Krugman: Our lost GDP output is $900 billion per year

by Gaius Publius on 8/12/2011 07:08:00 PM

 

Thanks to the St. Louis Fed's new ability to make data-charting easier, Paul Krugman shows us a graph of the tragic waste in the current U.S. economy. The blue line is potential GDP. The red line is actual GDP.

The gap between the black horizontal lines on the chart is half a trillion dollars. So the shortfall as of the end of the graph (Nov 2010), i.e., the difference between the red and blue lines, is almost $1 trillion (click to enlarge).


Even if our economy were now functioning at full capacity (and it's far from that), the lost output from 2008-2010 would still linger in the form of lost profits, lost wages, and lost jobs. Only the jobs can be recovered (not money you could have made and didn't), and that only if the economy grows at a faster rate than 2.5% (the stay-even point for job creation).

This is a tragic waste:

[W]e’re now sacrificing output we should be producing, goods and services that we have the capacity to produce but aren’t producing due to insufficient demand, at the rate of more than $900 billion a year. By the way, the cumulative loss since the recession began is almost $2.8 trillion.

So next time someone tells you that it would be irresponsible to engage in more stimulus, monetary, fiscal, or both, ask: in what universe is wasting almost a trillion a year, not to mention the human costs, a responsible thing to do?

This is an economic and human waste, to be sure. But it's also a tragic political and national waste. Thanks to the Tea Party, Movement Conservatives (McConnell & Boehner), and NeoLiberals (Obama, Clinton & co), all operating together, we are on a locked-in course to make this problem worse. It's now guaranteed.

In a time when the future (of manufacturing, of engineering R&D, of scientific research) is abroad, can the country afford to wound itself to this degree — just so our billionaires (right and center) can stay fat and happy?

Krugman is certain we can't.

What to do — Believe me, many are searching for alternatives. The progressive movement is sorting its options with great urgency. My own thinking, for what that's worth, is that if the plan is to work within the system, it's time for all this grassroots organizing to identify leaders.

The Obama-experience (the shock and betrayal that many feel) has been especially dispiriting, but in my view, that shouldn't stop the search. Without Washington, the president could have become a president-for-life; without Lincoln the Civil War could have produced a far different, far more broken result; and without FDR, the Depression era could have easily coughed up something seriously anti-democratic. (More on FDR and his magnificent role in a bit.)

Ask yourself: What happens in 1968 if Eugene McCarthy doesn't challenge Lyndon Johnson? (For starters, Bobby Kennedy doesn't enter the race.)

We should be identifying leaders now, in my view, as quickly as we can, since only leaders can coalesce a movement, give it a focus (leaders are necessary, but not sufficient, as I've written elsewhere). Elizabeth Warren? Alan Grayson? Bernie Sanders? Raul Grijalva? (Matt Damon?) Someone else?

I'm not arguing for any of those names (most have the flaw of being party-loyalists when parties are not our friends). But again — assuming we want to work within the system — a good strategic move would be to aggressively grow the list of people to woo, and to make that a high priority. It's a doable task, and appropriate to the time.

GP

Roubini: "capitalism could self destruct"

Quote of The Day

"The moment I discover a man's a fool I let him drop, but I delight in getting into the confidence and pockets of men who think they can't be 'skinned.' It ministers to my intellectual pride." ~Bertha Heyman

Life in The Desert

~It is presently 98° and 14% humidity. Nearly 100° at half past noon? Oy, gonna be bakey today.

Kitteh Nooz

~Mauser aka Terror Cat has been In Residence with us for about ten months now. He's chilled quite a bit. He's even getting fat. And we shall let him. He lived on garbage and packrats for most of his life and if he wants to eat until he's round, then so be it. He can roll around the house.

However, he is a dirty stinky snaggle toothed old thing, so he needs to go in for grooming and teeth cleaning. That's not gonna be fun. His performance during his last vet visit is how he earned his sobriquet Terror Cat, lots of yowling and snarling and the brandishing of razor-like claws. He will have to be sedated to have those tasks accomplished. Next month most likely.

Stay tuned...

Quote of The Day

"I always favoured terraforming Mars. But, after 20 years of world travel, I now think we should terraform Atlanta first." ~Warren Ellis

Wired's unethical experiments: The Ape Man

Wired recently published an article titled, "Seven Creepy Experiments That Could Teach Us So Much (If They Weren’t So Wrong)." Among their picks is the creation of an "ape man" that would come about through cross-breeding a human with a chimpanzee:

The premise:
The great biologist Stephen Jay Gould called it “the most potentially interesting and ethically unacceptable experiment I can imagine.” The idea? Mating a human with a chimp. His interest in this monstrosity grew out of his work with snails, closely related species of which can display wide variation in shell architecture. Gould attributed this diversity to a few master genes, which turn on and off the shared genes responsible for constructing the shells. Perhaps, he speculated, the large visible differences between humans and apes were also a factor of developmental timing. He pointed out that adult humans have physical traits, such as larger craniums and wide-set eyes, that resemble infant chimpanzees, a phenomenon known as neoteny—the retention of juvenile traits in adults. Gould theorized that over the course of evolution, a tendency toward neoteny might have helped give rise to human beings. By watching the development of a half-human, half-chimp, researchers could explore this theory in a firsthand (and truly creepy) way.

How it works:
It would probably be frighteningly easy: The same techniques used for in vitro fertilization would likely yield a viable hybrid human-chimp embryo. (Researchers have already spanned a comparable genetic gap in breeding a rhesus monkey with a baboon.) Chimps have 24 pairs of chromosomes, and humans 23, but this is not an absolute barrier to breeding. The offspring would likely have an odd number of chromosomes, though, which might make them unable to reproduce themselves. As for the gestation and birth, it could be done the natural way. Chimpanzees are born slightly smaller than humans, on average—around 4 pounds—and so comparative anatomy would argue for growing the embryo in a human uterus.

The payoff:
Gould’s idea about neoteny remains controversial, to say the least. “It got a lot of scrutiny and has been disproved in many ways,” says Daniel Lieberman, a Harvard professor of human evolutionary biology. But Alexander Harcourt, professor emeritus of anthropology at UC Davis, regards neoteny as “still a viable concept.” This forbidden experiment would help to resolve that debate and, in a broader sense, illuminate how two species with such similar genomes could be so different. Its outcome would take biologists deep into the origin of the species we care about most: ourselves. Let’s just hope we can find a less disturbing route to get there.

Posted by George at 8/14/2011  

Labels: bioethics, transgenics