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

[Charles Albert]

[image:
http://blogs-images.forbes.com/briandomitrovic/files/2011/08/300px-Laffer_Curve.png]

love,
cfa

On Fri, May 11, 2012 at 2:53 PM, David Morris <fqmorris at gmail.com> wrote:

> 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.
> >>>
> >>>
> >>
> >
>
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