Monday, July 4, 2011

Growth: What goes around comes around

11 May 2011: Dean Baker writes

The trick that got us from the large deficit projected for 2000 to the surplus that we actually experienced in that year was, in fact, much stronger than projected growth...

It would be helpful if policymakers paid more attention to this history...

Evidently, Mr. Baker thinks people need to be told that economic growth is a worthwhile policy objective.

11 May 2011: Sandwichman links to the Dean Baker post with these opening remarks:

Dean is right, of course. But does he have to be so smug about it? Historically it was economic growth that transformed a projected budget deficit in 2000 into a budget surplus.

Not to put words in anybody's mouth, but it looks to me like Sandwichman thinks Baker is excessively pleased with himself for actually remembering that growth is a worthwhile policy objective.

Sandwichman may be on to something.

8 June 2011: ProGrowthLiberal evaluates Pawlenty’s economic goal:

Five percent growth for an entire decade may be “out of line with any mainstream assessment of the American economy” but with a GDP gap near 10 percent and potential GDP growing at about 3 percent per year, 5 percent growth for the next five years strikes me as a very laudable goal.

My tongue-in-cheek comment on the post was

Pawlenty's plan is that we should grow fast instead of slow? Remarkable!! It's a wonder nobody thought of that solution before...

In response, wellbasically said

Art, many elite commentators and policy-makers oppose growth.

I just thought that was weird. Only a couple weeks later did I run across Baker's words of wisdom and Sandwichman's disappointment. And only then did it occur to me that perhaps... perhaps wellbasically was right.

Back in the 1970s, New York City almost went bankrupt and farmers were plowing their crop into the soil to minimize costs. It was bizarre. So I signed up for a course in economics. It was 1977.

In 1977, there were two goals: price stability and growth.

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