The above-linked op-ed piece, “Economics for Politicians,” appeared on the Reuters web site this morning. I found it interesting because it echoes a post on the same subject that I made over a year ago, as our economy began to unravel. (See Advice for Next President: Listen to “Kooks” and “Weirdos”.) This Reuters piece is a good indictment of the field of economics. Here’s some selected excerpts:
President Barack Obama was happy enough to host a summit on job creation on Thursday. Economists were in attendance, among others. But few political leaders feel comfortable with the dismal science in all its glory.
… Current and future leaders shouldn’t feel embarrassed about finding the subject daunting or depressing. It is both.
… If President George W. Bush had been a little more curious, perhaps he would have placed less faith in the no-worry approach to regulation and bubbles expounded by Alan Greenspan, then chairman of the Federal Reserve.
Few politicians seem to learn this lesson. Obama’s economics team is made up almost entirely of professional insiders. Such choices make it easy for critics to say the administration has borrowed a narrow economic worldview from Wall Street.
The following point is critical – it’s the very message I’ve been hammering home in my book and in this blog:
The thought provides a neat segue into the second rule: unemployment can matter more than growth. The recession has brought output down to 2006 levels in most rich countries. That’s not good, but it needn’t be a huge problem. There’s still an awful lot of production and consumption going on by the standards of any year in history other than the last two or three.
Today’s level of GDP is exactly the same level that, only a couple of years ago, constituted economic boom times and had everyone partying to the tune of “let the good times roll!” What really matters is employment. GDP is almost inconsequential, as I tried to point out in Chapter 1 of Five Short Blasts.
Unemployment is a much greater evil. Human dignity is lost when workers who want jobs cannot find them. Chronic unemployment is also bad for future economic growth, as idle workers lose skills and motivation.
The recession has pushed up unemployment rates significantly in the U.S., and somewhat less in European countries with stronger job protection laws. The conventional economic toolbox is not designed primarily to help the jobless find their way back into employment. Government programs help a little, but perhaps there are some bright iconoclast economists around with better ideas.
I’m right here – ready, willing and able to help if there are any politicians out there willing to listen. But I won’t hold my breath.