dailynewsnblog
From Paul Krugman:
Let me be clear: I am not arguing that European productivity is mismeasured, and never said that. I am, instead, arguing that standard measures of productivity do not have the implications for cross-country comparisons of living standards and economic welfare that many people – including many economists – think they have. To put it a slightly different way: people are using data that is unsuited for the kinds of comparisons that they are trying to make. Thus, the conclusions that they are drawing from the data are misguided. But this is not to say that the data are wrong.
The apparent misunderstanding by Aghion et al of what I am trying to say is also reflected in their discussion. Their presentation mostly centers on arguing that European productivity growth is in fact lower than US productivity growth. This is puzzling, because I am not arguing that European productivity growth matches or exceeds US productivity growth. Like Aghion et al, I am fully aware that European productivity growth is lower than in the U.S. But this is not the actual issue that I am trying to address. My question is whether the standard comparison of European and US productivity growth rates is a good indicator of what is actually going on in the two economies over time.
OK, but if U.S. innovation drives global living standards, is that not a very strong argument for modest capital taxes in the United States, weak labor union privileges, high U.S. pharma prices, and so on? Imagine a mix of the libertarian and corporatist agendas, rather than the social democratic policies Krugman typically has argued for. I doubt however if Krugman sees it that way, but I am no longer sure why not.
The post A new American exceptionalism? appeared first on Marginal REVOLUTION.
