I heard a very good speech by Tyler Cowen at the Association for Private Enterprise Education conference in Las Vegas today.
It was titled "Why Is It Such a Deep and Long Recession?" In it, he not only explained what he sees as the causes of the recession, but also prognosticated about next 50 years. I won't try to be comprehensive but here are some highlights, along with occasional commentary by me:
1. We haven't, since the Great Depression, seen such a large percentage of people unemployed for 27 weeks or more. While he did, at another point in the talk, mention the role of unemployment insurance, I think he should have mentioned it directly at this point, pointing out that in some states one can now get unemployment benefits for up to 99 weeks vs. the traditional 26 (plus 13 when we're in a recession.)
2. He quoted Michael Mandell's finding that if you strip out government (did he mean government spending or government workers' pay?--I think the latter), there has been no growth in per capita person income for the last decade.
3. He made co-blogger Arnold Kling's point about the recalculation, crediting Arnold.
4. He stated that stimulus spending has postponed the day of reckoning for higher "education" (the quotation marks are mine). Quote: "Higher education is on life support."
5. Pointed out what Bastiat, Henry Hazlitt, Dwight Lee, and I (and I'm sure many others) have been saying: All other things equal, green jobs are bad, not good. Jobs are a cost.
6. Quoted "the wise Garett Jones": "Labor hoarding is so 20th century." Translation: because of the web, employers can go out and hire workers when they need them, so why keep them on the payroll.
7. Pointed out that the unemployment rate in Haiti is always about 0 percent. Whether people are formally counted as unemployed or not, they are out working to stay alive. Great line: "The only unemployment you find in Haiti is in the graveyard."
8. During this recession, there is easier substitutability from durables into things that are fun and cheap, like gaming and reading blogs, which is why durable sales have fallen off the cliff.
9. There is a substantial probability (0.1 < p < 0.5) that in the next 30 to 50 years we will in the stationary state where the extra wealth thrown off by growth will go almost entirely to the elderly and health care costs of those same elderly. Think Japan, except that there are fewer rent-seeking fights among the Japanese special interests. (On this last, I'm reminded of something Bob Crandall of Brookings said at a conference I was at in 1985 when explaining where there are so many fewer lawyers in Japan than in the U.S. Said Crandall, "In Japan, the fix is in.")
10. There is also a substantial probability of a techno-utopia as Moore's Law races against the higher costs due to health care spending on the elderly.
11. The biggest technological revolution in our economic history was from 1890 to 1928.
12. The U.S. is in better shape than the EU. "The U.S. is still the world economy's best bet."
13. Income distribution will become more unequal. Utility distribution will become more equal. Also, envy is local. Most people aren't upset about Bill Gates's wealth: they're upset about their more-successful brother-in-law's wealth.
14. "The Internet has become the great equalizer." My comment: I think I remember that being said about the Colt 45.
15. Google has increased the value of reputation.
16. A disproportionate share of the gains from various economic changes will accrue to capital, but not necessarily to capital in publicly traded firms.