She highlights what is a legitimate criticism of the economic recovery post stock market crash/9-11, in that it was slower than previous ones. This much is true, but the last "recession" we had was nothing. There was not that big of a valley to climb out of, additionally average wages for your average earner didn't really recover significantly until 2006. I would be curious to see if these charts were extended one year.
Regardless, a potential winner in the chart contest!!! (and yes, the fact she's female does have an increasing chance on her winning ;P JUST KIDDING!)
http://www.cedarcomm.com/~stevelm1/usdebt.htm
ReplyDeleteCare to comment Captain?
Trying to come up with some sort of "average expansion" is ridiculous. Economics in general suffers from having a huge number of variables that make clear conlusions almost impossible, and the wider the scope of your analysis, the worse that problem gets. To compare macroeconomic performance now against some other period (especially one more than a few years previous) to draw any specific conclusions is really, really sketchy. Trying to aggregate decades of previous expansions into some sort of meaningful composite is completely futile, and then to compare current performance against that arbitrarily chosen set of "previous expansions" is absurd.
ReplyDeleteNot only that, but we have a comparison of "wages and salaries" from now against everything post-WW2. I think wage data is among the most misleading of all economic statistics; non-wage compensation has increased significantly since WW2 relative to wages, so wages and salaries are [i]not[/i] representative of total compensation. If you go from real wages of $15 an hour to real wages of $15 an hour plus a full coverage health insurance plan, you're a whole lot better off than you were before. Of course, there will always be somebody out there who will say, "LOOK! WAGES ARE STAGNANT! RICH GET RICHER, POOR GET POORER! SOCIALISM NOW!"
Makes me sick.
Hey Anon,
ReplyDeleteWithout reading the whole thing (sorry, short on time), the first chart is worthless because they don't adjust for the size of the economy of the population growth, so no-duh, it's going to expand unbelievably.
The second chart is correct and is my primary, literally, only criticism against Bush Jr.
The first chart is completely worthless. Investment, is more a function of interest rates than of income. It's also impossible to compare both of these time periods because investor behavior was completely different in both time periods. 1995-1999 = "irrational exhuberance" when the "new economy" emerged and everyone was investing in every possible new technology. 2003 = period when corporations were telling their IT departments to get the same results with less money, so they outsourced.
ReplyDeleteOn the second chart, i mostly agree with Ryan, although econometric analysis with appropriate control variables will allow this type of comparison. Graphical representations are rather sketchy though.
The only way you can control for different factors is if you actually know what impact they've had. For example, we have no idea what the US economy would look like if China and India weren't expanding so much, so we can't control for that to get an accurate comparison between current US performance and 1950s US performance.
ReplyDeleteThe real world isn't the laboratory environment that we'd need to isolate variables and determine their impact. What is the impact of having an economy shift from 20% services to 40%, and how can we compare those different points as though it's the same sort of economy? Even if we look at other countries that have experienced similar shifts, they've also got a billion other variables at work that affect their final outcome.
Lets pretend we're all members of the hard sciences working in a lab. We want to determine what effect changing a particular variable would have. We'd need an identical control group and experimental group, and we can change one thing between them and observe the results. By that process, we can get a pretty clear idea of what effect our change has made.
Unfortunately, we're not in a lab, we don't have two copies of the US economy to experiment on, and there are about six billion different independent variables wandering around of their own free will. Actual economies, especially ones the size of the US economy, are complex almost beyond imagining. There is no way to account for everything to start isolating variables to determine their impact, and while we can make models to fit the curve that used to be, our ability to predict the future with those models is only competitive with astrology and long term weather forecasting. That's why if you laid ten economists end to end, you'd have a line fifteen opinions long.