Krugman: Spend Now, Save Later

[mrstickball]

HappySqurriel said:

richardhutnik said:

Since 2001, job creation rate has remained anemic.  You hardly had any month creating more than 150000 new jobs a month in the United States.  It hasn't been there.  People who had been working had put in more hours, thus the productivity gains that were more (as seen in GDP).  Temp work increased also.  There is NOTHING that says that productivity efficiencies shiouldd result in a better life for anyone outside of the owner of the business that has productivity increased.  What the businesses did, with the increases in producitivity wasn't to redeploy people, but let them go.  To maximize profits, the trendy thing to do was to let people go.

Again, there is nothing to indicate productivity gains should benefit everyone.  Why should it, unless you are going on faith alone, to say it doess.

Throughout history there has been a relationship between increasing productivity of an economy and increased wellbeing of the average citizen. It is not an instantaneous relationship, and the productivity gains may not be the same as the ones that are currently tracked.

I’m not certain that everyone will agree with me, but I would personally argue that the reason wages have remained static (or declined) is because manipulation of the economy has decreased productivity in many western nations. In order to "Correct" the fallout of the dot-com bubble the United States (and many western nations) pushed interest rates to near record lows and increased government spending. One of the core results of this action was growth in the economy in careers that offered little or no benefit to the economy but profited from the asset bubbles that were forming due to such (insane) policies; consider the massive explosion in day-traders and real-estate flippers and how they offer no goods or services that people would willingly pay for.

With a smaller and smaller portion of the population involved in work of value, the increases in productivity went mostly towards maintaining the standard of living of everyone.

I agree with you.

Between the bubbles being burst, as well as our trade deficits being strongly in the negative, why should we expect salaries to increase? What underlying 'thing' has America done in the past ~20 years to simply improve salaries? The truth is, we've got to where we are at through manipulations.