Response to Death of the philips curve

No one seems to understand the new economy. Most companies use as many contract workers as they do employees. This helps them control their bottom line by giving them a variable labor supply. When a company lays off 500 employees that means it has probably NOT HIRED 1000 contractors. Greenspan sees the layoff of 500 as unemployed but not the 1000 not hired. Outsourcing has not necessarily killed the philips curve but it has made it much more difficult to understand. For example the democrats want to increase demand with a low income tax cut but they don't want to increase the supply by reducing capital gains. That is a recipe for stagflation.

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