Tags: Obama | policies | productivity | growth

Economists Prescott, Ohanian: Obama Policies Depress Productivity Growth

By    |   Tuesday, 04 February 2014 01:58 PM

President Barack Obama's economic policies are putting a damper on productivity growth, putting our living standards at risk, say Nobel laureate economist Edward Prescott of Arizona State University and UCLA economist Lee Ohanian.

U.S. productivity has grown at an average annual rate of 2.5 percent since 1948, but that rate has slipped to 1.1 percent since 2011, they write in The Wall Street Journal.

"The implications are enormous," Prescott and Ohanian say.

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"If productivity growth rates this low persist for a decade, . . . then U.S. living standards will only increase by about 12 percent between now and 2024 instead of 28 percent at the historical rate."

Programs adopted in response to the 2008 financial crisis are a big part of the problem, the duo says. That includes Obamacare, the Dodd-Frank financial reform law, auto bailouts and clean energy subsidies.

"This explosion in federal regulation, intervention and subsidies has retarded productivity growth by protecting incumbents at the expense of more efficient producers, including startups," Prescott and Ohanian write.

The number of pages in the Federal Code of Regulations grew more than 7 percent in the first three years of Obama's presidency, they say.

The Conference Board reported last month that its broadest measure of global productivity fell in 2013 for the first time in decades.

"This stalling appears to be the result of slowing demand in recent years, which caused a drop in productive use of resources that is possibly related to a combination of market rigidities and stagnating innovation," the group said, according to the Financial Times.

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President Barack Obama's economic policies are putting a damper on productivity growth, putting our living standards at risk, say Nobel laureate economist Edward Prescott of Arizona State University and UCLA economist Lee Ohanian.
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2014-58-04
Tuesday, 04 February 2014 01:58 PM
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