Word: cannot
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Dates: during 1970-1979
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Along with the other incentive economists, Feldstein argues that the Government is trying to do too many things that it either cannot do efficiently or that people can do better for themselves. That, of course, is a direct affront to Keynesian doctrine. Beginning in the mid-1930s, Establishment pillars of the dismal science have propagated Keynes' captivating notion that governments could tame beastly economies, making them stand up and jump through hoops. His prescription succeeded in lifting Western countries out of the 1930s Depression that had been triggered by an almost complete collapse in demand both...
Inflation has, of course, been seriously aggravated by a host of outside or "exogenous" factors that lie beyond the power of economists to control. They cannot be held accountable for poor grain harvests, such as occurred in 1972, for the harsh winters of 1977 and 1978, or for the weather of last year that cut into harvests in the citrus belt. Government economists also argue that price gouging by foreign oil producers is exogenous. True, but only partly so. Not only did inflation in the industrial countries encourage the 13-nation OPEC cartel to quintuple its prices...
...heart of the productivity problem, he believes, because resources are blocked from moving from sluggish industries to more productive ones. He favors pulling investments out of "sunset" industries and allowing them to go under, while providing generous aid and retraining programs to laid-off workers. Says Thurow: "If we cannot learn to disinvest, we cannot compete in the modern growth race...
...become the largest selling advanced economics text. The authors' central thesis reflects the new economists' nagging uncertainty about the omnipotence of their own profession. They contend that the complex computer models used to predict the effects of specific economic policies or actions simply do not-and cannot-reflect the way the real world behaves. "What will be the magnitude of reaction to a broad tax cut?" asks Dornbusch. "Will people spend the money at once? Will they wait?" His conclusion: "We don't know...
ROBERT LUCAS, 41. The "rational expectations" economists hold that short-term policy jiggering cannot outsmart human ingenuity, or, you can't fool all the people even some of the time. One principal in this school is Lucas of the University of Chicago. Says he: "The real amount of goods and services available cannot be manipulated effectively by short-term market interferences. Such policies are based on the premise that we, the Government, can make people work harder, invest more or perform some other desired objective. But people are skeptical, so such policies do not work any more. The public...