Tuesday, April 5, 2011

Inequality and The Great Stagnation

A good read from Jonathan Chait:

Inequality and The Great Stagnation

1 comment:

  1. I'm not sure if Chait's catch achieves as much as he imagines it does. It's true that median family income shows a greater slowing after the 70s than does per capita GDP, but as Lindsey points out the slowness post the 70s (and acceleration between WW2 and the 70s) is seen in both places, though it's not as marked.

    Further, the insistence on looking at family income arguably over-states the effect on individual Americans, as family sizes went down dramatically in the 70s and after.

    It's very convenient to compare the 50s and 60s with the period after 1970, since our economic data gets a lot better after the war, but it does strike me that this is arguably a rather unrealistic comparison. We can't necessarily expect US economic growth to always be similar to a period in which we were the only major industrial economy which hadn't just been bombed to bits, and when we'd also lost significantly fewer working-age people than most other major powers. (Not to mention that we had a far greater education advantage over the rest of the world in the GI Bill period than we have since the 70s.) There are certainly ways in which the US has gone off the rails over the last couple decades, but it seems like trying to come up with a more reasonable baseline expectation for US growth than that of the 50s and 60s is also an important exercise.