Shares of GDI and the Great Inflation

Allan Meltzer dates the Great Inflation as the period from 1965 to 1984:

https://files.stlouisfed.org/files/htdocs/publications/review/05/03/part2/Meltzer.pdf

Compensation of Employees as a percent of Gross Domestic Income:

https://fred.stlouisfed.org/series/A4002E1A156NBEA

Click the links below to highlight the graph:

1966 to 1970 may be the wage-push part of the Great Inflation. The increase suggests it.

1971 to 1985 certainly is not wage-push. The downtrend denies the possibility.

Come to think of it, 1954 to 1965 doesn't show a wage-push increase, either. Again, there is no trend of increase in employee compensation as a share of Gross Domestic Income. But something was driving prices up. In those years we find a worrisome warning of the Great Inflation to come: the creeping inflation of 1955-1958. Samuelson and Solow wrote of it in 1960:

This emphasis on demand-pull was somewhat reinforced by the Korean war run-up of prices after mid-1950. But just by the time that cost-push was becoming discredited as a theory of inflation, we ran into the rather puzzling phenomenon of the 1955-58 upward creep of prices, which seemed to take place in the last part of the period despite growing overcapacity, slack labor markets, slow real growth, and no apparent great buoyancy in overall demand.

If inflation was rising because wages were leading the way, wouldn't demand have been buoyant?

Everywhere you look, people say cost-push inflation was due to the rising cost of oil or the rising cost of labor. But that's in recent decades. In the 1950s and '60s, before oil became a problem, everybody blamed the cost of labor. The bleedin' obvious, Basil Fawlty would say.

Obvious, yes, but not the right answer.

The growing cost of finance in the 1950s was the spark that was to create the raging fire we call the Great Inflation. 

But these days, not so much the inflation. These days, finance hinders growth instead, because the Fed is less willing to "accommodate" the cost pressure. And again, let me add that because the cost of finance creates continuing cost pressure throughout the economy, the "hindering" of economic growth has become long-term economic decline.