I don’t want to have to file this one under Liberalization Failure. I hope the mere suggestion of this is a wake up call to some folks. From
Kotlikoff writing at Bloomberg.
This is the standard sticky wage and price explanation for our economic malaise offered by Keynesian economists such as Paul Krugman and James Galbraith. I think there are fewer markets suffering from this problem than Krugman and Galbraith do, but there are enough such markets to make the case for government intervention. Indeed, the president should put these economists in charge of identifying the markets suffering from this problem and helping their participants set market-clearing prices and wages.
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Wednesday ~ September 28th, 2011 at 5:29 pm
Patrick Lange (@PFunkLange)
Speaking only to the narrower political implications: I suspect that if there is anything that would go over more poorly with the median voter than elevated inflation, it would be government-initiated cuts to their paycheck.
Wednesday ~ September 28th, 2011 at 6:16 pm
rjs
here’s galbraith on that:
http://economistsview.typepad.com/economistsview/2011/09/wages-and-recovery.html
& here’s krugman: http://krugman.blogs.nytimes.com/2011/09/28/larry-kotlikoff-proves-my-point
Wednesday ~ September 28th, 2011 at 6:40 pm
Lorenzo from Oz
Does Kotlikoff know that versions of his suggestions 2&3 were tried by Hoover?
We really are living in the re-run of the Hoover Administration.