Wednesday, January 28, 2004

Speaking of blind spots of economists (as we were), Brad DeLong today expounds that

Employment is lagging not because businesses are too bureaucratic and slow to hire quickly, but because demand growth has been slower than productivity growth. Policies that had produced faster demand growth--either by not scaring the bejeezus out of everyone by claiming that Saddam Hussein was an immediate and deadly threat to every American, or by a fiscal policy that had more employment bang--would have produced faster employment growth as well.

But businessmen who are actually in a position to create good jobs say instead that they aren't doing it here because, no matter what the job, you can find someone who will do it just as well for less in India or China.

Who to believe about the motives of the businessmen -- the businessmen themselves or the economists?

Which is not, for the umpteenth time to argue that trade or outsourcing per se is bad, but rather, that at the very least, we are handling it badly...


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