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Saturday, March 29, 2014

'The Skills Zombie'

Paul Krugman:

The Skills Zombie: One of the most frustrating aspects of economic debate since 2008 has been the preference of influential people for stories about our troubles that sound serious as opposed to those that actually are serious. The reality, all along, has been that our economy is depressed because there isn’t enough spending... But policymakers and pundits want to hear about tough decisions and hard choices, and they just recoil from any suggestion that terrible problems might have easy answers.
The most destructive example is, of course, the deficit obsession... The deficit obsession has faded a bit; but we still have others..., namely, the notion that we have big problems because our work force lacks essential skills.
This is very much a zombie doctrine — that is, a doctrine that should be dead by now, having been repeatedly refuted by evidence...
Yet the skills story just keeps showing up in supposedly informed discussion. Again, I think that this is because it sounds like the kind of thing serious people should say.
The sad truth is that while disasters brought on by inadequate demand have an easy economic answer — just spend more! — the psychology of policy elites is such that they generally refuse to believe in this answer, and look for tough choices to make instead. And the result is that unless something comes along to jolt them out of that mindset — something like a war — the slump goes on for a very long time.

I think there is also a prefeence for explanations and policies that won't take money out of their (VSP's) pockets. "Tough choices" = things that are hard for other people.

    Posted by on Saturday, March 29, 2014 at 08:40 AM in Economics | Permalink  Comments (113)

          


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