Beware the New Normal

December 23rd, 2013 at 11:26 am

Over at the NYT Economix blog.

Just in case you’re wondering, as I note in the piece, I’m not alone in this concern about a damaging downshift in growth and its inputs, including labor force participation.  I wrote about CBOs work on this a year ago; this piece by Fed Reserve economists examines the issue in great detail, and Larry Summers important IMF talk is coming from a similar place.

One other thing.  Often when I present this argument in public speaking forums, someone coming from an environmental-sustainability place reasonably asks whether it is really in the planet’s interest to be pursuing faster growth.  My response is that faster growth does not have to imply faster environmental degredation.  Especially given the public goods investment is an important part of the solution, growth policy should be complementary to climate policy, including investments in renewables and incentives to expand our national footprint in sectors that will be important in this regard, like advanced battery production and smart grid technology.

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2 comments in reply to "Beware the New Normal"

  1. Nick Batzdorf says:

    Putting a finer point on it: environmental sustainability etc. is more expensive (in the short term)! That’s why China has so many coal power plants, for example.

  2. Dave says:

    I have seen dual concerns from people wondering about perpetual growth. 1) Environmental/resource limitations but also 2) A lot of people tend to have a general belief that economic growth implies that people must keep working harder and longer.

    Don’t underestimate #2. People don’t often say it, but I hear it between the lines from a lot of people. They kind of want economics to fail because they misperceive the idea of growth.

    Lots of really smart people feel that way about it. They need to hear it more often that growth is actually not required for economic viability. It is only required in certain conditions…