Base10 actually got a question right in macro class last night. The professor pointed out that the United States has undergone the most spectacular growth in the last ten years--indeed the US economy is growing at a rate that is nearly double its historical average. Why do people think we're in a recession? He asked if we had heard that real wages were stagnant, if not down. Base10 pointed out that while real wages may be down, real compensation has increased--a point he has made here. The professor suggested we get more of our economic news from sources other than the NY Times.

If the Times won't print good economic news, Base10 supposes it is because they can't bring themselves to give any credit to President Bush. Does Bush deserve any credit? Maybe a little for his first term tax cuts. But the growth models that Base10 has seen so far seem to belie the notion that any fiscal policy changes can alter the growth rate. By the same token, does Clinton deserve any credit? Likewise, maybe a little for reducing entitlements and deficit reduction, but this doesn't account for the US's massive growth either.

At least one model suggests that the increased growth rate is due to technological change. Base10 remembers the tech balloon of the mid- to late-eighties and how many argued that we were in a "new economy" where computer technology and the like would result in huge gains in productivity. While many scoffed at this notion when the asset bubble burst, it may very well be true.

- posted by Base10 @ 10:15 AM