Speaking of axes to grind, you might be amused by this article by Eric Levitz in New York Magazine. It seems that the Federal Reserve has been undermining economic growth:
Our esteemed technocrats produced a cornucopia of creative explanations for each of these phenomena. Overly generous disability benefits had lured able-bodied Americans out of the labor force and into irrevocable dependency. Or else excessively entertaining video games had persuaded a generation of young men to pursue a life of PlayStation and poverty over one of work and prosperity. Regardless, the decline could not be averted through economic stimulus—the labor market was not failing these workers; they were failing the labor market.
As for wages, globalization and automation had placed new limits on American workers’ bargaining power; ask for too much, and the boss will simply replace you with a robot or a less-demanding worker from the developing world. Or else workers simply hadn’t earned raises — productivity growth was too low for firms to increase wages without eating into profits. Or sluggish wage growth merely reflected demographics; as the population aged, senior-level workers were being replaced with entry-level ones with lower salary expectations. Or (more credibly) perhaps the long death of the American labor movement had left workers too atomized and demoralized to ask for what they’re worth.
Regardless, wage growth couldn’t be significantly improved through further fiscal or monetary stimulus. The economy was already nearing full employment. The labor market simply couldn’t get much tighter.
A few lonely voices disputed this consensus. In their view, these two distinct mysteries weren’t actually distinct — or all that mysterious. The reason wage growth wasn’t rising as one would expect with the economy near full employment was that the economy wasn’t near full employment. And the reason the economy wasn’t near full employment was that all those prime-age workers who’d supposedly exited the labor force for reasons totally unrelated to the strength of the economy hadn’t actually exited the labor force for reasons totally unrelated to the strength of the economy.
I don’t really ask much of the Federal Reserve. Only that they regulate banks, their primary charter, something they have steadfastly been unable to do and not stray beyond their mandates, something else they are apparently unable to do.
The Federal Reserve Board of Governors does not hold the responsibility of “running the economy” and they most emphatically do not have the responsibility of ensuring that the Dow-Jones Industrial Average rises, which seems to have become a primary objective.
“I don’t really ask much of the Federal Reserve. Only that they regulate banks, their primary charter, something they have steadfastly been unable to do and not stray beyond their mandates, something else they are apparently unable to do.”
Aye, laddie. But predictable.
“The Federal Reserve Board of Governors does not hold the responsibility of “running the economy†and they most emphatically do not have the responsibility of ensuring that the Dow-Jones Industrial Average rises…”
Aye, laddie. Situation normal, all fucked up.
“Only that they regulate banks, their primary charter”
If they do that they won’t get that cushy 7 figure job when they leave the Fed.
Steve
“Or else workers simply hadn’t earned raises — productivity growth was too low for firms to increase wages without eating into profits.”
Earned? Productivity growth is a result of capital investment by company owners. The workers get to share in it. What the author is demonstrating is that America’s capitalists are disinvesting in their companies.