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Our Economic Eagle: Caged by Bad Policy March 11, 2015 8:00 AM | Tagged as Taylor
WSJ March 3, 2015 (op-ed): “A Recovery Waiting to be Liberated”, by John B.Taylor of the Stanford Business School
Dr. Taylor is one of the preeminent classical economists in the US. In the referenced article, he argues our recovery since the bottom of the 2008 recession has been anemic due to bad governmental policy. All hope for the long awaited turnaround flickered when the GDP numbers for 4Q14 arrived. The growth in two prior quarters was about 4%. This last quarter is slipped to 2.2%. The overall annual growth for 2014 was 2.3%, the same as it has been since 2009, the alleged end of the recession.
One reason is fewer people are working, as measured by the constantly lowering labor participation rate…the percent of people who are employed divided by those employed or looking. People are dropping out of the workforce. Apologists claim this is just the long anticipated retirements from the baby boomers.
Not so fast. The data slow the decline is among teens and young adults. For those over 65, the participation rate has actually increased. The lower participation rate makes the overall unemployment figures largely useless. The current unemployment rate of just under 6% would be three percentage points higher, if the participation rate was at the 2008 level of 66%. It is now just under 63%.
Taylor argues for tax rate reductions, regulatory simplification, increased free-trade agreements, and entitlement reform to stop for massive increase in debt.
In Taylor’s words, “The U.S. economy is not a turtle, but a caged eagle ready to soar if released from the captivity of bad government policy. By putting the right policies in place—particularly personal and business tax reform with marginal rate cuts—the U.S. can turn the economy around quickly.”
[Although opinion is included, The Biz Bucks Blog is primarily written to former students of Biz Bucks training courses to encourage their daily reading of the three opinion pages of the WSJ. This refreshes principles of Biz Bucks courses and improves business acumen on topics not discussed in Biz Bucks training.]
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