NP - Structural w/ Austerity or Demand-Lack w/ Stimulus?

[Charles Albert]

(Setting dweeb mode to "STUPIFY")

Post WW2 t* was clearly too far over to the right. I think one way to
measure the marginal benefit of moving it, either to the left or the right,
is to look at the growth rate of the revenues from the associated tax.
Moving it to the right under Clinton (ceteris paribus) proved far more
effective than moving left under Bush.

love,
cfa


On Fri, May 11, 2012 at 12:28 PM, Paul Mackin <mackin.paul at verizon.net>wrote:

> I don't think Krugman mentioned in this morning's column the famous
> Killingsworth/Heller "debate" of 1962-63. It was so much like the present
> day contretemps. Unemployment was 4.5 percent, huge for that era, and two
> economists were fighting it out over whether the cause was largely
> insufficient demand or structural. Heller was head of Kennedy's Council of
> Economic Advisers and advocated measures to increase demand. Killingsworth
> was a Michigan State (or it might have been U of Michigan) economist who
> held that demand approaches would be ineffective because of structural
> problems, the big structural problem at the time being automation. Anyway,
> Kennedy was a Keynesian like Heller and in his '63 State of the Union
> called for a big tax cut to increase demand.  After the assassination
> Johnson got about a $10 billion cut passed. And it worked. By '65 the
> unemployment rate was down to 4.5 percent. Not as big an effect as the WWII
> build up, but pretty darn good. Created quite a boom as I recall.
>
> P
>
>
>
> On 5/11/2012 11:07 AM, Madeleine Maudlin wrote:
>
>> Structure sounds important.
>>
>> On Fri, May 11, 2012 at 9:50 AM, David Morris <fqmorris at gmail.com
>> <mailto:fqmorris at gmail.com>> wrote:
>>
>>    http://www.nytimes.com/2012/**05/11/opinion/krugman-easy-**
>> useless-economics.html?_r=1&**ref=opinion<http://www.nytimes.com/2012/05/11/opinion/krugman-easy-useless-economics.html?_r=1&ref=opinion>
>>
>>    <http://www.nytimes.com/2012/**05/11/opinion/krugman-easy-**
>> useless-economics.html?_r=1&**ref=opinion<http://www.nytimes.com/2012/05/11/opinion/krugman-easy-useless-economics.html?_r=1&ref=opinion>
>> >
>>
>>    Krugman:
>>
>>    What does it mean to say that we have a structural unemployment
>>    problem? The usual version involves the claim that American workers
>>    are stuck in the wrong industries or with the wrong skills. A widely
>>    cited recent article by Raghuram Rajan of the University of Chicago
>>    asserts that the problem is the need to move workers out of the
>>    “bloated” housing, finance and government sectors.
>>
>>    Actually, government employment per capita has been more or less flat
>>    for decades, but never mind — the main point is that contrary to what
>>    such stories suggest, job losses since the crisis began haven’t mainly
>>    been in industries that arguably got too big in the bubble years.
>>    Instead, the economy has bled jobs across the board, in just about
>>    every sector and every occupation, just as it did in the 1930s. Also,
>>    if the problem was that many workers have the wrong skills or are in
>>    the wrong place, you’d expect workers with the right skills in the
>>    right place to be getting big wage increases; in reality, there are
>>    very few winners in the work force.
>>
>>    All of this strongly suggests that we’re suffering not from the
>>    teething pains of some kind of structural transition that must
>>    gradually run its course but rather from an overall lack of sufficient
>>    demand — the kind of lack that could and should be cured quickly with
>>    government programs designed to boost spending.
>>
>>
>>
>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://waste.org/pipermail/pynchon-l/attachments/20120511/315666e5/attachment.html>