Friday, October 16, 2009

On Recoveries

It's well-known among economists, and often known by politicians and even journalists that employment is a lagging indicator. When the economy sinks, jobs are lost a few months later. When the economy recovers, job creation is often the last step.

Why, then, do journalists and Keynesian economists insist that demand drives business cycles? How can consumer demand increase while unemployment is high? Something always ends recessions; we've never suffered a persistent recession. Even the Great Depression didn't "bend the curve" of long-run growth.

There are a lot of mysteries in economics. It shouldn't be a mystery that the economy will recover, and when it does, it won't be because of consumer demand rising unbidden like the sphinx.

3 comments:

fendeilagh said...

I will not argue with your economics, but am curious about your literary allusion. I am not familiar with a story of a sphinx rising unbidden? Please enlighten me if there is one. My guess is that more likely you mean to invoke the mythical rising from the dead of the phoenix.

Anonymous said...

Chops probably means mysteriously and thus invokes the Sphinx, which means a better placement for that allusion would have been the first clause of the last sentence.

ali baba

Chops said...

ah yes, I meant the phoenix. Well corrected.