Lacking All Conviction

[n2doc]

November 28, 2010, 5:05 PM- Paul Krugman

Mark Thoma directs us to an appalling story — apparently Obama held a meeting after the midterm to debate whether our unemployment problem is cyclical or structural.

What I want to know is, who was arguing for structural? I find it hard to think of anyone I know in the administration’s economic team who would make that case, who would deny that the bulk of the rise in unemployment since 2007 is cyclical. And as I and others have been trying to point out, none of the signatures of structural unemployment are visible: there are no large groups of workers with rising wages, there are no large parts of the labor force at full employment, there are no full-employment states aside from Nebraska and the Dakotas, inflation is falling, not rising.

More generally, I can’t think of any Democratic-leaning economists who think the problem is largely structural.

Yet someone who has Obama’s ear must think otherwise.

No wonder we’re in such trouble. Obama must gravitate instinctively to people who give him bad economic advice, and who almost surely don’t share the values he was elected to promote. That’s what I’d call a structural problem.

http://krugman.blogs.nytimes.com/2010/11/28/lacking-all-conviction-2/