[lbo-talk] Krugman

[Seth Ackerman]

Rakesh Bhandari wrote:

>If I have read him correctly, Jha would point to perverse 
>de-industrialization, meaning relocation of low productivity sectors 
>of US industry abroad without commensurate growth in service sector 
>and advanced mfg jobs. 
>

1.  First of all, if this were true - if low-productivity sectors had 
been relocated elsewhere without being replaced by other sectors - then 
by definition we would be left with greater unused resources, i.e., 
unemployment. Yet the percentage of adults (over 16) with jobs was 
exactly unchanged from Dec 1996-Dec. 2006 (63.4%).

2.  Secondly, why the need for these guesses and hunches? You know, 
bourgeois economics, whatever you think of it, has produced some 
extremely rich empirical analyses of the 1995-2005 productivity 
acceleration.

Try studies by McKinskey - 
http://www.mckinsey.com/mgi/reports/pdfs/usproductivity/US_Prod_After_Dot_Com.pdf....

...or Robert J. Gordon  
http://faculty-web.at.northwestern.edu/economics/gordon/Productivity-Brookings.pdf

I'll summarize them for you. The vast majority of the productivity 
acceleration was due to sharply improved productivity growth in a small 
number of sectors: retail, wholesale, securities trading, domestic IT 
hardware production. It was mostly due to technological improvements. It 
has nothing to do with offshoring low-productivity sectors.

Seth