Arthur MacEwan traces a recurring assumption in US inflation policy: when prices rise, make it harder for workers to demand higher wages. His Jacobin essay connects Nixon-era wage controls, the early-1980s interest-rate shock, and the Fed’s current response.
- A Nixon administration official described the goal of anti-inflation controls as “zap labor.”
- In the early 1980s, the Fed pushed its benchmark overnight rate above 20 percent. Inflation fell, but unemployment reached 10.8 percent by the end of 1982.
- Higher rates curb borrowing and hiring, reducing workers’ leverage even when wages are not the main source of price increases.
- MacEwan instead points to war-driven energy costs, tariffs, deportation-related labor shortages, military spending, and AI data-center construction among today’s pressures.
The historical question is not whether rate hikes can reduce inflation. It is who absorbs the cost, and whether the policy even addresses what’s pushing prices up this time. MacEwan’s answer: fix the sources of inflation rather than defaulting to weaker labor.