Wednesday, April 26, 2017

Looking for answers in all the wrong places

Supply-side economics is a macroeconomic theory that argues economic growth can be most effectively created by investing in capital and by lowering barriers on the production of goods and services.

Noah considers the mystery of "labor's falling share of GDP":

Economists are very worried about the decline in labor’s share of U.S. national income.

He finds

four main potential explanations for the mysterious slide in labor's share. These are: 1) China, 2) robots, 3) monopolies and 4) landlords.

He goes thru the list, finding some merit and some problem with each of those explanations. Then he juggles them a bit and comes up with this:

So monopoly power, robots and globalization might all be part of one unified phenomenon -- new technologies that disproportionately help big, capital-intensive multinational companies...

That theory still doesn’t explain how landlords might fit into the picture. But it provides a possible way to unify at least some of the competing explanations for this disturbing economic trend.

Interesting. Noah is seeking a Unified Theory to explain the decline of labor share.

Here's one: Supply-side economics.

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