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

[Erik T. Burns]

Yes, well, everyone's got to eat.



On May 11, 2012, at 8:52 PM, Paul Mackin <mackin.paul at verizon.net> wrote:

> On 5/11/2012 3:05 PM, Charles Albert wrote:
>> http://blogs-images.forbes.com/briandomitrovic/files/2011/08/300px-Laffer_Curve.png
>> 
>> love,
>> cfa
> 
> 
> John Kenneth Galbraith compared ss economics with feeding the horse oats in order to feed the sparrows.
> 
> P
>> 
>> On Fri, May 11, 2012 at 2:53 PM, David Morris <fqmorris at gmail.com
>> <mailto: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
>>    <mailto: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 <mailto: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>
>>     >>> <mailto: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.
>>     >>>
>>     >>>
>>     >>
>>     >
>> 
>> 
>