So what next? The best first step is to free up labor markets world wide. Specifically, we need policies that take aim at the unbearable political forces that seek to tighten the regulatory noose on voluntary labor markets.
Unfortunately, the dominant attitude of macroeconomists is to assume that nothing that takes place within the labor market (of which Krugman never speaks) is large enough to influence the large macro trends to which they attribute today’s high employment rates.
The blunt truth is exactly the opposite. The calcification of labor markets is the primary impediment to economic recovery. The direct effects of government regulation of labor can matter far more than the indirect effects of macroeconomic policy, whether Keynesian or austerity-based. Neither austerity nor lavish public expenditures will improve the overall situation, which is why the massive increase in American public debt has not nudged unemployment rates down. The only workable solution has to stress job creation, not by misdirected subsidies, but by dismantling the government obstacles to market exchange.
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I can’t write this often enough: Krugman is definitive proof that one can choose to be a Leftist, or one can choose to understand economics (or, as I prefer, political economy), but either choice precludes the other.
In this case, if Krugman ignores the issue then it is almost certainly critical.
Krugman isn’t stupid, rather dishonest and partisan.
“The only workable solution has to stress job creation, not by misdirected subsidies, but by dismantling the government obstacles to market exchange.”
If it were only that simple. Economics basically consists of “kicking the can down the road”, well most of it anyway. The problem noone seems to understand is that it’s a small planet. We have reached the end of the road.
You don’t come here for the hunting, do you?
Jonathan, you got me laughing. I’ll bet you a six pack he doesn’t know where your response came from.
He also doesn’t realize he added evidence to support my assertion.
Market exchange is economics. You really think if you let the market rule your economy that it would produce any different result? It already does and it is what put your country, and really the whole world into the crapper.
It is deregulation that allowed this to happen. Your corporate masters have gotten their way again and again and have produced a result which enriches the very rich while destroying the economy and impoverishing the general population. Again about 15 of your population is on the food stamp program. There are areas that have little else to power their local economies.
Yeah I do come to hunt but being from not too far south of the Polar Bears and inundated here in BC with Black Bears, I see one about half the time on my walks, I find the hunting here is pretty tame.
I basically agree that the labor market transaction – if safety, honesty, legality, and most of all proper documents are observed.
Because otherwise we’ll not improve our situation.
Of course many do work for cash in otherwise perfectly legal work.
It is fun seeing a top rate lawyer who is a first rate economist,too. The labor law in these countries is catastrophic and this is then exacerbated by arbitrary laws and regulation. Economic stagnation* is the future of Europe,because the public has bought completely into something for nothing,and the political class is willing to indulge them in that. At the same time, the Euroklatura has bought into almost every hare brained scheme from Global Warming to multiculturalism, to ever closer union. I don’t see anything except radical regime change giving them a prosperous future. In this country there is resistance to all this.Maybe we will luck out.
The stagnation isn’t just economic. They are culturally nullities,too.
All I can add to Epstein’s comments, and contra to the leftist kibbitzer, is the following:
“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded””here and there, now and then””are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as ‘bad luck’.”
– Robert A. Heinlein
Has anyone else noticed that leftist literature, and I include entertainment that is visual such as movies and TV, is always about social issues, like gay marriage or DADT ? They never mention economics. The movie “The American President,” or “The West Wing” never mentioned economics. I think the Left believes that economics is random, and we see an example here.
I am endlessly fascinated by the nonsense that comes out of these people—
The individual is dangerous, the private organization is dangerous, freedom is dangerous, getting together voluntarily and making or providing something is dangerous, having too many choices is dangerous, being able to do anything without permission is dangerous, and on and on and on.
Conversely, state action is always preferable to private action, state cadres are more knowledgeable or responsible or have more integrity or are more trustworthy or more compassionate or just better than private people, political solutions are better than economic solutions, if times are bad, more state programs, if times are good, more state programs, in any and all cases, there’s always need for more state programs.
As the above comment mentioned, all through history, the great mass of the people lived in squalor and bare subsistence poverty, always one bad harvest or one infection away from death and disaster.
Suddenly, in the space of a few centuries, after millenia of stasis, men and women are living lives of health and material well being, in societies powered by energies and technologies that would appear to be magic to our ancestors only a few generations ago.
And the great bulk of this happened in those very societies committed to individual freedoms and economic liberty—two intermingled concepts that have carried humanity from the hand plow and horseback to exploring the moon and nearby planets.
But, oh yes, we must be on guard against those evil individualists who make profits, and always run to the loving arms of our state cadres and their endless regulations, rules, and procedures.
There are some who can only feel safe in the corral, and then there are those who relish the freedom of the wide open plains.
Better to run free.
I might recommend books by Joel Mokyr who has studied technology through the ages and who concludes (as I interpret his writing) that the lack of private property and the rights of inventors was a large factor in the failure of the Industrial Revolution to take off in Roman times. They had the steam engine but failed to go beyond. China had a similar failure when the Ming Dynasty stopped technological progress. A country that was casting iron bells in the 4th century had lost all knowledge of metallurgy by the time Europeans arrived ten centuries later.
The revolution of the rights of the individual was, and is, the only true revolution in human history.
As long as one armed gang could replace another, with no rules or restrictions on their prerogatives, and no concept of an independent and higher law, at least on earth, to which they could be held accountable, consistent and cumulative progress was impossible.
The highest value of any ruling elite is stasis at a point where they are firmly in control, and things are going well for their continued position in society.
The only interest they had in any new idea was in taxing it, or giving a monopoly license for it to one of their relatives. We see the same general attitudes now around the globe, as politicians in china and russia divvy up the spoils from their collapsed state run industries, and our pols search desperately for new taxes to fund their endless spending schemes.
The state, historically and currently, is a benefit to prosperity when it can maintain the rule of law to some degree, and is controlled by people who can restrain their baser impulses. But these features are rare in human history, as are periods when ordinary people are free of war and predation, from their own states or outsiders.
The genius of the Constitution is that it recognizes the true source of danger and privation, the armed force of an uncontrolled state turned against its people, and puts its limits there, while recognizing the rights of the ordinary citizen to be the only true wellspring of both political power and social progress.
As a great man once said, a house divided against itself cannot stand. And this nation, and the world, cannot continue half slave and half free, but must become all one, or all the other.
Such is the never ending challenge that confronts us and our children.
“All I can add to Epstein’s comments, and contra to the leftist kibbitzer, is the following:
“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded””here and there, now and then””are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as ‘bad luck’.”
– Robert A. Heinlein”
Ya know I figured out Heinlein when I was just a boy. I used to read a lot of SciFi and all his earlier work and by the time I was 18 or so it was apparent he was very one dimensional when it came to social commentary. His hero’s became caricatures and I quit reading his stuff. They are stories for children really. Don’t get me started on his decline into weirdness in his later books. They are awful.
One might say it was Heineken who started my move to the left of center. I have returned to the center over time and find myself mocking both wings these days.
I am regularly amazed at where people think “the center” is – oddly enough, right near where they are, no matter where that may happen to be. (No, criticizing both extremes doesn’t make you the midpoint.) As if the world somehow revolves around them …