We are all stagnationists now

Here is Jim Hamilton, on peak oil, scary tag at the end:

…we should not dismiss the possibility that there may also have been a nontrivial contribution of simply having been quite lucky to have found an incredibly valuable raw material that for a century and a half or so was relatively easy to obtain. Optimists may expect the next century and a half to look like the last. Benes and coauthors are suggesting that instead we should perhaps expect the next decade to look like the last.

On this issue I am more optimistic than Hamilton.

Alternatively, here is Cardiff Garcia from the FT, with a survey of recent pessimistic thought on productivity, citing (but not necessarily endorsing) Nomura:

…we think it more likely that the economy will grow at a trend pace near 2.5%, which, coupled with normalization in productivity, implies the sustainable underlying pace of monthly gains in private payrolls is in the low-100k range or lower.

Karl Smith has a very useful blog post.  Addressing me, he writes:

My position perhaps more clearly stated is that if all markets were clearing then phenomena such as: lack of educational improvement, globalization, de-industrialization, skew of technological improvement towards information technology, energy shortages, etc would show up in wages.

My view is this.  When real factors are slow, it takes much longer for the private sector to manufacture its own ngdp and also of course rgdp.  (You can pursue a separate argument about how quickly the Fed can fix things, but given that they haven’t, for whatever reason, the previous claim still holds.  We can make multiple margins of comparison, even if a perfect Fed would clear everything up.  We don’t have a perfect Fed.)  Much of North Dakota has full employment, but most of the nation does not.  With a stronger real economy along the right dimensions, we would have more jobs, but we don’t.  The long term where everything shows up in wages can take a while to arrive.  Nothing in this view requires one to tell stories — be they true or not — about companies which cannot find quality computer programmers.  A final point is that labor force participation may be the job market number that really matters.

Here is an excellent post by Will Wilkinson on Obama, Romney, meanness, and Ben Friedman.


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