If you’re arguing that we can somehow make the system fairer and more efficient, then yes, I bet we can. But as a culture we need to reject the corporatist line that the road to happiness is paved with 60-hour work-weeks. That’s been proven wrong.

Green demand is tricky, though. Some green demand is reduction. There’s a nice piece in the NY Times Magazine about Zipcars, which reduce the number of cars on the road and the number of miles driven.

Yes, we need to retool. Yes we need to create green demand and then fill it. But green demand may not do the whole trick.

What we also need is to create demand for things which increase quality of life without reducing the quality of the natural environment. GDP increases through literature, drama, community sports and recreation, education, and other low impact, high satisfaction activities.

It’s indeed true, and often mentioned, that in the mid 1970’s the link between productivity and wages was broken, however, just as important is that there is a link between consistency of productivity, and lower average gains. Thus the two major constraints on the economy, from much of the public policy view, is that real wages were not rising, and productivity was, for much of the time, not rising as fast as commitments.

A lot of that had/has to do with the compensation structure, where those at the top were accumulating all the productivity gains.

At one point Agilent Technologies, where I used to work, changed their “profit sharing” plan because worker productivity from outsourcing had made the old formula so lucrative that they said it was bad. Of course, the payouts went way down.

Until something shifts, I’m glad productivity is down.

Thus in the 1960s (and briefly again in the 1990s), labor became so scarce that companies were forced to bid workers away from each other (unemployment rate around 4% is the empirical tipping point), wages rose, making labor expensive, launching the substitution of capital for labor.

in the ’90s was it really labor scarcity or monetary policy as i think stiglitz says (if i don’t misunderstand him completely) – iow, a bubble economy?

Right now, Obama’s economic team is banging their head against a catch-22: Until there is private money coming in, credit can’t be restored.

i don’t understand this – at least in the short run. $700 billion went for the TARP, and now obama is talking about the possibility of needing another $700 billion at some point. instead of bailing out the banksters, why not use that $700 billion (or two) to restart a new credit source? at 10 to 1 leverage that’s $7 trillion of credit. or maybe you think this is woefully inadequate?

i agree though that to me it looks like demand is a problem. and especially the kind of demand that leads to long term benefits (health, environment, energy, education, security and so forth) and not just for americans.

at the moment labor productivity doesn’t look like an issue to me. at least not in the classic amount produced / unit of labor sense because the world has tons of labor going to waste. the trick, i’d think, is how to put it to productive use.

what am i missing?