Streams

Why the Economic Crisis is (Almost) Over

Wednesday, January 22, 2014

Tim Harford, Financial Times columnist and the author of The Undercover Economist Strikes Back:  How to Run - or Ruin - an Economy (Riverhead Hardcover, 2014) explains macroeconomics to the layman, including how to deal with recessions, inflation and unemployment. 

He says the book doesn't put political spins on economics. “The idea of the new book was to make it less political, less polemical and kind of fun.”

Caller Walter in Monmouth asked about the changing nature of jobs in today’s economy, and Harford partially agreed with him. “Manufacturing employment in China is falling, it’s been falling for years,” he said. “So if it’s falling in China, how on earth do we think we can keep it up in the Europe or America?”  

But he also gave a sunny view of our economic future. He said people often mistake short-term problems for long-term problems.

"We've had five years, six years of bad news, and I think a lot of people now think, ‘well, things will never be better. The economy is structurally damaged, and it’s game over,'” he said.

“I don’t believe that. I think there are long-term issues to solve but ultimately I’m an optimist. I think technological progress and human ingenuity is going to put the economy back on track and we will get there in the end.”

He closed the interview by reminding us that “all crises come to an end.”

Guests:

Tim Harford

Comments [21]

Sorry I missed this segment. Too much snow to shovel!

I would have asked: Where did the good jobs go? The 1963 average wage of $4400 commanded more - far more - of the $654B GDP of 1963, than can today's $42,000 command of the $16T GDP. How can the economy grow (on average) 2% faster than the wages that support consumption? Where is that growth in GDP being soaked up before it hits the average income earner's pockets? CEO salaries and corporate profits can only be a small part of that GDP growth...Where does it go?

Jan. 22 2014 12:39 PM
John A

People are remarking about a decline in US jobs. I'll just say that morals have an economic value - having a moral backbone helped us to become the richest country in the world. And being the richest country in the world "helped" us see that morality was no longer of use to us. This is a cycle I am describing...

Jan. 22 2014 12:10 PM

The economist that sidesteps or dismisses unsustainable human consumption and pollution levels is as worth listening to as a headless talking head.

Jan. 22 2014 11:58 AM
MC from Manhattan

" the classic ponzi scheme" look let's get this straight EVERYTHING including LIFE on dart itself is a ponzu scheme.

Ponzi schemes work you are and have been in the grand scheme from the beginning of life.... it is only when faith is lost that the "scheme" fails ... Let's get off this demonization of "Ponzi" economics. Thats the way things work

Jan. 22 2014 11:48 AM
blacksocialist from BKbaby

maybe one of the reasons manufacturing has fallen in china is becuase there are even cheaper options......

Jan. 22 2014 11:48 AM
Ed from Larchmont

China is now having a labor shortage. I wonder why.

Jan. 22 2014 11:47 AM
Ed from Larchmont

The standard of living has been stagnant or now going down since 1973. I wonder why 1973?

Jan. 22 2014 11:46 AM
tb from astoria

As an artist, I find an analogy from the fine arts world were 'insiders' lose touch with average people: I think even macro-economists are susceptible to missing the big, obvious things: Hundreds of millions of jobs have gone overseas, therefore we have huge unemployment here.

Jan. 22 2014 11:44 AM
blacksocialsit from BKbaby

fiscal and monetary policy is always about the politics, and guess who is winning? the oligarchs........

Jan. 22 2014 11:44 AM
MC from Manhattan

I am sorry but I lost respect for this guy with his theory of H Ford inventing unemployment. How can you frame your story with a background of auto jobs being easy to get in Detroit as he said ... so much so that people could walk in and out of jobs easily and then say that because H Ford raised wages ( supposedly to make it easier for his workers to buy his product) all of a sudden all the jobs that were available at other manufacturers vanished?
Am I supposed to be an idiot? All the other auto manufacturers were still there making cars so any one that was not able to work for Ford was able to work for them or the supporting industries that were even more numerous.
Maybe he should stay undercover

this only touches on the facts that we are increasingly developing a civilization and technology that is able to increase and produce goods and services but not necessarily jobs in order to EARN wages to buy the goods and services produced .. ergo PRiCES must fall and in many cases be free. ( remember the sort earlier on how amazon anticipating your purchases just might ship you something and not charge if you don't want it because the marginal costs are insignificant once the juggernaut is rolling) Our economy is a juggernaut all of our economic crises have been about an over SUPPLY and not enough demand.. not a shortage of supply.

Jan. 22 2014 11:43 AM
jgarbuz from Queens

I believe Japan is not overly worried about the possibility of a shrinking population, because they they pushing robotics to do more and more jobs, and would prefer to take care of a shrinking native population rather than taking in immigrants.

Jan. 22 2014 11:43 AM
ivan obregon from nyc

http://en.wikipedia.org/wiki/Co-determination

Jan. 22 2014 11:43 AM
jgarbuz from Queens

I believe Japan is not overly worried about the possibility of a shrinking population, because they they pushing robotics to do more and more jobs, and would prefer to take care of a shrinking native population rather than taking in immigrants.

Jan. 22 2014 11:43 AM
blacksocialist from BKbaby

kate - youre right he doesnt make sense and he hasnt said anything of value as of the 11:41 mark.... and he gives only a casual reference to the importance of the gov't to fill the gap left by the private sector. an expert, really?

Jan. 22 2014 11:42 AM
Mar from ca

please speak to the trend of part time and temp labour as the new normal, and both government and corporate responsibilities with this situation.

Jan. 22 2014 11:42 AM
MichaelB from Morningside Heights

The caller's question about the need for a growing population to grow the economy... isn't that the equivalent of the classic Ponzi scheme??

Jan. 22 2014 11:42 AM
sophia

Is he seriously comparing youth unemployment in Germany and Spain post-crash, without taking the crash and German-led austerity for Spain and the other debtor countries into account?

Jan. 22 2014 11:40 AM
ivan obregon from nyc

http://www.redfortyeight.com/2010/10/15/german-social-democracy-vs-the-usa/

Jan. 22 2014 11:40 AM
Kate from Hamilton Heights

What he's saying doesn't make sense to me. He thinks unemployment would be less if wagers were lower? So, given the example of Ford that he gave: if wages were lower, people would be more willing to quite Ford. So I quit Ford and someone who was unemployed takes my job. But now I'm unemployed, so where's the reduction in the unemployment rate?

Jan. 22 2014 11:38 AM
RJ from prospect hts

I don't think I've ever heard a clear definition of an "economy." Aside from the balance of income and expenditure in any defined entity--geography, demographic, etc. But it seems to be the most significant gauge by which we judge a successful society. Is there a "happiness" variable? I'm familiar with the questionable Bhutan happiness index, but that seems to have been undermined by some government practices. Is "happiness" gauged in Economics 101 and Eco major programs? Not productivity, health, wealth, etc.

Jan. 22 2014 11:38 AM
tom from astoria

What I don't understand is why economists and the press don't report unemployment with a global perspective. You can bet a corporation looks at how much it pays to workers across national boundaries, but we discuss only employment WITHIN the US. For example, "Chrysler added 3,500 jobs this quarter: 1500 in China, 1500 in Mexico, 450 in Canada, but only 50 were in the US"

Jan. 22 2014 11:38 AM

Leave a Comment

Email addresses are required but never displayed.

Get the WNYC Morning Brief in your inbox.
We'll send you our top 5 stories every day, plus breaking news and weather.