ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
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Yet another reason not to try to apply 1930's Keynes to today's economy.
So if we examine earlier industrial data we should be seeing more Keynesian behavior? A surprising acknowledgment.
Also, to be frank this observation looks like a argument for propping up failing industries to spread out periods of intersectoral shift. If industries can dismiss workers without substantially losing total output (at least for a while), then a 'recalculation' doesn't need to involve sustained periods of unemployment or recession.
One other factor in the equation: the "organizational capital" can often be replaced by improved tech and use of tech, but for numerous reasons isn't when an existing human organization is in place.
But the human organization often goes away when a company is having hard times, and if the company survives, the organizational function is replaced, by a new, cheaper, tech-heavy team.
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RE: "Yet another reason not to try to apply 1930's Keynes to today's economy."
You might want to explain this a little more, Arnold. There is demand for organizational capital just as there is demand for final output. I'm concerned about the jobless recovery problems, but I have no idea why you think this invalidates Keynes (not that I would simply reproduce Keynes from the 1930s either - we've learned a lot since then. But the Keynes that remains valid doesn't seem to be negated by the fact that a lot of work goes to producing organizational capital).
Even without labor being focused towards organizational capital, lags between labor and growth are to be expected. Add in that the contraction makes capital relatively cheap, and you will have a preference of substituting capital for labor hours.
Foobarista hit on this already.
"a jobless recovery persist until profits improve" does not sound like much of a recovery to me.
Without job creation or profit improvement it sounds more like Hamlet without the prince than a "recovery."