"Demand does not matter in the long run and hence the TFP growth crisis cannot be lastingly cured by fiscal stimulus (as Trump seems to propose), higher real wages, or a restructuring of the private debt overhang. 

"In this view, because demand is side-lined, rising inequality, growing polarization and the vanishing middle class play no role whatsoever as drivers of slow potential growth. They simply drop out of the story. I think this is wrong.

"The U.S. economy is suffering from two interrelated diseases: the secular stagnation of its potential growth, and the polarization of jobs and incomes.  The two disorders have a common root in the demand shortfall, originating from the ‘unbalanced’ growth between technologically ‘dynamic’ and ‘stagnant’ sectors, which—crucially—is bringing down potential growth. 

"To understand how the short-run demand shortfall carries over into the long run, we must first rethink the Solow residual."