Hidden beneath ten pounds of verbiage there is this kernel in Lawrence Summers’s lates Washington Post op-ed:
Why has supply potential declined so much? This will be hotly debated for years to come. Part of the answer lies in the effect of past economic weakness. Part of it is the brutal demographic realities of an aging population, the end of the trend toward increased women’s labor force participation and the exhaustion of the gains that could be won from an increasingly educated workforce. And part is the apparent slowing of productivity growth.
The emphasis is mine. Get it? The jig is up!
Here’s the Reader’s Digest summary of the op-ed: growth continues to be slow, the output gap between where we might have been and where we are now is large and growing, and the solutions are Keynesian pump-priming, immigration reform (presumably meaning accepting 10 million more unskilled workers and 1,000 more skilled workers), family-friendly workplaces (!?), pumping more oil and gas, and bringing our corporate tax system more into line with those of other OECD countries.
Let’s see a show of hands. Does anybody believe that those actions in aggregate will reduce the output gap?
They don’t believe it either. It’s all a put-on.
Why anybody takes Larry Summers seriously is beyond me. He throws crap at the wall made up of the conventional wisdom of that day. He will take credit for what works, and he will forget about the mess left behind.
He made his stash over-educating the unemployable, but no matter, he is willing to work to make a better future – for Larry Summers.
That ought to put neoclassical/New Keynesian economics into the proper perspective: it couldn’t see the problem developing and seven years after disaster cannot recommend a way out. They still don’t get that capitalist economies are dynamic and don’t neatly fit into a series of equations in a toy model where all outcomes can be foreseen.
@Ben Wolf
You know the real reason is because they have no idea of how any of it works. The scary part is that these guys/gals are running the show.
They are like the little girl in the back seat with her toy steering wheel. For years, the car happened to turn the same way she did, and now, it does not. She keeps turning harder, but all she is doing is flinging Cheerios everywhere.
So much of life these days reminds me of that scene near the end of the 1939 The Wizard of Oz when the wizard, being carried away from Oz via the hot air balloon in which he arrived, admits that he doesn’t know how it works.
Years ago, a teacher claimed the book was about the monetary system. All I remember is that in the book the slippers were silver, and this was supposed to represented silver backed money. The yellow brick road was gold backed money, and the silver on gold meant something.
William Jennings Bryant was one of the characters because of silver. The Emerald City, the Wizard, and Kansas all had a meaning, but I cannot remember what they were.
That was first suggested a half century ago and it’s described here.
And here I thought the W of O was a public service film jointly produced by the weather service and a pediatric head trauma advocacy group.
Dave, I think you are wrong. Here’s proof that education is the secret to a good job in a great industry:
http://cheezburger.com/8301852672
There’s a joke going around on this side of the pond that goes something like this:
Supervisor to new hire: Grab that broom and start sweeping up!
New hire: But I’m a university graduate.
Supervisor: In that case, let me show you how to do it.
Dave,
Humor can really reveal the underside of truth. I chuckled when I got to the end of your above post, when thinking about the manual adeptness of those I know who have a college degree.