Michelle Malkin:

Last week, a prominent self-made tech mogul dared to diagnose the problem publicly. His passionate letter to the Wall Street Journal decried the “progressive war on the American 1 percent.” He called on the Left to stop demonizing “the rich,” and he condemned the Occupy movement’s “rising tide of hatred.”

The mini-manifesto was newsworthy because this truth-teller is not a GOP politician or conservative activist or Fox News personality. As he points out, he lives in the “epicenter of progressive thought, San Francisco.” No matter. The mob is shooting the messenger anyway. But maybe, just maybe, his critical message in defense of our nation’s achievers will transcend, inspire, embolden, and prevail.

The letter-writer is Tom Perkins, a Silicon Valley pioneer with an MIT degree in electrical engineering and computer science and a Harvard MBA. He started out at the bottom at Hewlett-Packard, founded his own separate laser company on the side, and then teamed up with fellow entrepreneur Eugene Kleiner to establish one of the nation’s oldest and most important venture-capital firms — Kleiner Perkins Caufield and Byers. …

Because he dared to compare the seething resentment of modern progressives to Kristallnacht and Nazi Germany, the grievance industry attacked Perkins and dismissed his message. His former colleagues at the venture-capital firm he founded threw him under the bus. Left-wing punk journalists immediately branded him “nuts” and a “rich idiot.”

Please note: Not one of those sanctimonious grievance-mongers had anything to say about the Molotov cocktail–fueled riots and fires set by the Occupy mobs at banks, car dealerships, and restaurants in Oakland that provoked Perkins’s comparison in the first place.

While he regrets invoking Kristallnacht specifically, Perkins unequivocally refused to back down from his message defending the “creative 1 percent.” He reiterated his fundamental point in a TV interview on Monday: “Anytime the majority starts to demonize a minority, no matter what it is, it’s wrong, and dangerous, and no good ever comes from it.”

Perkins also chastised those who bemoan “income inequality,” including his erstwhile “friends” Al Gore, Jerry Brown, and Barack Obama: “The 1 percent are not causing the inequality. They are the job creators. . . .  I think Kleiner Perkins itself over the years has created pretty close to a million jobs, and we’re still doing it. It’s absurd to demonize the rich for being rich and for doing what the rich do, which is get richer by creating opportunity for others.”

Amen, amen, and amen. Perkins barely scratched the surface of the War on Wealth that has spread under the Obama regime. Anti-capitalism saboteurs have organized wealth-shaming protests at corporate CEOs’ private homes in New York and in private neighborhoods in Connecticut. Hypocrite wealth-basher and former paid Enron adviser Paul Krugman at the New York Times whipped up hatred against the “plutocrats” in solidarity with the Occupy mob. New York state lawmakers received threatening mail saying it was “time to kill the wealthy” if they didn’t renew the state’s tax surcharge on millionaires.

“If you don’t, I’m going to pay a visit with my carbine to one of those tech companies you are so proud of and shoot every spoiled Ivy League [expletive] I can find,” the death threat read. In Perkins’s own backyard, Bay Area celebrity rapper Boots Riley infamously penned “5 Million Ways to Kill a CEO” (“Toss a dollar in the river, and when he jump in / If you find he can swim, put lead boots on him and do it again”) before making cameo appearances at vandal-infested Occupy Oakland marches over the past few years.

But the most dangerous threats to the nation’s job creators don’t come from Oakland rappers or social-justice guerillas or San Francisco neighbors griping about tech workers’ private buses and big homes. The deadliest threats come from the men in power in Washington who stoke bottomless hatred against “millionaires and billionaires” through class-bashing rhetoric and entrepreneur-crushing policies — while they pocket the hard-earned money of the achievers trying to buy immunity. It’s high time to shame the wealth-shamers and their cowed enablers. Silence is complicity.

Perkins‘ letter …

Regarding your editorial “Censors on Campus” (Jan. 18): Writing from the epicenter of progressive thought, San Francisco, I would call attention to the parallels of fascist Nazi Germany to its war on its “one percent,” namely its Jews, to the progressive war on the American one percent, namely the “rich.”

