Comments and Discussion: The Hall and Holt Papers

Abstract

R. A. Gordon: The papers by Hall and by Holt and his colleagues at the Urban Institute are at the opposite ends of the spectrum in their analyses of what manpower policy can contribute to improving the tradeoff between inflation and unemployment. Holt and his associates hold out high hope with a much expanded and improved set of programs. Hall writes off 80 percent or more of the effect on unemployment that Holt and his colleagues estimate would result from their recommendations. Indeed, Hall can see little if any effect of existing manpower programs in shifting the Phillips curve, and apparently believes that whatever their merits on other grounds, existing programs are largely worthless as a means of improving the unemployment-inflation tradeoff. My own position lies between these two extremes. I think that Holt and his colleagues are too optimistic, both in their assessment of the magnitude of the effect of their program in reducing unemployment and in their implication that a program of the size and kind they envision is politically feasible. On the other hand, I believe that Hall goes much too far in the other direction. His Table 1, for example, seriously underestimates the number of workers who might be helped by the Employment Service. While there is an interesting discussion, at the beginning of Hall's paper, of the alternate views that have been expounded regarding defects in the labor market that yield an unfavorable Phillips curve today for the United States, the views he summarizes are incompletely described, and he does not consider the various ways in which they may overlap each other.