Thursday, August 04, 2011

Planet Money: The State of the Economy is Strong

R- once asked, if you know so much about fixing the economy, why aren't you out there fixing it? The answer is that I don't need to be because the ideas I have are already represented because pretty much all economists think very much like. There is more unanimity in economics I feel than in any social science. NPR's Planet Money often reminds me of this, most recently by airing an episode that echoes something I rant about often. I really respect the show for doing the best job in all media of airing the economists viewpoint.

This episode's premise: the state of the US economy is strong. For educated America, even in the recession, unemployment is under 2%. That US manufacturing is still the strongest in the world, its just now powered by machines, and the educated people who fix the machines.

That the rest of the economy can be fixed if we just fix education, the deficit, and healthcare, and that these are easily fixed. That most of the deficit (except Medicare/medicaid) can be made to go away through simple cuts like raising the retirement age to 70.

On all this I very much agree although  a couple quibbles--e.g. head start hasn't worked, and while I agree employer driven healthcare is dumb, and I was there for the big Bush push to get rid of it, it probably isn't the main problem with healthcare costs.

R- cleverly followed up her question with a tougher one, if all economists know how to fix the economy, why are things in the economy still broken. Much to her pique, I had an answer for that too: which  can be found in the field of political economy and the class I used to teach.

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