From the Occupy movement to the demonization of the rich embedded in virtually every word of our local newspaper, the San Francisco Chronicle, I perceive a rising tide of hatred of the successful one percent. There is outraged public reaction to the Google buses carrying technology workers from the city to the peninsula high-tech companies which employ them. We have outrage over the rising real-estate prices which these “techno geeks” can pay. We have, for example, libelous and cruel attacks in the Chronicle on our number-one celebrity, the author Danielle Steel, alleging that she is a “snob” despite the millions she has spent on our city’s homeless and mentally ill over the past decades.

This is a very dangerous drift in our American thinking. Kristallnacht was unthinkable in 1930; is its descendant “progressive” radicalism unthinkable now?

… and Malkin’s column prompted this response that correctly criticized both the left and populist right …

The economy is global. Always has been. Breakdowns in communist barriers have allowed prosperity to flow to the poorest people in the world. Those are not Americans. The only American prosperity that has existed since then has come in the form of profiting from foreign growth. Few Americans do this, and they tend to get quite wealthy as a result.

Xenophobes decry opportunity and success for those outside the magical lines that border our country and demand that we take what little they have to feed people inside the lines who already have far more. They invent copious “data” to justify their racism, but it is what it is.

They advocate creating more bureaucracy to bribe and lobby so that avenues for advancement other than pleasing customers become easier and honest work becomes harder, and they do this by suggesting that anyone who uses modern logistical technology to please millions or billions of customers has somehow stolen his wealth, even though they cannot show any particular instances of theft. The consequences of their actions – the corrupt rising above the honest – are blamed on their enemies instead of themselves, and they present more of themselves as the solution, ensuring an incestuous feedback loop.

Those who seek to eliminate the entire channel in which corruption exists are painted as the problem, as though the channel were the solution.

… while another criticized limousine liberals:

I always find it amusing when people such as the rapper mentioned criticize businessmen. Were we to make a list of the biggest parasites with the most undeservedly bloated paychecks, folks in the entertainment industry, especially “artists” would prominently figure at the top. A guy who funds businesses creating tens of thousands of jobs and gets rich thereby is some scheming money grubber who is undeserving of what he has, but some half-wit recites angry inarticulancies making millions thereby, which he usually proceeds to spend on conspicuous consumption and hedonistic pursuits (many of them not legal), and the latter feels the former is the untalented parasite.

Hollywood and much of the rest of the entertainment industry is hypocrisy central. And if you wish to find the truly undeserving idle rich who have too much money for too little economic reason, the true boil on democracy’s butt, there’s the best place to start.

Regular readers know that the actually pertinent unemployment measure is what the feds call U6 — the unemployed, plus those working part-time who want to work full-time, and those who have given up looking for work.

With the sensational job Barack Obama and his minions have done wrecking the American economy, what if the U.S. economy looks like this forevermore?

Consider a selection from the 22 Independent Journal “fun facts” about Obama’s economy that are not fun at all:

1. The Number Of Americans That Have Joined The Food Stamp Program Since Obama Took Office: 19.4 Million.

2. The Number Of People Unemployed At The End Of Obama’s Fifth Year As President: 10.4 Million.

3. The Number Of People Working Part-Time That Would Like To Work Full-Time: 7.8 Million.

4. The Number Of People That Have Entered Poverty Since 2008: 6.7 Million.

5. Americans Who Received Cancellation Notices For Their Health Plans Due To ObamaCare After Obama Promised They Could Keep Their Plans In His 2010 State Of The Union Address: 5 Million.

6. The Number Of Americans Struggling With Long-Term Unemployment Of 27 Weeks Or Over: 3.9 Million.

7. The Increase In Americans Struggling With Long-Term Unemployment Since Obama Became President: 1.2 Million.

8. Construction Jobs (aka “Shovel-Ready Jobs”) Lost Since Obama Took Office: 721,000.

9. Manufacturing Jobs Lost Since Obama Took Office: 528,000.

10. The Number Of People That Left The Labor Force In December: 347,000. …

14. The Decline In Median House Hold Income Since Obama Became President: $3,827.

15. Increase In Family Health Care Premiums Under Obama, Despite His Claim That ObamaCare Would Reduce Premiums During His 2010 State Of The Union Address (Subsidies Being Irrelevant): $3,671.

