Wednesday, June 29, 2011

Structural Problems

When we discuss Macroeconomics in class I try to make sure that students come to understand the difference between cyclical and structural challenges. There is no better description of the structural challenges we face than flipping through the Business Section of today's NY Times...

Here bankers are praising the prospects of Linked In, the social networking company for adults based on contacts around employment and professional interests.

Here the AFL-CIO talks about a commitment to inject $10 Billion in union pension funds into infrastructure construction over the next few years.

The financial sector concentrates on the speculative investment in a firm whose competitive advantage is a marketing concept. It falls to the organization for workers to increase societal investment in social infrastructure. The Obama Administration proposal for a national infrastructure bank languishes in Congress so effort must be made to move the idea along. And the bubble in social networking related stocks continues....from the WSJ...

Without government spending we will not move this economy forward except from bubble sparked consumption spending just like last decade.