Pynchon and Lethem; wage inflation and the Death of God

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Red Queens: Jonathan Lethem’s ‘Dissident Gardens’ reviewed by Yiyun Li

A little pop philosophy of history. Along with the theories of evolution and science and relativity theory, etc. came Modernism and the "Death of God." The wasteland of T.S. Eliot. Nietzsche etc. and the losing of religion.

For the ideological left, the disillusionment with the Soviet Union in 1956 and much earlier for other leftists, was like the loss of God. Today it is politics without a viable socialist movement. Could the turn away from Bloomberg in New York City and the turn towards de Blasio mean something? Could the back-to-back elections of Obama mean something related to demographics and the conservative movement collapsing in upon itself in an enclosed ideological bubble? Could the election of Elizabeth Warren (who replaced Scott Brown); the flash of Occupy Wall Street and Jerry Brown's success in California auger something more hopeful than a political wasteland devoid of a strong, viable socialist movement? Could the legalization of gay marriage and the sidelining of the Right's useful religious idiots?

The political economy's record is not good. It could be that Steve Randy Waldman is correct and that the 1970s inflation was the least-bad option for Arthur Burns and the Fed. Lower inflation would have meant much higher unemployment and social unrest for the uppity 1970s.

But what happened next? The 1970s could be the last bout of "excessive" wage inflation tolerated by the Fed. What followed was Volcker slamming on the breaks; global competition with Japan and Germany with their export economies coming online (and now the Chinese); Reagan breaking organized labor and PATCO; the metastasization of the financial industry and global capital flows; the end of the Cold War and "there is no alternative (TINA)".

We will not see excessive wage inflation again. Instead the Fed will pop financial sector bubbles ahead of time (early 90s, early 2000s, 2007-) and the result will be balance sheet recessions.

The final result? Growing inequality.