16. The Last Time The Labor Force Participation Rate Was At Its Current level: 1978.

17. Increase In The Average Price Per Gallon Of Gas Since Obama Took Office: 79%.

18. The Percent Of Unemployed That Are 18-34 Year Olds: 46%.

19. Average Number Of Weeks Someone Will Be Unemployed: 37.

All this prompts Mark Steyn to observe:

Who has a greater grasp of the economic contours of the day after tomorrow — [Amazon.com’s Jeff] Bezos or Obama? My colleague Jonah Goldberg notes that the day before the president’s speech on “inequality,” Applebee’s announced that it was introducing computer “menu tablets” to its restaurants. Automated supermarket checkout, 3D printing, driverless vehicles . . . what has the “minimum wage” to do with any of that? To get your minimum wage increased, you first have to have a minimum-wage job. …

What do millions of people do in a world in which, in Marxian terms, “capital” no longer needs “labor”? America’s liberal elite seem to enjoy having a domestic-servant class on hand, but, unlike the Downton Abbey crowd, are vaguely uncomfortable with having them drawn from the sturdy yokel stock of the village, and thus favor, to a degree only the Saudis can match, importing their maids and pool-boys from a permanent subordinate class of cheap foreign labor. Hence the fetishization of the “undocumented,” soon to be reflected in the multi-million bipartisan amnesty for those willing to do “the jobs Americans won’t do.”

So what jobs will Americans get to do? We dignify the new age as “the knowledge economy,” although, to the casual observer, it doesn’t seem to require a lot of knowledge. One of the advantages of Obamacare, according to Nancy Pelosi, is that it will liberate the citizenry: “Think of an economy where people could be an artist or a photographer or a writer without worrying about keeping their day job in order to have health insurance.” It’s certainly true that employer-based health coverage distorts the job market, but what’s more likely in a world without work? A new golden age of American sculpture and opera? Or millions more people who live vicariously through celebrity gossip and electronic diversions? One of the differences between government health care in America compared to, say, Sweden is the costs of obesity, heart disease, childhood diabetes, etc. In an ever more sedentary society where fewer and fewer have to get up to go to work in the morning, is it likely that those trends will diminish or increase?

Consider Vermont. Unlike my own state of New Hampshire, it has a bucolic image: Holsteins, dirt roads, the Vermont Teddy Bear Company, Ben & Jerry’s, Howard Dean . . . And yet the Green Mountain State has appalling levels of heroin and meth addiction, and the social chaos that follows. Geoffrey Norman began a recent essay in The Weekly Standard with a vignette from a town I know very well — St. Johnsbury, population 7,600, motto “Very Vermont,” the capital of the remote North-East Kingdom hard by the Quebec border and as far from urban pathologies as you can get. Or so you’d think. But on a recent Saturday morning, Norman reports, there were more cars parked at the needle-exchange clinic than at the farmers’ market. In Vermont, there’s no inner-city underclass, because there are no cities, inner or outer; there’s no disadvantaged minorities, because there’s only three blacks and seven Hispanics in the entire state; there’s no nothing. Which is the real problem. …

“Work” and “purpose” are intimately connected: Researchers at the University of Michigan, for example, found that welfare payments make one unhappier than a modest income honestly earned and used to provide for one’s family. “It drains too much of the life from life,” said Charles Murray in a speech in 2009. “And that statement applies as much to the lives of janitors — even more to the lives of janitors — as it does to the lives of CEOs.” Self-reliance — “work” — is intimately connected to human dignity — “purpose.”

