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

[David Morris]

OK. I'll bite. t*?

On Fri, May 11, 2012 at 12:34 PM, Charles Albert <cfalbert at gmail.com> wrote:
> (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>
>>>
>>>    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.
>>>
>>>
>>
>