Project Syndicate
http://www.project-syndicate.org/commentary/eichengreen22/English
Barry Eichengreen
BARRY EICHENGREEN IS PROFESSOR OF ECONOMICS AND POLITICAL SCIENCE AT THE UNIVERSITY OF CALIFORNIA, BERKELEY.
September 9, 2010
Berkeley – A double-dip recession is one thing, but a lost decade is something far more sinister. In the United States, there is growing concern that the worst recession since the Great Depression has damaged the economy’s capacity to grow.
Indeed, there are good reasons for worrying that the US and other advanced countries will now be consigned to a long period of sub-par growth. Having been burned by the crisis, banks have tightened their lending standards, and will now be subject to more stringent capital and liquidity requirements. As a result, bank credit will be harder to obtain.
…Policymakers must encourage it. Small, innovative firms need enhanced access to credit. Firms need stronger tax incentives for R&D. Productivity growth can be boosted by public investment in infrastructure, as illustrated by the 1930’s examples of the Hoover Dam and the Tennessee Valley Authority.
Productivity growth makes many things possible. It makes it easier to eliminate budget deficits, and it makes it possible to increase education spending and to fund training schemes for the long-term unemployed. But, even if rapid productivity growth is possible under current circumstances, it cannot be taken for granted. Policymakers need to act.
It is so easy to criticize others. SO EASY to post that criticism as a comment. Perhaps he does come across as a bit of a know-it-all sometimes, but I doubt he would actually think that way. Personally, I have learned a lot from just a handful of his videos (I’m a system manager and have worked in IT for 22 years!) and I can easily see how others could get a lot more out of his material than I have.