Tuesday, August 30, 2011

Alan Krueger's Appointment as Administration's Chief Economist

I was somewhat stunned to learn that Alan Krueger's appointment as the administration's chief economic advisor makes him the third in.....three years.

Good God! Can the US be so badly off that we literally have changed chief economists an average of once each year in this administration?

I heard various pundits praising Krueger. Douglas Holz-Eakins described him as well-qualified. Bloomberg's Tom Keene said that Krueger 'knows more about the American wage' than anyone else.

Great, Tom. Too bad what our nation needs is capital investment in business which will draw with it more employment. Jobs don't just grow by themselves.

While I'm on the subject, I would observe that the recent anemic US quarterly GDP growth rates hardly constitute the sort of activity which one associates with an expanding effect of Samuelson's accelerator-multiplier effect. A table in a weekend edition of the Wall Street Journal editorial by Alan Reynolds showed private sector quarterly GDP growth to have been worse than the topline numbers, including two recent negative quarters.

I don't care how much Krueger knows about wages, nor how vociferous he is about employment tax credits. Without sufficiently positive and sustained US GDP growth, no amount of temporary tax breaks are going to bring about a sustained private sector recovery.

However, according to recent surveys of business owners, the results of which I've seen and heard on CNBC and/or Bloomberg, an investment climate of less uncertainty regarding government intrusion, less regulation, and lower tax rates on capital gains and profits would all have a more positive effect than minor fiddling with payroll taxes.

Maybe we should find an economist who believes those things and make her/him the nation's new chief economist for this year.

No comments: