"Math and economics are hard!"
Excellent column by Dean Baker:
That is pretty much what former Obama adviser Steven Rattner had to say in the Washington Post today. In his piece, Rattner told President Obama:
"don’t blame the talented economists who were advising you …. Creating jobs is a slow and frustrating process in the wake of a tough recession."
Calling the president’s economic advisers "talented" is good for their self-esteem (we know how important that is), but in the real world, their talent as economists must be judged by their performance. Missing the biggest asset bubble in the history of the world (a credential shared by all of the president’s economic advisers) doesn’t speak well for them.
However even more important is their failure to generate jobs for the country’s workers following the bubble’s collapse, which has to be the top priority for economic policy. While job creation might be "hard" other countries have managed to do it. For example, Germany has managed to bring down its unemployment rate from 7.1 percent at the start of the downturn to 6.7 percent today. This was accomplished in spite of the fact that Germany actually had a steeper downturn than the United States.
Mr. Rattner’s piece suggests one of the key causes of the administration’s failure to generate jobs. Rattner highlights the more rapid productivity growth in the United States over the last decade than in other countries, in particular singling out Germany as country with slower growth.
While faster productivity growth is generally better than slower growth, this is not the case when . . .