Here’s Atrios
As Krugman says, to reduce unemployment significantly you need more than “normal” growth, you need turbo-charged growth.
And here’s Paul with some obviously false, but totally orthodox econo-doctrine:
Here’s the scatterplot of annual growth versus annual changes in the unemployment rate over the past 60 years […]Basically, we’d be lucky if growth at this rate brought unemployment down by half a percentage point per year
This is the kind of dim financial reasoning that caused the collapse in the first place – and the 30 years of devastatingly bad economic policy that led up to it.
Here’s a simple, factual, observation: there is no causal connection between GDP and job growth. If the price of refined gasoline goes up and sales don’t drop, GDP may rise, even though most Americans become poorer and even if business cut employment.
GDP = Consumption + Investment + Government
spending + eXports – iMports)
That’s it. There is nothing about employment tracked there at all. In fact, in an economy that has such gross concentration of wealth and such massive income inequality as ours, the relationship between GDP and employment can easily be backwards. If Wall Street invests $100B in ponzi-scheme real-estate pyramids – GDP goes up. If, on the other hand, the public cuts credit card debt and increases savings rates – the GDP goes down. If a private equity firm invests $1B in a profitable manufacturing company, loads it down with debt, and then pays itself $3B by liquidating the assets of the company, tossing thousands of people out of work, but paying out its partners, this will be a positive contribution to GDP. The contribution to GDP of 10,000 mortgage agents each reaping $1M in transaction fees will be far greater than the contribution of 100,000 construction workers weatherizing homes for $40K/year.
Imagine that the financial industry shrinks from 7% of the GDP back to 3% but we get 3million new manufacturing jobs in green industry. Is that bad? No. Would it require GDP to go up ? No.
So here we are in a weird situation where the spokesman for “progressive” economics is pretty much wedded to the same silly economic analysis that made him a strong advocate of NAFTA 20 years ago.