fight back.  If workers aren't organized (as, in the US private sector, Feldstein rightly notes they aren't) then they can't fight back and demand increases as the value of their wages is being cheapened by ruling-class honchos like Feldstein and his policy making friends.  So, stick it to them!

Ah, it's all justified by creating more market opportunities for our exporters.  Evidently, it won't do much good for the people working for those exporters, because they are among those happily unorganized private sector workers who are going to get screwed.  So Feldstein means that a loss in the value of the dollar, and their wages, will end up helping the stockholders of our exporters.

Sorry, Sahib, but this makes me want to head to the ocean for some salt.