So what does every initiative of the Obama era have in common? Obamacare, Obamaphones, Social Security disability expansion, 50 million people on food stamps . . . The assumption is that mass, multi-generational dependency is now a permanent feature of life. A coastal elite will devise ever smarter and slicker trinkets, and pretty much everyone else will be a member of either the dependency class or the vast bureaucracy that ministers to them. And, if you’re wondering why every Big Government program assumes you’re a feeble child, that’s because a citizenry without “work and purpose” is ultimately incompatible with liberty. The elites think a smart society will be wealthy enough to relieve the masses from the need to work. In reality, it would be neo-feudal, but with fatter, sicker peasants. It wouldn’t just be “economic inequality,” but a far more profound kind, and seething with resentments.

John Tamny of Forbes.com:

About all the wholly ineffective regulation that followed the 1980s S&L debacle, it was once written that it amounted to an “Act of anger.” Politicians and regulators are always and everywhere fighting yesterday’s maladies, and as evidenced by the troubles in the still heavily regulated banking sector in 2008, the alleged “fixes” in the ‘90s were nothing of the sort.

The above sprung to mind when the SEC unleashed the obnoxious force of government on Henry Blodget in 2002. Blodget most notably rose to fame for making what was ultimately a very correct call about Amazon.com in the late ‘90s, but when Internet stocks collapsed in 2000 and 2001, what amounted to overdone anger led to Blodget being forced out of the securities industry after paying a large fine. Near as this writer could tell he didn’t do anything wrong, but thanks to an angry political class that was out for blood for capitalism working – very well – to starve bad technology ideas, Blodget was wrongly made the poster boy for all that was supposedly wrong with Wall Street.

Happily, Blodget didn’t disappear. Instead, he chose to reinvent himself perhaps not so ironically in the Internet space that initially made him famous. As the editor of the very popular website Business Insider, Blodget has created what is very much a go-to site for those interested in what’s going on in the world of business and the markets.

Recently Blodget penned a piece for readers in which he argued that contrary to popular opinion, the rich do not create jobs. A provocative statement to say the least, and wildly untrue. The rich do create jobs, by definition.

Indeed, as Joseph Schumpeter long ago observed, and his observation was a tautology, there are no entrepreneurs without capital. Taking Schumpeter’s basic insight even further, it’s stating the obvious to assert that there are no companies, and no jobs, without investment first.  …

Blodget dismisses the commentary that says the rich would create even more jobs if they were taxed less. About that, he writes that “taxes on entrepreneurs and investors are already historically low, even after this year’s modest increases.” Blodget is correct that taxes are low relative to the rates that prevailed from the 1930s to mid-1980s, but in making the latter point, he misses the point.

No doubt it’s true that restlessly ambitious entrepreneurs of the Ted Turner, Steve Jobs, Jeff Bezos, and Mark Zuckerberg variety likely would not have been deterred by most any tax rate on income in starting CNN, Apple, Amazon, and Facebook. That much is true, but per the above, it misses the point. There are once again no companies and jobs without investment first, so when governments tax income and capital gains on investment at all, they’re logically reducing the amount of capital available for entrepreneurs to access.

Blodget’s error is in residing in the ‘seen.’ What he misses is the ‘unseen.’ As George Gilder has long pointed out, economic growth is about the ‘leap,’ or better yet, experimentation with new ideas. The latter requires investment, so rather than celebrate the ‘seen,’ we must consider the ‘unseen’ that Blodget does not; as in how many future Microsofts, Intels and Googles never were and never will be started at all thanks to governments taxing and borrowing away always limited capital so that they can consume it.

The above is important in light of what the rich do with their money. Blodget writes of customer demand for goods, and says the demand creates jobs, but as evidenced by how much wealth is in the hands of the tragically demonized 1 percent, it’s their demand that plays a major role in the health of job-creating companies created by the savings of the rich. More on this in a bit.

More to the point, the wealth that the rich don’t consume must go somewhere. Jeff Bezos has notably invested some of his disposable income not taxed away by the federal government into the Uber car service. Considering the ‘unseen’ yet again, we must ask how many life-enhancing services never saw the light of day thanks once again to government presuming for itself so much our capital through its taxing and borrowing powers.

