The Growth Deficit Redux

There’s this from last fall:

Let’s look at this another way.  It’s been widely reported that this “recovery” is the weakest, most anemic post-recession recovery in our nation’s history.  Those reports aren’t far wrong.  A normal recovery coming out of a downturn as deep and steep as was the Panic of 2009 typically sees growth rates of 5%-6% per year, or more.  This Obama recovery has been 6.7% over the entirety of his term in office—nearly four years [as of October 2012.  It’s not any better today].  Had we seen a normal recovery (and using a pessimistic 5%/year growth rate), we would have reached today’s unemployment rate after a shade over one year—in 2010—and we would have been back to full employment (in the range of 4.8%-5.5%) in just under 2 years—by last year.

Next, there’s this from last weekend:

We are now in year five of what has been one of the great experiments in Keynesian economic policy.  We were told that if Congress would spend $830 billion more temporarily, and the Federal Reserve would unleash monetary policy, a recovery would begin and rapid growth would resume.  Larry Summers, Alan Krueger, Jared Bernstein and their allies on Wall Street got their policy wishes.  Their economy has delivered mediocre growth and declining middle-class incomes—though we will concede that the wealthy have done well as the stock market has recovered.

So now the same Keynesians say the spending blowout wasn’t large or long enough, taxes still aren’t high enough, and monetary policy hasn’t been easy enough.  What this economy really needs is a statute of limitations on intellectual denial.

Finally, there’s this from Henry Morgenthau in the depths of that earlier great experiment in Keynesian economic policy:

We have tried spending money.  We are spending more than we have ever spent before and it does not work.  I want to see this country prosper.  I want to see people get a job.  I want to see people get enough to eat.  We have never made good on our promises.  I say after eight years of this administration, we have just as much unemployment as when we started.  And enormous debt to boot.


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