Wren-Lewis and austerity dodging

4 April, 2017 at 10:29 | Posted in Economics | 1 Comment

In the ongoing austerity debate, Brad DeLong told Simon Wren-Lewis the other day to stop dodging and instead squarely face the fact that

most mainstream economists who were heard in the public sphere were not against austerity, but rather split, with, if anything, louder and larger voices on the pro-austerity side.

austerity22But Wren-Lewis still thinks neither people outside economics, nor economists, know how representative of the majority of economists are those economists the media choose to publicise. In Wren-Lewis’ view the majority of academic macroeconomists have always been against austerity. Economists and economics are simply ‘misrepresented’ in his view.

Misrepresented or not, he sure can’t have got that view from his Swedish collaborator Lars Calmfors (one of Sweden’s most well-known ‘elite’ mainstream macroeconomists). For more than 25 years this economist has told us that lowering wages is the solution to macroeconomic problems:

1991. Unemployment: 3,9%
March: “We must be able to lower the wages”
Dagens Nyheter

April: ”Lower wages saves employment”
Aftonbladet

June: ”Flexible wages can save the jobs”
Dagens Nyheter

September: ”Lower the wages to save the jobs!”
Expressen

1994. Unemployment: 10,6%
April: ”Lower wages gives us more jobs”
Aftonbladet

1998. Unemployment: 9,3%
January: ”Lower wage costs drastically … or we risk to get stuck with high unemployment”
Dagens Nyheter

2007. Unemployment: 6,2%
January: ”Lower unemployment benefits give new jobs”
Aftonbladet

2013. Unemployment: 8,1%
March: ”Wage costs are too high”
Svenska Dagbladet

To me that sounds like the thing I’ve heard repeated ad nauseam for four decades when talking to mainstream economists …

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1 Comment

  1. Mainstream economics of the SWL kind is basically Victorian Classical Economics that assumes society is made up of greedy individual agents – with rigidities and other arbitrary twitches added to give Keynesian outcomes when the political zeitgeist asks for it. None of this is helpful either for understanding how an economy works or for providing for the basis of informed policy. That calls for ground up multidisciplinary analysis – every time.


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