Monday, January 31, 2011

The Great Stagnation

Here is a good article by Tyler Cowen, an economist at George Mason University, who offers a potential explanation for our median income slowdown since the 1970s that I often talk about in my income inequality posts.

I agree that a big problem we have now is that people keep trying to live beyond their means (for example, by taking out more and more loans to buy bigger and bigger houses without the income to do so). Then the government feels pressure to spend in order to keep the economy growing. Maybe we aren't growing because we lack the technological advances necessary to do so and maybe we will have to deal with that fact by living within our means and not expecting a (much) higher standard of living than our parents.

For more on the topic:
Median-itis by Tyler Cowen
Econlog Reponse
Krugman's Kitchen

No comments:

Post a Comment