Monday, February 10, 2020

Harvard Economist Says the Economy is Doing Great, But This is What He is Not Telling You

Greg Mankiw
Harvard economist and top-selling economics textbook author Greg Mankiw writes:
As the Democratic candidates get ready for tonight's debate, let me offer some advice: They should refrain from their tendency to disparage the current state of the economy. As the graphs below show, the employment-population ratio for prime-age workers is at its highest level in about 20 years. Real wages for production and nonsupervisory workers (that is, excluding the more highly paid bosses) are at an all-time high. There are plenty of good reasons to remove Donald Trump from office, but a poor economy is not one of them.

Mankiw is mostly correct about what he writes here, though I am not a big fan of the "real wages" read, and Trump deserves near zero credit for the boom, but his big miss is that like AOC, he is a Keynesian and, thus, doesn't understand the business cycle.

This boom is a Fed-created boom in the form of the boom-bust business cycle. We have a boom now, but it will not end well because of the Fed interference. Mankiw doesn't understand this and so gives no warning that the party will end at some point. A point that the Democratic presidential candidates could use to their advantage if they understood it just a little bit better than Mankiw.


1 comment:

  1. Correction, unlike AOC, Mankiw is a John Maynard Keynesian.