by Rodger Malcolm Mitchell, www.nofica.com
Because economics is a social “science,” it contains more bulls**t than a rodeo chute.
The latest example is called “secular stagnation,” and wouldn’t you know it, right in the middle is the amazing Larry Summers, about whom you can read by clicking the link.
Never heard of “secular stagnation”? Here is a description by Jacob Davidson, a news editor at Time Magazine:
As a diagnosis, secular stagnation is simple: It’s the idea that the economic problems the U.S. continues to face aren’t a product of the “business cycle,” the ebb and flow of boom times and recession (hence the “secular” part), but may well be permanent drags on the modern economy.
“It’s a kind of long term and sustained slow-down in economic growth,” saysLarry Summers, who served as Bill Clinton’s treasury secretary and is widely credited with dusting off the concept of secular stagnation and bringing it into the mainstream.
Yes, secular stagnation is simple: Slow growth.
But why say, “slow growth,” when you can give it the name, “secular stagnation,” and sound like you know what you’re talking about?
The phrase was originally coined in a 1938 address by economist Alvin Hansen to the American Economic Association.
Grappling with the sluggish recovery that followed the Great Depression, Hansen predicted that slower population growth and a lower speed of technological progress would combine to thwart full employment, wage increases, and general economic expansion.
In both cases, Hansen’s reasoning was the same: without new people entering the work force and new inventions coming onto the market, there would be less investment in new goods, employees and services.
Without investment, fewer businesses would open or expand, growth would slow, and more workers would be unable to find jobs.
And why is that appropriate to today’s situation? Do we have slow population growth? No, especially if we don’t deport 11 million immigrants, who constitute 11 million consumers of goods and services.
Do we have lower speed of technological progress? Are you kidding?Technology has exploded in the last two decades.
The article continues:
Hansen painted an eerily familiar picture: “This is the essence of secular stagnation,” he explained, “sick recoveries which die in their infancy and depressions which feed on themselves and leave a hard and seemingly immovable core of unemployment.”
He could have been describing 1938 or 2016.
The comparison between 1938 and 2016 is nuts, but suddenly, unexpectedly, it gets right to the heart of the matter:
World War II effectively solved at least one of Hansen’s concerns. The U.S. population exploded, thanks to a post-war baby boom.
Meanwhile, high government spending during the conflict boosted the economy, and new inventions jet airplanes, interstate highways, and eventually computers kept productivity and growth churning.
And there it is: “High government spending during the conflict boosted the economy.”
Could it be clearer or simpler? HIGH FEDERAL SPENDING – – > GROWING ECONOMY
Unfortunately, despite the obvious and undeniable experience of federal spending during WWII bringing us into prosperity, today’s economists, politicians and media writers either don’t get it or don’t want to admit it.
No, it wasn’t the bloodshed that stimulated the economy. It wasn’t the destruction of entire nations. It was:
HIGH FEDERAL SPENDING – – > GROWING ECONOMY
There were jobs because the federal government paid for jobs. It wasn’t even population growth. Millions of people left to serve overseas. It was, very simply:HIGH FEDERAL SPENDING – – > GROWING ECONOMY
