I have to admit to a twinge of anxiety when I remember that Obama's go to guy in economics teaches at the University of Chicago (even though he apparently isn't a spawn of Milton Friedman) because stuff like this shows up from UC Professor John Cochrane: “We should have a recession...people who spend their lives pounding nails in Nevada need something else to do.”
Then there's the newest NYT econ blogger, Casey Mulligan, also at Chicago, who maintains that the employment rate is down not because of a recession but because some people are facing “ financial incentives” not to work. It doesn't appear that Prof. Mulligan is referring to unemployed Nevada nail pounders or folks on the dole but suggests “as people adjust to the reality of depleted retirement accounts and vanished home equity, many of them will decide to make up for some of the shortfall by working more and retiring later.” You people with AARP memberships – its up to you to turn the employment situation around. Lazy slugs.
Mulligan promises more on this later. Can't wait, I need more humor in my life.
To complete the trifecta, Steve Levitt believes people are no longer buying SUVs because they're “uncool.” Unlike pickup trucks which apparently are still cool although not fuel efficient.
As Brad DeLong puts it: “...Chicago has nothing coherent or useful or constructive to say about our current situation.”
2 comments:
The "pounding nails" quote makes economic sense. People had been spending too much money on big, fancy, McMansions that they can't really afford. It is time for a lot of people who were bulding houses ("pounding nails") to do something more productive with their talents.
Or do you think that us taxpayers should subsidize more McMansion construction in Nevada?
The Casey Mulligan article points to data that supports his position. It's counter-intuitive, and the economic model of employment and productivity might be wrong (I'm very skeptical of ALL macro-economic models), but the data fits the model, and dismissing it without seriously thinking about the possibility that it might be right seems narrow-minded to me.
And you're not being fair to Levitt, either-- he presents a puzzle, and some possible explanations. What's your hypothesis to the puzzle of why pickup sales have remained strong but SUV sales have dropped off a cliff?
I don't think that taxpayers should subsidize McMansion construction in Nevada but we do, there and in Amherst as well, courtesy of the tax code. At any rate see Krugman on the hangover hypothesis in(http://www.slate.com/id/9593)cited in his NYT blog.
There's lots of fun in counter intuitives but Mulligan appears to be over the top with this one.
As for Levitt, I have a well thumbed copy of Freakonomics and enjoy his work but pickenup truck sales are down too.
Here's to us all in the New Year!
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