My brain hurts, but I think Taylor is right.

Lots of blowback from this John Taylor post on his blog.

Here’s the striking graph Taylor showed which seems to demonstrate a striking correlation between investment as a share of GDP and unemployment. His conclusion is that policies should encourage investment, and thus unemployment would be solved. Yay Republican rhetoric, right?

oh boy.

Clearly this is politically charged. As such, It’s been strongly challenged. Here’s what Justin Wolfers had to say at Freakonomics, and here’s what the ever-verbose Krugman has had to say, here and here and (exasperated) here.

And Taylor’s reply, and reply.

You decide who wins. I’m picking Taylor.