EconLog
by Bryan Caplan
Posted in
Commentary "Yes, it's conceivable for new production methods to suddenly drive millions of workers' productivity down to zero. But why on earth should we believe that this has occurred? This is an extraordinary claim requiring extraordinary evidence. If lots (say 25%) of old economy firms saw their revenues fall by 80% I might believe it. If wages fell 50% and the unemployment rate didn't budge, I might believe it. All I've seen this recession, however, is that nominal GDP sharply fell, and real GDP fell almost proportionally. That's how recessions in low-inflation economies usually work." (11/15/11)
http://econlog.econlib.org/archives/2011/11/reply_to_arnold.html
Tags: economics
Reply to Arnold on PSST
by Bryan Caplan
Posted in Commentary
"Yes, it's conceivable for new production methods to suddenly drive millions of workers' productivity down to zero. But why on earth should we believe that this has occurred? This is an extraordinary claim requiring extraordinary evidence. If lots (say 25%) of old economy firms saw their revenues fall by 80% I might believe it. If wages fell 50% and the unemployment rate didn't budge, I might believe it. All I've seen this recession, however, is that nominal GDP sharply fell, and real GDP fell almost proportionally. That's how recessions in low-inflation economies usually work." (11/15/11)
http://econlog.econlib.org/archives/2011/11/reply_to_arnold.htmlTags: economics