Dispassionate analysis?: America’s economists are almost as divided as its politicians

Posted: January 6, 2016 in economy
Tags: , ,

ECONOMISTS pride themselves on their dispassionate analysis. A survey in the early 2000s found that nearly four-fifths of graduate economics students in top universities viewed their field as “more scientific” than other social sciences. Careful economics, then, should be impervious to politics. But a packed session at the American Economic Association’s vast annual convention, held from January 3rd-5th in San Francisco, showed that divisions among economists on partisan lines can be stark.Start with the left. Joseph Stiglitz of Columbia University, a Nobel prize-winner for work in microeconomics, bemoaned low spending in the economy, which, he argued, is holding down wages. Hourly pay grew by only 2.3% in the last year, in spite of low unemployment of just 5% and sustained economic growth. “The malaise in which the country has been for eight years is likely to continue”, he predicted gloomily. Inequality is one of the factors holding back demand, says Mr Stiglitz, because rich people save more.Others agree with his pessimistic forecast. One hot topic at the conference was “secular stagnation”, a thesis championed by Larry Summers of Harvard University, a former Treasury secretary under President Bill Clinton. Secular stagnation predicts that chronically weak investment will hold down growth for years to come. Mr Summers and his colleagues have updated the theory to …

via Economic Crisis http://ift.tt/1Rt2Loy

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