I have a great deal of respect for the Wall Street Journal but a recent article by Greg Ip is an example of, once again, the blind leading the blind on what’s really wrong with the U.S. economy.
The headline reads: Economic Theory Gets Its Day
Right away, something is wrong. Why would anyone care if the economic theorists are getting their books published and getting featured on television if they don’t know anything that will help us recover from several years of deep economic malaise? Why is theory flourishing if reality is headed in the other direction?
In the story, Reporter Ip introduces us to the world of books written by economists and introduces a new one.
“Now the American economist Robert Gordon follows (My note: follows another economics book by Thomas Piketty) with “The Rise and Fall of American Growth,” an equally dour take on the future of living standards.
Here’s the payoff line:
“…Mr. Gordon uses exhaustive historic data to buttress his thesis: Americans’ standard of living advanced impressively during the “special century” of 1870 to 1970, thanks to a series of revolutionary innovations—from indoor plumbing, the internal-combustion engine and electricity to municipal water systems and antibiotics—that, once complete, could never be repeated.”
What value is there in this argument? What planet is this guy living on? The technological change over the past quarter century has been stunning and there is a lot more on the way.
What we need from economists are suggestions about how to get the American economy to grow at sustainably high rates of 3 to 4 percent a year to create more employment and more tax revenue for strapped governments. We don’t need deeply researched cases about why growth can never be revived. That’s completely useless in today’s context.
Let’s talk about commercializing more technology, educating our workforce better, investing in infrastructure, improving our manufacturing, opening up our export valves and other things that create true wealth.
I’ve said this many times but it continues to shock me that the economists getting glorified in the pages of our finest newspapers know nothing about today’s economy and how to generate wealth. They are essentially bankrupt in terms of offering ideas about how to rev up the American growth engine. And it stuns me that the journalistic profession is glorifying them rather than revealing the truth: the emperor has no clothes.