Blodget goes on to write that “America’s middle class has been pummeled, in part, by tax policies that reward ‘the 1 percent’ at the expense of everyone else.” That’s interesting when we consider that the 1 percent account for 40 percent of federal revenues. It would be more realistic to say that it’s the 1 percent who are being pummeled, though that’s an article for another day. …

Ok, but if readers buy into Blodget’s line of thinking, they might ask themselves a question once posed by the late Robert Bartley in his masterful book, The Seven Fat Years. Bartley asked readers to “Rank in order the most likely recipient of capital from an industrial planning bureaucracy:

(A) Steve Jobs’s garage.

(B) IBM

(C) A company in the district of the most powerful congressman.”

The answer to Bartley’s question was and is rather self-evident. Government, like Blodget, resides in the ‘seen’ once again. Anyone possessing any skill at allocating capital obviously would not work for the relatively low wages offered by government, so in his desire to help the middle class by virtue of making the federal government a VC, Blodget reveals an unwitting desire to hurt the very middle class that he aims to help.

Notable about Steve Jobs is that he got the funds to start Apple in his garage from a very rich venture capitalist by the name of Arthur Rock. Hewlett-Packard was also started in a garage, and just the same, it would be foolhardy to presume that H-P might have been an investment recipient of the federal government that Blodget appears so eager to empower. Henry Ford envisioned making the once obscure bauble of the rich that was the automobile something accessible to the middle class, but only the seriously deluded would suggest that he could have secured the funds to do so from the feds back in the late 19th century.

Ford’s story is instructive, however. Ford didn’t just wake up one day and start mass-producing cars; instead he regularly re-invested the profits from his nascent company back into the business on the way to perfecting the manufacture of automobiles such that they were an increasingly common middle class good by 1914. It’s important to point out here that Ford was able to reach the point of mass-producing the Model T thanks to a federal government that wasn’t so aggressive about taxing and borrowing when this automotive visionary was on the rise. If the tax rates that prevail today were around when Ford began, simple logic says that federal taxation of his profits would have slowed the arrival of a relatively inexpensive car that so many eventually enjoyed.

The history of Ford Motor Company also tells us a lot about job creation. Henry Ford was a rich man, and very much a job creator. About his job-creating skills, an urban myth persists to this day which says that Ford paid his employees well so that they would buy his cars. The problem is that the latter is not true. Not only did Ford not employ enough workers to drive the sales of his car-making behemoth, the simple truth is that early on Ford suffered employee turnover of 317% per year. The turnover very much ate into profits such that Ford compensated his employees well in order to keep them around. …

Companies couldn’t exploit their employees even if they wanted to, but if Blodget is still worried about this, he should be calling for lower taxes on income, capital gains, and corporations. Once again, there are no companies and no jobs without investment first, and the more money we leave in the private economy, the more money there will be chasing workers. Taxes logically reduce the amount of capital available, and as such are very anti-worker.

What’s interesting about Blodget’s odd stab at economic commentary is that he never mentions where the funding for Business Insider came from. I won’t presume to say with certainty where it originated, but it’s my best guess that his popular internet news site wasn’t crowdfunded. Something tells me that he has rich backers whose disposable income made it possible for him to employ those who toil for him.

After all that, it’s important to go back to the basics. Companies and the jobs they create are always and everywhere able to open their doors thanks to investment. The 1 percent, by virtue of being the 1 percent, have the most investable funds without which there would be no jobs. Sorry Henry Blodget, but the rich create nearly every job. This is basic economics.

National Review’s Kevin D. Williamson goes to Texas. (No, this is not about Jerry Jones.)

There are plenty of rich people in and around Dallas, as a walk down Euclid Avenue in Highland Park will confirm, but unlike in New York City’s Upper East Side or San Francisco’s Mission District, Dallas’s outdoor cafes and boutiques are deserted on a typical weekday afternoon: Dallas’s rich are in the main the working rich. Dallas is no longer the Dallas of Dallas, but it still is a city in which the very well off are not at all shy about their money — there are plenty of Bentleys parked in front of the Mansion at Turtle Creek, because Dallas is the sort of place where rich people drive Bentleys and call their nicest hotel “the Mansion.” Those Bentleys belong to energy traders, hedge-fund geeks, restaurateurs, real-estate developers, dentists, importers, exporters — to the extent that there are trust-funders, they’re keeping a relatively low profile everywhere but the charity circuit. …

