Final answer:
Alan Greenspan suggested job insecurity can be beneficial if balanced by a solid social safety net, as it might lead to economic adaptability and productivity by reducing the insistence on protective regulations. This could enhance market efficiencies and potentially contribute to an upward sloping section of the PPF between equality and output.
Step-by-step explanation:
Alan Greenspan proposed that a sense of job insecurity might be good because it can encourage flexibility and adaptability in the labor market. This proposition is grounded in the belief that when there is a well-funded social safety net in place, individuals might feel a degree of protection even if they face economic uncertainties like company bankruptcy or the need to switch jobs. This perceived security allows for more willingness to let markets operate without heavy regulation and interference, which in turn could increase economic output and efficiency. Moreover, such a system could potentially lead to an upward slope in some portion of the Production Possibility Frontier (PPF) between equality and economic output, indicating a complementary relationship between the two.
In essence, Greenspan's viewpoint is that job insecurity, cushioned by a strong safety net, can result in a more dynamic and productive economy. It aligns with economic theories suggesting that moderate degrees of certain economic tensions, such as inflation, could potentially benefit the economy by providing flexibility—making wages more flexible, similar to how a low rate of inflation could serve as the 'oil' for the gears of the labor market.