Carlitos Wrote: The biggest problem is that any economist that identifies the problem will become the instant enemy of all past, present and future Harvard MBA's. I don't see any changes in the foreseeable future.
Vox, August 1, 2016: The big puzzle in economics today: why is the economy growing so slowly?
Timothy Lee of Vox notes that the "US economy grew at an inflation-adjusted rate of 1 percent in the first half of 2016. That’s the slowest six-month growth rate since 2012, and it continues the slow growth that has characterized the recovery since 2009...Since 2009, inflation-adjusted output has barely grown at 2 percent per year. Business investment has been weak, wages have been stagnant, and worker productivity has improved at its slowest pace since World War II."
Lee lists eight popular reasons often cited by economists-- running out of innovations, too little spending, high debt, too much regulation, aging population, and a few more. I would focus on two: too little spending and an aging population. With respect to spending, I would emphasize the lack of government spending on big projects like infrastructure. This is a direct result of the Republican controlled Congress sabotaging President Obama's efforts to stimulate growth and employment. It is appears to be entirely political...the Party of No puts party ahead of country. However, some Republican brains are also hard wired into austerity economic theories.
On the aging population, there is truth to this idea that as the population demographics gets older, we tend to be less entrepreneurial and innovative...less risk taking. We need an influx of young energetic people including immigrants to take their ideas to the market place. This may be a longer term problem as us baby boomers are now retiring in huge numbers, but are not being replaced one for one by young energetic innovative workers. Many of the young people who might have the desire are burdened by college debt. Immigration of people with ideas is stymied by Republican fear mongering.
Other thoughts? Take a look at the list of eight.
This is a simple unspent income or demand leakage story.
Human beings have understood the paradox of thrift for hundreds of years.
At the highest levels of policy making in our country, it's been understood for at least 70 years, since at least the time of Marriner Eccles as FDR's Fed Chairman, and whose name is on the building of where the Board of Governors meet and work today.
We've had environments with way higher taxes and regulation, with way less people, with less knowledge and technology, and with labor even more subdued and subservient to capital, and had far higher economic growth and employment.
What's different is we've never had this large a foreign sector, nor have we had this level of income inequality in the domestic sector.
Furthermore, there's a hell of a lot that's wrong with our healthcare and education funding systems that screw up the economy.