Saturday, November 21, 2015

"Some Big Changes in Macroeconomic Thinking from Lawrence Summers"

This post's title refers to Adam Posen's blog post about the keynote address by Larry Summers: "Is It (just) Hysteresis? Disentangling the Cyclical from the Structural," Conference: Making Sense of the Productivity Slowdown, Peterson Institute for International Economics, Washington, DC, November 16, 2015:
...basically what we were taught were that there were these smart people who were exemplified by Bob Solow and there were the stupid people who were exemplified by a bunch of sociologists. 
And the stupid people said that technology was going to remove the jobs and the smart people said, “Well the technology will remove the jobs. If there’s more productivity than people are going to have more money and if people have more money, they’re going to spend it and then everybody’s going to be employed. And so, it’s like the Luddite fallacy to think that technological progress reduces jobs and this is stupid. And that’s basically what I believed and you know, that’s basically what I went through life believing because that’s what I’ve been taught and it seemed to me to make sense. 
And then at some point, it sort of occurred to me that suppose the stupid people were right, what would it look like? Well what it would it look like would be there’ll be some large categories of labor who would see their relative wage go way down.
O.K. fine, but Sandwichman would just love it if Larry Summers would send a little credit his way for documenting FIFTEEN YEARS AGO the vacuity of the stupid people fallacy claim.

"The 'Lump-of-Labor' Case Against Work-Sharing: Populist Fallacy or Marginalist Throwback?" Tom Walker in "Working Time: International trends,'theory and policy perspectives, Lonnie Golden and Deborah Figart (eds), Routledge, 2000.

"Why economists dislike a lump of labor," Tom Walker, Review of Social Economy Volume 65, Issue 3, 2007, pp. 279-291.