From: Gue Frank <firstname.lastname@example.org>Subject: Re:
Re: Friedman and supply-side policies
Your August 26, p. 58
Date: September 6, 2017 at 6:05:53 AM EDT
Re: NAIRU, etc.
We grunts who just work for a living are surrounded by naiveté,
malfeasance, misfeasance, and nonfeasance in high office and
among professionals who should know better.
Example: we rest major policies on that broken reed, GDP, which
erroneously includes things like the price of crude oil, which is
not a “product” at all in the dictionary meaning of the term and
draws no distinctions among value-added, non-value-added,
and value-subtractive economic activities.
As you say, Friedmanites (and endless others) are driven off-
course by “oil-price shocks” that utterly destroy neat formulae
like GDP or NAIRU. One is reminded irresistibly of Harold
Macmillan who, challenged to account for his plan changes,
responded condescendingly and with aphoristic precision,
“Events, dear boy, events.”
We desperately need to replace our bent, elastic, chipped,
illegible economic yardsticks with measures that will better
respond to Sir Harold’s “events”. Perhaps then we can stop
driving the car by watching the rear-view mirror.