In this superb essay, Bob Murphy explains that
Contrary to Krugman’s and other Keynesians’ characterization, there are many historical examples of “expansionary austerity” apparently working.
In my latest column in the Pittsburgh Tribune-Review, I compute the amount of time that an ordinary American worker today must toil to buy nine ordinary household appliances (such as an automatic clothes washer and a 30″ electric range/oven combo). I then compare this amount of time to that which was required of an ordinary worker in 1956 – and, then, an ordinary worker in 1975 – to buy the same bundle of appliances. Here’s my conclusion:
An ordinary American worker today, to buy the same bundle of items from Sears.com , needs to work a mere 105 hours — just about two and a half weeks. That‘s nearly a month less work time than was required in 1975, nearly nine weeks less than was required in 1956.
Ed Lazear concludes his Wall Street Journal op-ed with this paragraph:
But China’s choice of exchange rate policy is not the source of China’s export growth. Disappointing job and wage growth in the U.S. has much more to do with our economic policy than with the value of China’s currency.