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August 16, 2005
Max Sawicky, Tom Walker, and I Discuss Labor Market Slack...
... and, amazingly, disagree. It's the latest edition of the Wall Street Journal Online Econoblog. Actually, I think I may have sent an incompletely copied and pasted version of my last comment, so here is my closing comment in its totality:
I suspect that these debates are quite frustrating to onlookers, as they ultimately lead down the “is”/ “is not” path of argumentation. But there is a reasonable, even if not satisfying, reason for this: The data just won’t confess. Tom and Max are smart guys, and I am doing my best. We look at the same information, and, in good faith, come to different conclusions. And policy making is, all too often, a leap of faith. (If you would like to revel in documentation of this claim, check out this post at the New Economist.)
Perhaps it is because I am a child of the 1970s -- the decade in which I became familiar with the larger world around me – that my instinct is to respond to this type of uncertainty with a certain reluctance to espouse activist policies unless the evidence pretty clearly speaks to the need. To my eye, that evidence is lacking for the moment.
Now Max and Tom might argue that, in the spirit of these comments, the conservative approach would be, for example, to ease up on the funds rate increases for now. They would find a lot of support for this among bloggers that I respect a lot – Angry Bear, James Hamilton, and William Polley, to name just a few. Mark Thom, on the other hand, emphasizes a different take on the cost-benefit analysis that works to the opposite conclusion. And so it goes.
UPDATE: Calculated Risk provides his own metric for what constitutes reasonable labor market growth for President Bush's second term, and promises to update the tracl record monthly. (So far, things are looking pretty decent.)
UPDATE: The correct version of my last post is now up at Econoblog.
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Job Growth: Bush's 2nd Term
The online world receives another treat today as Dr. Altig of Macroblog discusses the labor market with MaxSpeak's Max Sawicky and Tom Walker. Check out the WSJ Econoblog: Debating Job-Market 'Slack'. [Read More]
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