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Kling on Galbraith

Here’s EconLog’s Arnold Kling on Jamie Galbraith’s notion to encourage early retirement as a means of increasing employment and helping the economy:

The Washington Post reports that some on the left want to see older workers encouraged to retire, to make room for young workers. If you believe in AS-AD [aggregate supply – aggregate demand], I suppose that makes sense. If you believe in PSST [patterns of sustainable specialization and trade] (or anything like elementary economics), it’s nuts. From a PSST point of view, taking away market activity from some people will reduce, not increase, the market economic activity of others. I should point out that this applies to sending home illegal immigrants–from a PSST point of view I would expect this to reduce employment of the native population, not increase it.


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