What, demographics again?

From Why Critics of a More Relaxed Attitude on Public Debt Are Wrong by Olivier Blanchard and Ángel Ubide, July 15, 2019:

The decrease in real interest rates is not something that started with the financial crisis and that will go away when its effects fully dissipate. The decrease started much earlier, in the mid-1980s, and has taken place steadily since then, driven in large part by structural factors, such as demographics.

Okay, but not long ago, "structural factors, such as demographics" were used to make a different argument. This argument:

The decrease of Labor Force Participation was not something that started with the financial crisis and that would go away when the effects of the financial crisis fully dissipate. The decline began much earlier, in the year 2000, and had taken place steadily since then, driven in large part by structural factors such as demographics. 

But the decline in Labor Force Participation stopped dead in its tracks in October of 2013. And it wasn't because demographics returned to what it had been before the year 2000. Far as I'm concerned, this means the demographics argument was total nonsense. It was nonsense then. It is nonsense now.

Economists should do economics, and leave fertility issues to druids.

No disrespect intended, to druids.


Blanchard and Ubide, the next two sentences:

For a while, there was a belief that, after the financial crisis, interest rates would return to their historical levels. They have not.

Some people thought that, after the financial crisis, interest rates would return to their pre-crisis levels. But interest rates have not returned to those levels. The statement implies that the effects of the financial crisis have fully dissipated.

That is certainly wrong.


Many economists seem to think their task is to explain the economy to the rest of us. That's not it. The task is to understand the economy. If you don't understand it, all your explanations are bullshit.