Wednesday, April 13, 2005


Brad deLong: Once again points out the obvious


Brad dealing keeps pounding on the table as only an economist can do. He points out again and again that while there is reason to believe that economic growth may be lower in the future than it has been in the past, there is none to believe that stock market returns can offer historical profits in such a low growth environment.
Macro Lunch: "Asset Returns and Economic Growth
Yep. However:

1 If there is a trend toward lower economic growth, it has not so far as I am aware been reflected in our actual economic statistics.

2 The Bush administration has been working without cease to permanently increase returns to capital while depressing those to labor. They have enjoyed considerable success in achieving those aims.

3 There are strong theoretical reasons to believe that the Bush administration by accomplishing (2) above, increase the chances of (1) becoming true.

4 No that doesn't invalidate Brad's point over the long haul, but it does mean that Bush gets to hand stockholders a big one off gain.

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