Brad DeLong's Semi-Daily Journal: A Weblog

If the United States represents about 30% of world GDP, should not the section on the U.S. economy be about 30% of the presentation?

Great resource, thanks for posting these two presentations.

Good luck getting macro-economists interested in modeling a boundedly rational world. How much of the economic edifice and influence would survive a move to a muddy world of competing models of irrationality?

I like the visual presentation of the slides in a sort of slide sorter view. Once one calls up a full-size slide in a separate window, could you have a forward button that links directly to the next slide? It would make serious viewing much easier.

Perspective? The United States currently represents 30% of the world's GDP. As far as the world is concerned, the US is only one nation among almost 200 in the world (0.5%); and its population is about 4% and falling.

Oil consumption per person is misleading. Much of the consumption goes into producing manufactured goods. No question that the US has an energy inefficient transportation infrastructure.

Cannot the explosive growth in U.S. productivity be explained by our shift to the importation of more labor intensive goods from countries in which wages are low? This would leave American workers to be employed in the more capital intensive industries, in which, almost by definition, output per manhour is higher. It also explains why total employment is lagging (ie, capital intensive industries are not labor intensive, ergo, they employ fewer people to produce a given amount of GDP). I have seen nothing about this in the press. Why not?

"I have seen nothing about this in the press. Why not?"

Answer: because thet would mean stating (on the record) that there will be many, many more "losers" in the current economic climate than winners. People don't want to be explicitly reminded that the odds of them becoming a loser have increased over the last generation, at the same time that the price of failure has increased (due to the deterioration of our socail safety net).

The strategy is to move to a more advanced service economy. But the strategy has flaws: the latest edition of 'Foreign Affairs' points out that the rest of the world has been educated to compete in these services also. ('Is America Losing Its Edge?)

Should the US administration legislate to keep knowledge to itself? Definitely not: "U.S. private industry may want to follow the example of the nation's armed forces. Washington's military dominance no longer depends on it denying others access to critical technologies. . ."

Follow the example of the nation's armed forces? Yesterday's press carried a story that Congress is denying the UK the right to buy advanced weapon systems. http://scotlandonsunday.scotsman.com/opinion.cfm?id=1232862004

National foreign policy is seriously restricting economic policy.

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The Economist's Pam Woodall says “new wealth is an illusion.” So does Paul Kasriel, in his 10/22/04 “Wealth Illusion” at http://www.northerntrust.com/library/econ_research/weekly/us/pc102204.pdf

Also, Brad Setser has some interesting perspectives on the US and China, taking DeLong to task a bit and arguing that the US “comparative advantage” seems mainly in exporting debt. See, http://www.roubiniglobal.com/setser/archives/2004/10/delong_on_the_g.html#more

Setser says, in part:

“The problem, it seems to me, is that no one in the US really seems to have a good sense of where our future comparative advantage will be. I have not heard of many new investments in the US that are premised on supplying the growing Chinese market. Usually, the anecdotes are of the opposite -- US firms moving to China to supply the US market.

“…No doubt, such sectors will emerge, particularly as China's exchange rate adjusts, as it must. But the process of discovering where our comparative advantage lies and reorienting our economy to exploit that niche may well take time, and probably won't be painless.

"Of course, so long as China --and for that matter Japan -- is willing to buy an ever increasing number of US treasury bills, we can continue to specialize in budget deficits, and put off our day of reckoning!”

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