This is of course a very popular idea among economists (Eg. Paul Krugman has advocated something like this for a long time), because it allows them to have thei

This is of course a very popular idea among economists (Eg. Paul Krugman has advocated something like this for a long time), because it allows them to have their cake and eat it too. But I fail to see any shred of evidence backing it up — it seems like purely wishful thinking on the part of someone who doesn’t want the party to change mood. The problem is that most economists do not actually have a good “grounded” model of productivity and growth — they are lost in their own abstractions (GDP and what not). The pernicious side effects of growth are symptomatic of the underlying problem which is market failure — and despite pockets of work (Eg. Stiglitz, etc) economics as a whole is not yet emotionally ready to wake up to the situation.