The real economic crisis, by John Schmitt and Dean Baker, Comment is Free: All the bad news about the bursting of the US housing bubble ... has deflected the world's attention from what is arguably an even more fundamental problem...: the sharp deceleration in productivity growth since the middle of 2004. ...
For Europeans, long-encouraged to see the United States as the flexible economic ideal, the productivity slowdown sounds another note of caution about the US model. Europeans already know that the US economy generates substantial inequality. The last three years of slow productivity growth now suggest that all that inequality apparently doesn't even guarantee faster growth.
Economists ... agree that the growth rate of productivity is the single most important determinant of the long-run prospects for a country's standard of living.
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