There’s an interesting assumption going on behind the estimation of the output gaps (the difference between the economy’s current output and the economy’s estimated maximum potential output)–that not only did the economy decline during the recent crisis, but that the economy’s potential declined as well. This assumption leads to governments believing that their economies are less capable than perhaps they are, that the output gaps are not especially large, and that there is little revenue to be raised to offset stimulus spending, but what if it is not true? The idea comes from Capital Economics, a macroeconomics research company, has received attention from the Financial Times and Paul Krugman, and now it will receive attention from me as today’s topic.
Tag: GDP
Where Have the Conservatives Gone?
Conservatives are people politically who are anti-change, anti-reform, who want to preserve things as they are, or return to the way things used to be not so very long ago. Conservatives always represent the time just passed or the time being passed. In the age of the industrial revolution, the conservatives were agrarians who mourned the loss of pastoral life. When the progressive era came along, the conservatives were capitalists who pushed back against the unions and labour reform. Nowadays, however, the left no longer pushes new social programmes, new reforms, or new ideas. Today, right wing politicians like Paul Ryan and David Cameron are the ones supporting things like “welfare reform”, “NHS reform”, “social security reform”, “Medicare reform”, and other reform policies that would change the state structurally, altering elements of it that have been in place for in many cases well over half a century. There is nothing conservative about wanting to change these policies. Change is, inherently, anti-conservative. So where have the conservatives gone? That is today’s topic.
Fed-Bashing Tomfoolery
It has become fashionable on the political right to attack the Federal Reserve and its policy of quantitative easing, the process by which the Federal Reserve increases the money supply by purchasing assets owned by the private sector with cash that it prints. The right argues that quantitative easing encourages inflation and makes it easier for the government to borrow money, that it discourages saving, and that these are bad things. In contrast, these are very good things, and I shall endeavour to argue as to why.
Money and Motivation: A Shocking Contradiction
Frequently, we are told by the right that progressive taxation is bad policy, that it diminishes the motivation of entrepreneurs and “job creators”. But what is the relationship between money and motivation? Does more income lead to higher productivity? It turns out, if you phrase the question correctly, the answer is already well known, and the implications of that answer comprise today’s topic.
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Back to Britain
Today I find myself preparing to board plane to resume my final undergraduate year at the University of Warwick in Britain. But what sort of country am I coming back to? Has Britain’s government managed to turn around the country’s economic situation, buoyed by the Olympics, or does Britain remain stuck in the doldrums? That is today’s topic.
Benjamin Studebaker 