FOR DECADES, economic policymakers have viewed full employment as a scourge to be avoided at all costs, betokening as it does the grim specter of inflation. If his words are to be believed, Joe Biden wants to break with that consensus and aim for full employment. Economist James Galbraith joins Ryan Grim to discuss.

On Thursday, the Consumer Price Index for the last month was released, and the headlines were grim: “Prices Jumped 5 percent in May From Year Earlier, Stoking Debate in Washington.” That’s from The New York Times. The subhead spelled out the doom even more clearly. “The CPI showed the strongest year-over-year reading since 2008, and a core index popped the most since 1992.”

Much lower in the story, we learn that one reason the year-over-year increase was so high is that it was a comparison, of course, to last May. And last May came at the depth of the early days of the pandemic, when prices had fallen to record lows.

We also learn that economists have expected a price bump as the economy re-opens and people travel and spend money they’ve saved the past year. All of this is happening while rickety supply chains are still themselves recovering from the panic. And because we’ve allowed so many of our industries to become so concentrated, supply-chain problems are felt more acutely than they used to be.

The thing that might actually be more dangerous than inflation, however, could be the reports of inflation, and the response from Washington that those reports produce. The knee-jerk move in D.C. whenever we hear the word inflation is to hurry up and throw people out of work by raising interest rates.

The Washington Post recently reported that President Biden had a private phone call with this exceedingly influential economist and gave him a chance to air his criticisms of the administration’s economic policies.

So does this mean Biden is actually listening to Larry Summers? Or to economists like him? If Biden really wants to know what happens when you let Larry Summers guide your economic policymaking, he could just call his old boss, Barack Obama.

Summers, for those of you who don’t remember, was Obama’s top economist at the height of the financial crisis. Before that, he was a treasury secretary for Bill Clinton, whom he helped push through the very Wall Street deregulation that ended up fueling the 2008 crash.

The idea that Larry Summers thinks anybody should be listening to him at this point doesn’t speak well of his judgment. The good news is that, no, it doesn’t seem like either Biden or his economic team are actually listening to Summers. More on that in a moment.

But first, let’s talk about Larry Summers’ economic policy beef with the Biden White House. Basically, it boils down to inflation. Summers thinks that Biden is doing TOO MUCH to juice the economy and that all this government spending is gonna drive up inflation. He’s called inflation “the primary risk” that we face.

It’s true that real inflation that gets too high can be a big problem for regular people — that is, if wages don’t keep up with it or you’re on a fixed income. But when people like Summers talk about inflation and an overheating economy, it’s not just rising grocery prices they’re talking about.

What this is all really about is a power struggle in the workplace. In the 1970s, according to mainstream economists, workers had gotten too powerful. Their unions were driving up wages not just for them, but at non-unionized companies, too.

The solution was to destroy the unions and fire the workers. And so Jimmy Carter brought in Paul Volker to chair the Federal Reserve and do just that. He jacked interest rates up to the sky, bringing about a vicious recession.

By the early ’80s, inflation was coming down. Since so many people had been fired, they had less money to spend and, as a consequence, there were way more jobseekers than there were jobs. Wages went down, and it became much harder to form a union. Those unions that survived had to accept lower wages.

In 1981, Ronald Reagan fired the air traffic controllers when they went on strike. It was a signal to big business that they could do whatever they wanted to unions and the government wouldn’t stop them; it might even help them. Wealth and power flowed upward. Inequality skyrocketed. And wages were kept low to guarantee that things would stay that way.

Any time real wages showed even a hint that they were thinking of going up, the Fed would jack up interest rates and slow down the economy. It got so bad that the market started getting spooked if there was even a rumor of a good jobs report.

If it looked like workers were doing a tiny bit better, investors thought: Well, now the Fed’s going to raise interest rates, so we better sell everything now and slow down hiring. That’s why the words of the Fed chairman or the president actually matter if they’re talking about inflation. In most cases, when politicians talk, it’s just talk. But if they’re talking about wages and inflation, what they say filters immediately into the real world, and into people’s paychecks.

The fight over wages and inflation is at the very heart of the class war. And what’s interesting is that even to those who say race- and gender-equity dynamics should be prioritized ahead of a class analysis, wage pressure is still the most important game in town.

Think about it this way: If there are ten unemployed workers for every job opening, bosses can pay the bare minimum and treat workers like garbage. In a country shot through with racism and sexism, that means racism and sexism will flourish in the workplace.

But if there’s only one worker for every job opening, companies have to treat that worker a lot better. If a boss messes with the schedule, or harasses you, or treats you as less-than because of who you are or who you love, you can just quit and go find another good job. That’s power. You can’t do that if it’s harder to find another job. And your boss knows that, so he’s less likely to treat you that way.

The name for that situation is “full employment,” and full employment is the biggest fear of the ruling class. When an economist on CNBC or Fox Business warns about inflation, what they’re really worried about is workers getting too much power.

Now, back to Biden and Summers. Let’s pretend for a moment that Summers’ grievance is sincere and grounded in real economic data, instead of just his bitterness that he’s no longer an insider. The fact that Biden made that call to Summers at all is worrying. The official line on the call, however, is more encouraging.

The Post quoted a White House official who said that Biden is seeking “a wide spectrum of views” and that the Summers call was “brief and informal.” The same official said that the call took place before the president’s speech on the economy in Cleveland on Friday. They explained that Biden “has spoken to a number of voices outside of the administration, including many with whom he has disagreements,” and added that he has also been speaking with Bernie Sanders.

As somebody who’s covered White Houses over the years, let me parse that for you. When a mainstream news outlet refers to a “White House official” like that, and the quote is a bit robotic, it means it came from a spokesperson, which means it was approved up high and represents the White House’s public position. And Larry Summers knows that.

First aired on The Intercept.

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