Rich America is a lot more like Dallas — and even more like relatively understated Houston — than it is like Fifth Avenue. Rich America is working America: Wealthy households contain on average more than four times as many full-time workers as do poor households, and, surprisingly, inherited wealth constitutes a smaller share of their assets than it does for middle-class and poor households. They live modestly relative to their means and for the most part do not work on Wall Street or as corporate executives. The caricature of the rich American as a child of privilege who inherited a fortune and spends his days shuttling between mansions in a private jet is largely a product of the imagination of such would-be class warriors as Elizabeth Warren and Robert Reich, neither of whom lives in Section 8 housing, or even downwind of it.

The relatively minor role of inherited money in the lives of wealthy Americans is worth examining in some detail. Senator Bernie Sanders, the self-described socialist from Vermont, has been known to complain indignantly that “today the Walton family of Walmart own more wealth than the bottom 40 percent of America.” But that fact is rather less telling than Senator Sanders imagines it to be. Never mind the Waltons: If you have a net worth of $0.01, then your wealth exceeds that of the poorest quarter of Americans combined — their net worth begins in negative territory and tops out at $0.00.

The Waltons are not typical of rich America. Wealth transfers — inheritances and gifts combined — constitute a small part of the holdings of the rich, whether you define “rich” in terms of income or net worth. For the top income quintile, gifts and inheritances amount to 13 percent of household wealth, according to research published by the Bureau of Labor Statistics. For the top wealth quintile, they amount to 16 percent. For the hated “1 percent,” inherited wealth accounts for about 15 percent of holdings. Contrary to the story the Left likes to tell about economic inequality in the United States, those numbers have gone down over recent decades — by almost half for the wealthiest Americans. Meanwhile, inherited money makes up 43 percent of the wealth of the lowest income group and 31 percent for the second-lowest. In case our would-be class warriors are having trouble running the numbers here, that means that inherited money on net reduces wealth inequality in the United States (measured as a ratio) rather than exacerbating it; eliminating inherited wealth would have approximately twice as much of a negative effect on modest households as on wealthy ones.

There is a reason that money earned from work accounts for a relatively large share of the holdings of rich Americans: They work more — a lot more. While Census Bureau data document a very large gap in the prevalence of college degrees among the top 20 percent vs. the bottom 20 percent, there is an even larger and more significant gap — 60 percentage points — between full-time employment for householders in the top income group vs. the bottom income group. There is, to be sure, such a thing as the working poor, but the most salient characteristic of poor households is the lack of full-time workers in them. For the bottom income group, there is an average of 0.42 earners per household, with 68.2 percent of householders not working at all, as opposed to 1.97 earners per household and only 13.3 percent not working for the highest income group. The answer to poverty turns out to be “get a job,” after all — though that should be an aspiration toward which we assist the poor rather than a contemptuous dismissal of their needs.

Family matters. Not surprisingly, 78.4 percent of those highest-income families were married couples, as opposed to 17 percent for the lowest-income group. What this all means in brief is that the highest-income families are composed almost exclusively of two-earner households, the overwhelming majority of them married couples. Those who are inclined to see public policy mainly through green eyeshades may sniff at the social conservatives and their quaint worries about marriage, but there is a very strong connection between how we conduct our family lives and our economic outcomes — the very word “economy” derives from the Greek term for household administration, οἰκονομία. All the best people may roll their eyes at “tiger mom” Amy Chua’s admiration for Asian-American, Nigerian-American, and Mormon domestic culture, but it is difficult to dismiss the results. …

While it would be uncharitable to begrudge the poor the money that is spent on them by the welfare state, especially considering that we spend a great deal more subsidizing the middle class, the fact is that as a practical matter we are running out of ways to spend money on the needy: We already pay for education, food, housing, job training, health care, heating, etc. There are a number of charitable organizations that exist for the sole purpose of providing poor people with appropriate clothes to wear to job interviews. But something is missing — that priceless thing that makes an immigrant into a valedictorian or a successful publican, that inspires people to make the most out of the opportunities afforded by a society that is, for all of its present difficulties, stuffed with them. It isn’t want of material aspiration: There’s a reason that Kanye West makes money singing about his money (“new watch alert” — seriously, that’s a lyric — fortunately, Hublot is easy to rhyme) and why they sell the Robb Report at Walmart. And it’s not just luxury goods: People want better lives — healthier, more productive, and more secure. How to get them there? Mitt Romney might have some ideas about that, but Americans got a good hard look at him in 2012 and said no.

