We think of unemployment as a phenomenon that happens to people, but in economics the labor that people can provide is an capital asset just like a machine or a vehicle. Unemployment means that there is more capital than is needed to create the goods and services being demanded by the market. Therefor some of that capital doesn’t get employed. It is “unemployed.”. We see it in people, but also in shuttered factories, estuaries lined with mothballed container ships… and excess savings sloshing around the global markets looking for a place that needs it just as desperately as the people looking for jobs.

Inflation is the opposite phenomenon, when the demand for goods and services outstrips their supply.

If there is more supply than there is demand, we have two choices. The ugly one is to reduce supply. That is exactly what unemployment is. The other is to increase demand. Keynesian economics tells us that we can use short term government investment in our economic infrastructure and other government spending to increase demand. But there is another option.

The other option is that we can do things like increasing the minimum wage, strengthen unions and other collective bargaining forces, and make other moves that increase demand and reduce supply at the same time. Money doesn’t HAVE to flow through government to become demand.

Once government is fully funding our infrastructure needs (which admittedly, it isn’t) then any more that it spends on infrastructure will end up exasperating future problems by, actually, making the supply process even more efficient, requiring even less resources, etc.

Given this, it is extraordinary that as unemployment gets worse and worse, so many people start to fear inflation… which at this point we should only be so lucky as to have!  Inflation would mean that money and labor are both being so much utilized that they can’t keep up with demand.  That would be a welcome problem to have right now.

$200 Million GOP Campaign Avalanche Planned, Democrats Stunned.

This is unfortunate, but the dynamics described on the left are pretty accurate, and for good reason.  Unions and the progressive activist base have been focused on issues advocacy and primary challenges over Democratic Party solidarity because the Obama administration and the Democratic Party leadership have made it perfectly clear that they will not advocate for our issues.  At the very least they’ve made it perfectly clear that they won’t advocate for our issues while the bastards we’re waging primary challenges against still cling to power! And they’ve made it perfectly clear that they don’t give a damn about union and progressive issues because after the conservative Democrats we’re challenging in the primaries totally wrecked the progressive and labor agenda… they backed them for re-election anyway!

What was Joe Lieberman’s punishment for stripping healthcare reform of the public option after even the public option that was left had been watered down to practically nothing?  What was Bill Nelson’s punishment for the damage he did?  What was Mary Landrieu’s punishment for the damage she did.  What was Blanche Lincoln’s punishment for the damage she did?  What was Stupak’s punishment for the unbelievable way he sold out two generations of progressives fighting desperately to hold on the gains they’ve made for women’s health?

The answer?  Nothing! They all have the full support of the administration and Democratic leadership.  Joe Lieberman included!

But the administration can’t have it both ways.  If they want the money and energy of progressive activists and union families they have to give us a reason why we should give it to them.  We don’t give a rats ass about their priorities or their careers.  We were unified during the election because they were supposed to be the path to our priorities.  They weren’t.

We are fighting for the same thing we were fighting for before… our issues.  But now we’re also fighting to reform the entire system because if there’s one thing that we’ve learned from our landslide electoral victory and our anorexic legislative victories is that the system ain’t working.  And where are they on that?  Nowhere.  They seem to be fine with the system the way it is.  Whatever.  Everybody makes choices.  Back Blanche Lincoln.  Coddle Joe Lieberman.  But do it without us.  Call us after the elections if you’d like to rethink how you are going to handle the next two years.