Greg Mankiw makes very telling Points in this Post, especially about the growth of GDP and the provision of the graph. Greg shows an unholy, and unnecessary, desire to get some of the proceeds from Paul’s Nobel prize. I do know that my own Estimates establish that GDP will decrease about 5% under 2008 levels by 2015, simply due to the retirement of the Baby Boomers and lack of replacement labor. I also estimate that Labor will again absorb the percentage of Income lost to Business Profits since 1998. The presence of the graph somewhat amuses me, for it is the one relationship which will lose relevance in the coming years–Business enterprise will be established with advanced higher productivity per labor hour, or GDP will drop even further than I expect. Paul has commanding presence among economic authors, but I think he is beating a dead horse.
This criticism of Paul Krugman may hold more importance, but I think not. Everyone knows that Congress is going to splash Money all over the economy, and most of it is going to be worthless for any purpose other than Inflation. There is not even much dissension among the Parties about the magnitude of the Splash, simply who should be awarded with the Shower of Cash. Democrats say give it to the Poor, but actually means fund the Government agencies to expand and build empires–with little Trickling Down to the Poor. Republicans talk about starting new industry, though what they really mean is cut Taxes to make up for the lost Profits earned by Business–so that Business personnel can maintain the style of life associated with themselves during the Boom years. Nothing proposed actually heralds a viable increase in Productivity, or creation of an successive Boom in the future.
Read this article, and then estimate the likelihood of a Depression. I have often wondered about the possibility of a Depression, with an enhanced, decentralized education of Business personnel. It is my contention that the correct small Business format will be quickly worked out at the Retail level, maintaining a base level of Production capacity so that long-term suppression of the economy is unlikely to occur; this is not to say there cannot be long-term degradations of economic performance with potential abandonment of entire Sector service areas. I wish Some of our esteemed Economists would attempt to run some models based upon sheer capitalist formula, where recessionary pressures might be best dealt with a ‘Hands-Off’ approach in both monetary and fiscal policy. I think that the Numbers have been lying to Us for years, by Our mis-intentioned belief that We can do better at manipulating the Numbers, than can the Economy itself. lgl