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Monday, May 23, 2016

Paul Krugman: Remembrance of Booms Past

"Why was the Clinton economy so good?":

Remembrance of Booms Past, by Paul Krugman, NY Times: ... Last week Mrs. Clinton stirred up a flurry of comments by suggesting that Mr. Clinton would be “in charge of revitalizing the economy.” You can see why she might want to say that, since people still remember the good times that prevailed when he was in office. ...
First of all, it really was a very impressive boom, and ... it’s odd that Democrats don’t talk about it more. After all,... the Clinton-era expansion surpassed the Reagan economy in every dimension. ...
But why was the Clinton economy so good? ... Mostly, he had the good luck to hold office when good things were happening for reasons unrelated to politics... American business finally figured out what to do with computers... This led to a surge in productivity...
The technology takeoff also helped fuel a surge in business investment, which in turn produced job creation that ... brought America truly full employment..., the force behind the rising wages of the 1990s.
Oh, and yes, there was a technology bubble at the end of the decade, but that was a fairly minor part of the overall story...
And it’s worth remembering that ... when Mr. Clinton raised taxes on the wealthy, Republicans uniformly predicted disaster. ... None of that happened, which didn’t stop the same people from making the same predictions when President Obama raised taxes in 2013 – a move followed by the best job growth since the 1990s. ...
Mrs. Clinton is currently proposing roughly a trillion dollars in additional taxes on the top 1 percent, to pay for new programs. If she takes office ... the usual suspects will issue the usual dire warnings, but there is absolutely no reason to believe that her agenda would hurt the economy.
The other big lesson from the Clinton I boom is that ... the single most important thing policy can do to help workers is aim for full employment.
Unfortunately, we can’t count on another spontaneous surge in technology-driven private investment to drive job creation. But some kinds of private investment might grow rapidly if we take long-overdue steps to address climate change.
And in any case, not all productive investment is private. We desperately need to repair and upgrade our infrastructure...
So, will Bill Clinton play an important role if Mrs. Clinton wins? I have no idea... But it will be important to remember what went right and why on Bill’s watch.

    Posted by on Monday, May 23, 2016 at 06:48 AM in Economics | Permalink  Comments (55)


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