http://www.nytimes.com/2009/07/03/opinion/03krugman.html?emc=eta1
So, what is it about Krugman's blog today that is inconsistent with other economists, politicians generally, and the Obama administration (copy attached)? Wait, it's coming to me: the "difference" is that he's right! What a concept! Of course, why pay any attention to him? He is only the most recent Nobel Prize winner in economics.
Christina Romer (chairwoman of the Council of Economic Advisors), who makes sense a lot of the time, published an article (which Krugman references) on the "Lessons of 1937" - the year that FDR gave in to the deficit and inflation hawks, with disastrous consequences both for the economy and for his political agenda. Unfortunately, Dr. Romer is but one member of an economic team that is "chaired" by someone else, and, while I hope that that team works by a reasonable "consensus", I fear that it does not.
Krugman has been very consistent about advocating significantly more stimulus for the economy and he feels that Thursday's jobs report settles the issue: since the recession began, the U.S. economy has lost 6.5 million jobs and it's continuing to lose jobs at a rapid pace. Krugman goes on to point out that, once you take into account the 100,000-plus (I say it's 150,000) new jobs that we need each month just to keep up with a growing population, we're about 8.5 million jobs in the hole. Those facts are irrefutable. Thursday's report also showed wages stalling but that's for another blog.
So, the Obama stimulus plan aims to create 3.5 million jobs by "late next year"...someone do the "math" for me...
Krugman points out quite politely that "As an economist, I'd add that many members of my profession are playing a distinctly unhelpful role." Like Krugman, I worry about the politics of this situation. You should too.
*********************************
Additively, Sung Won Sohn (of the Smith School of Business and Economics) points out in the WSJ (7/2/09) that the "Green Shoots" in the job market are hard to find. Businesses are determined to trim costs by cutting payrolls. Expecting sluggish improvement in demand in the forseeable future, employers want to make sure that a sustained economic recovery is here before hiring. The job market will become the Achilles' heel of the economic recovery.
Subscribe to:
Post Comments (Atom)
This is just ramblings... To make it short:
ReplyDeleteWe need more stimulus focusing on job creation; government lacks much ability to most effectively/efficiently do its job (this should be changed); innovations will drive long term recovery, nobody knows what innovations (I give some suggestions)
The minimum wage increase will take a toll on jobs too. FDR didn't seem to be make any vast improvements in the future of America. His stimulus efforts just kept the wheels moving. Although I believe more stimulus is likely necessary at this time, we should certainly not avoid the mismanagement of government systems. With better leadership and management, could the U.S. government operate more efficiently? Furthermore, legislation should definitely be passed that gives consulting firms incentives to research the government organizational structure, its policies, goods, and services to make our government run much more effectively and efficiently. Nobody seems to think this way. It is only a pipe dream that people have given up, but is not this a source of generating better results cheaper?
Seriously, all this political BS is just a waste of time and money! Who knows how much standard of living goes sacrificed each day because "leaders" in government chase political ambitions instead of the collective good of society.
Take a look at the final version of the stimulus package: http://projects.nytimes.com/44th_president/stimulus
It looks largely ineffective because of the lack of job creation efforts. Artificial job creation is possible right? Like World War II? I am not promoting another war, I am promoting the effort to usher in job, GDP, and per capita growth. However, this will require economists and CEOs to collaborate to figure out where the economy is going. Then, usher in new industry and innovations more rapidly through government incentives. We will likely have to on more debt to keep the wheels turning. Hopefully, nanotechnology will go somewhere in the near future. Robots will take much longer to implement. Remember how the computer started in the around the 1960s? Robotics is in the same stage. Some people tinker around with robots today in their garage and college labs. Tomorrow, robots will be as ubiquitous as the car and the computer.
http://online.wsj.com/article/SB124698265628806371.html
ReplyDelete"Mr. Hoyer, of Maryland, said it had only been 130 days since the first stimulus package had been implemented, noting that only 10% of the money in it had been distributed so far. He said the rate of distribution of funds through the stimulus package had been slower than lawmakers would have hoped, further impeding a determination of its success."
I thought the stimulus package would have been distributed more rapidly than this. Maybe we do not need more stimulus, but this must stir some debate over government mismanagement. What does government look like when we laud its actions? Is it possible to evolve government into that kind of organization, or are we doomed to mediocre results inherent in the flawed mechanisms of human behavior that tolerate nothing besides the current system?