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Arthur Brooks, Peter Wallison and I will be participating in an event on barriers to job creation.  It’s available by webcast so please check it out.

Tim Kane makes a series of thoughtful observations about job creation in the present economic climate:

The good news is that new jobs will be in new sectors with arguably better pay and quality of life (i.e. I’d rather be a movie star than a coal miner … rather be a nurse practitioner than a seamstress … rather be a hammer than a nail). As jobs transition from goods-production to service-provision, workplace fatalities decline and pay rises, satisfaction rises and stress eases. The bad news … is that traditional policy remedies—based on a static notion that old employers will simply rehire the old laid-off workers when stimulated artificially or by real consumption—can only disappoint.

If any modern, depressed economy aims for faster job creation, it has to begin with a realistic understanding of new firm formation. It is much more about restructuring than recovering.

Tim’s point about old policy remedies not doing the trick was a theme in Arnold Kling’s recent essay about how we aren’t living in your grandfather’s economy anymore. Sustained job creation and what the government should be doing about it will be the topic at this upcoming joint National Chamber Foundation-AEI event. Space is limited so RSVP soon.

Paul Samuelson recently claimed in the New York Times (h/t Paul Kedrosky):

Had John McCain won that election, the present G.D.P. in the United States would have been even lower than it is now by more than 15 percent.

Samuelson also takes some shots at Milton Friedman and Friedrich Hayek (”Gone forever, one hopes, are the idiocies of Friedman-Hayek libertarian selfishness”).

I read Samuelson’s thrashing of his intellectual enemies with some amusement since I am in the process of reviewing the book “Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity” by Brian Domitrovic. The book includes a discussion of Samuelson’s treatment of economist Arthur Laffer in the early 1970s.

While working in the Nixon administration, Laffer predicted that 1971 GNP would come in at $1.065 trillion, higher than consensus forecast. Here’s a cool cartoon from that time depicting the “mad economist” Laffer.

Samuelson delivered a paper at the University of Chicago shortly after Laffer’s prediction titled “Why They Are Laughing at Laffer.” The talk ridiculed Laffer’s prediction. Martin Anderson later described the Samuelson lecture as “cruel and reckless” and “an extraordinary example of intellectual bullying.”

Cruelty and bullying aside, Samuelson turned out to be just plain wrong. Revised GNP numbers in 1976 vindicated Laffer and showed he was right on the money.

Arnold Kling and I have a book coming out really soon. It’s not yet on sale but you can see the cover image here. In it we build on the research of William Lewis and point out that productivity gains in unsexy industries, such as retailing, can have dramatic effects across an economy. This chart from Foreign Policy (h/t Mark Perry) offers interesting anecdotal evidence in support of this view.

FP asks:

So what’s going on? Does the ability to buy giant bags of Froot Loops at cut-rate prices inspire economic growth? More likely, Wal-Mart is simply a smart, cautious investor. “Wal-Mart chooses to go places with a sizable middle class,” says Nelson Lichtenstein, a historian who just published a book on Wal-Mart’s rise. And Wal-Mart’s attention to middle-class growth could pay off for the company in the future.

As you will learn from our book, this is almost certainly not the whole story. Many big-box retailers are prohibited from entering markets by local and national regulations. When these regulations ease, it becomes possible to come in. This regulatory switch—one more conducive to dynamic efficiency that makes it possible to quickly adopt new technologies, new business models, and so on—leads to greater growth. Wal-Mart and other retailers are certainly not responsible for all of the subsequent growth once they enter these countries; but as entrepreneurial forces they are important drivers of innovation in markets once the policy mix permits them to enter.

For more on Wal-Mart see this terrific book on The Wal-Mart Revolution.

My friend Arnold Kling has described a divide between what he calls Chauffered America–Hollywood, investment bankers, and high government officials–and Strip Mall America–people who launch businesses like restaurants, hair salons, and other small enterprises. No matter how the government responded to the financial crisis, Chauffered America was always going to do just fine. But as Scott Shane details in his piece today for THE AMERICAN, things aren’t great for those with small enterprises.

David Einhorn’s speech at the Value Investing Congress this week is making a lot of waves. Of note:

Over the last couple of years we have adopted a policy of private profits and socialized risks. We are transferring many private obligations onto the national ledger. Although our leaders ought to make some serious choices, they appear too trapped in short-termism and special interests to make them. Taking no action is an action.

In the nearer term the deficit on a cash basis is about $1.6 trillion or 11% of GDP. President Obama forecasts $1.4 trillion next year, and with an optimistic economic outlook, $9 trillion over the next decade. The American Enterprise Institute for Public Policy Research recently published a study that indicated that “by all relevant debt indicators, the U.S. fiscal scenario will soon approximate the economic scenario for countries on the verge of a sovereign debt default.”

For those interested, the paper he was referring to is here. In the Q and A afterwards, Einhorn likened the federal government’s fiscal mismanagement to that of Lehman Brothers. Ouch.

There are forecasts for unemployment to remain as high as 7.5% in 2014, even as the economy improves. You can imagine by the 2012 presidential election if unemployment is that high there will be a lot of hue and cry to do something about this. That something starts with the Fed.

That’s from Bob Samuelson in an interview discussing his book The Great Inflation and Its Aftermath: The Past and Future of American Affluence. Bob was a victim, in a sense, of bad market timing. His book is one of a handful of the most important nonfiction works of the last decade and it didn’t get nearly the attention it deserved because it was released during the mushrooming financial crisis. But the book is worthy of careful consideration, particularly as policy makers wrestle with how to think about future inflation. Vincent Reinhart’s suggestions for taking pre-emptive steps to combat future inflation are worth revisiting.