Reflecting on the recent outcome of the Canadian election, in which the Liberal Party of Canada cast itself as a progressive left of center party and reversed its fortunes in a major way to win a strong majority government, Larry Summers wrote in the Washington Post that “More infrastructure investment is not just good economics. It is good politics. Let us hope that American presidential candidates get the word!”
Anyone who has heard Mr. Summers speak over the course of at least the last five years will be familiar with his message, that he can’t imagine a better time—with historically low interest rates, lower wages, and higher unemployment—to be investing in the country’s infrastructure. Just when would be a better time to revamp Kennedy airport, and the nation’s roads, bridges, and dams, than now?
Paul Krugman echoes the same sentiment in a New York Times column entitled, somewhat inappropriately, “Keynes Comes to Canada.”
Good economics it is, and not simply for pump-priming reasons in the old Keynesian way. If there is a rock solid case to be made for productivity improving public investments, it should be made regardless of the state of the macro-economy.
But as the obvious frustration in the tone of Mr. Summers’ voice suggests, the fact that his advice does not lead to policy, suggests good economics doesn’t always line up with good politics. And there are a number of peculiarities in both personalities of political leaders, and the structure of politics, suggesting the Canadian example does not automatically translate to the American setting.
Continue reading “Are Canadian progressives showing Americans the way?”
Arthur Cecil Pigou made lasting contributions to the science of economics, but for macro-economists of a certain generation he will always be considered a laughingstock.
Professor Pigou taught at Cambridge University during the first decades of the 1900s, and had the misfortune of making a cameo appearance in the opening chapters of what is arguably the most influential economics book of the 20th century, The General Theory of Employment, Interest, and Money, written with eloquence, and at times a very caustic pen, by his colleague at the same university, John Maynard Keynes (whose last name, by the way, sounds like “Canes”).
Pigou’s big mistake was to suggest that the unemployed themselves were to be blamed for their predicament. To Mr. Keynes, the notion that the persistently high unemployment rates of the Great Depression were in some sense voluntary was worthy of scorn and ridicule.
Continue reading “Mr. Keynes and the Austrians: a battle over a suggested interpretation of unemployment”
The state of the jobs market is best assessed by a number that is not given enough attention by Statistics Canada, and the many media reports based upon its monthly press release.
The headline attention is all soaked up by the unemployment rate and the level of employment, when it really should be something Paul Krugman—the Princeton University economist and New York Times columnist—calls his “favorite gauge” of the employment situation.
Continue reading “Why there are better ways to measure unemployment”