Economic growth is measurable (in principle at least). Human welfare is not. Since the 1920s and especially the 1930s, economists have ASSUMED that changes in growth and welfare at least move in the same direction, even if the magnitude of change in growth is not a good indicator of the magnitude of change in welfare.
I can demonstrate that wealth and welfare are currently moving in OPPOSITE directions but the standard response will be "Yes, but can you demonstrate that using the canonical model [...that assumes they change in the same direction]." Well, no. If I assume in my model that they change in the same direction, my conclusion will be [surprise, surprise] that they change in the same direction. That's why I don't use THAT model. And around and around we go. Having delved into the historical evolution of that model, it is pretty clear to me that the taboo is about prescribing the reduction of working time. But I don't want to bore progressive economists with that angle. The more dramatic (and cinematic) angle is the mystique of "the machine": automation, robots and technology. Stiglitz is succumbing to a rather common fetish these days: the fetish of technology. "Techology" has gotten us into this jam; only "technology" can save us. Except for Stiglitz technology is exogenous. For him, it's those machines that are taking away jobs, not the mentality and corresponding social organization within which those machines are designed and operated. With a different mentality and the different social organization corresponding to that mentality, the machines that now eliminate jobs could instead eliminate toil. So Stiglitz prescribes "education" as a major part of the cure. Is it education to the new mentality? No. It's education to adapt people with the old mentality to the new (and even newer) machines. That's not education. It's an anachronism. On Tue, Dec 27, 2011 at 5:00 PM, Eugene Coyle <[email protected]> wrote: > Stiglitz' analysis is both insightful about the past and profoundly wrong > about the future. > > While pointing out that the Fed got it wrong about what the problem was > and is, Stiglitz describes a fix which is based on a stimulus to get us > back on the path to (clean) growth. That is not going to work, though the > stimulus spending he advocates is certainly necessary and in my opinion > desirable. > > Yes, there must be a shift in the real economy, as Stiglitz advocates, but > his is not the shift that we need. More education spending? What are > those graduates going to do? Well, some of them will improve production > while reducing the use of constrained physical inputs as he recommends. > But most of them will face the bleak jobs that today's graduates rightly > dread. Reagan saw that threat when he was governor of California. > > What is it that locks economic policy makers to the vision of getting back > to growth as the solution to the jobs crisis? A curtain, not iron but an > ideological curtain, keeps growth as the objective. Some, like Stiglitz, > would invest in education, roads, technology, clean energy. Others would > try to pull off a jump in investment by cutting taxes and regulation to > free up the "job creators" to create some jobs. But in the end they are > advocating the same fix: Growth, so that in a bigger economy next year, > and the next, and the next after that, there will be jobs for all. That > hasn't worked, won't work, and cannot work. > > Stiglitz rightly criticizes the dependence on monetary policy and would > substitute enlightened fiscal policy. But neither he nor another > "respectable"" economist will mention, let alone advocate, a third economic > tool, reducing the work week to create jobs. That reduction will not only > create jobs, it will be a solid basis for a national income-redistribution > in favor of the workers, as more of production goes to wages and less to > profits. That redistribution will, in turn, eventually change the culture > itself as growth slows and jobs are plentiful. That is the shift that we > need, not simply a large fiscal stimulus, however well directed. > > Gene Coyle > > > On Dec 27, 2011, at 12:56 PM, Louis Proyect wrote: > > > Forget monetary policy. Re-examining the cause of the Great > > Depression—the revolution in agriculture that threw millions out of > > work—the author argues that the U.S. is now facing and must manage a > > similar shift in the “real” economy, from industry to service, or risk a > > tragic replay of 80 years ago. > > > > full: > http://www.vanityfair.com/politics/2012/01/stiglitz-depression-201201 > > _______________________________________________ > > pen-l mailing list > > [email protected] > > https://lists.csuchico.edu/mailman/listinfo/pen-l > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Sandwichman
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