The greater the number of protected service sector jobs in an economy, the more likely those citizens will oppose inflation. Inflation brings the potential to lower real wages, possibly for good. How many insiders, if they had to renegotiate their current deals, would do just as well?
Get the picture?
This is a neglected cost of protected service sector jobs, namely that the economy’s central bank will face strong political pressures not to inflate even when a looser monetary policy would be welfare-improving.
Western Europe most of all. If you see that the young people in an economy aren’t doing nearly as well as the privileged insiders, you should suspect that the privileged insiders fear renegotiation and thus fear inflation.
Inflation is easier to sustain in rapidly growing economies where people are moving up various ladders quickly.
Perhaps we have lost the ability and the political economy to support inflation when needed.