Stanford University Prof. John B. Taylor:

When it became clear that the recovery from recession—which officially ended in mid-2009—was unprecedentedly weak, policy makers found an excuse in the depth of the financial crisis. Treasury Secretary Tim Geithner argued in August 2010 that “recoveries that follow financial crises are typically a hard climb. That is reality.” This argument is put forth frequently by government officials, and it’s loosely based on a popular 2009 book by Carmen Reinhart and Kenneth Rogoff, “This Time Is Different.”

A careful look at American history by Michael Bordo of Rutgers and Joseph Haubrich of the Cleveland Federal Reserve Bank has blown holes in the argument. Recoveries from deep recessions with financial crises have been stronger, not weaker, than recoveries following shallower recessions. These strong recoveries average about 6% real GDP growth per year, compared to only 2% per year in this recovery. The current recovery should have been much stronger. …

Yet the overall economy has failed to rebound strongly as it did so often in the past. At 52 months and counting, the recovery is already longer than the 33-month average of all U.S. recoveries. Yet the gap between real GDP and its potential based on population and productivity trends has yet to close appreciably. The fraction of the population employed is still below what it was at its start.

And now comes a new excuse, emerging like a vampire from the crypt. Though it has been quietly gestating for some time, a new-old idea, “secular stagnation,” has received a great deal of attention since former Treasury secretary and White House adviserLawrence Summers made the case at a Brookings-Hoover conference in October, and then again at an International Monetary Fund conference in November. A similar hypothesis was famously espoused by Alvin Hansen, “the American Keynes, ” in the late 1930s to explain America’s poor economic performance.

Hansen claimed, rather ludicrously in retrospect, that technological innovation and population growth had played out, depressing investment—and that only government deficit spending could keep employment up. According to the modern version, secular stagnation began 10 years ago when the rate of return on capital—or what Mr. Summers called in his IMF speech the “real interest rate that was consistent with full employment”—fell well below normal levels experienced since the end of World War II. The decline, say to “-2 or -3%,” continues today and will likely continue into the future, he said. The low rate of return is due to a supposed glut of saving and dearth of investment opportunities. …

There are many problems with this neo-secular stagnation hypothesis. First, it implies that there should have been slack economic conditions and high unemployment in the five years before the crisis, even with the very low interest rates—especially in 2003-05—and the lax regulatory policy.

But it was just the opposite. There were boom-like conditions, especially in residential investment, as demand for homes skyrocketed and housing price inflation jumped from around 7% per year from 2002-03 to near 14% in 2004-05 before busting in 2006-07. The unemployment rate got as low as 4.4%—well below the normal rate and not a sign of slack. Inflation was rising, not falling. During the years 2003-05, when the Fed’s interest rate was too low, the annual inflation rate for the GDP price index doubled to 3.4% from 1.7%.

Moreover, there is little direct evidence for a saving glut. During this recovery, the personal saving rate is well below what it was during the 1980s rapid recovery from a deep recession; 5.5% now versus 9.2% then. In my 2009 book on the crisis, Getting Off Track, I examined the claim that there was a global savings glut and found evidence to the contrary: In the past decade global savings rates fell below what they were in the 1980s and 1990s. The U.S. has been running a current account deficit, which means national saving is below investment.

In the current era, business firms have continued to be reluctant to invest and hire, and the ratio of investment to GDP is still below normal. That is most likely explained by policy uncertainty, increased regulation, including through the Dodd Frank and Affordable Care Act, about which there is plenty of evidence, especially in comparison with the secular stagnation hypothesis.