Everyone has probably seen one of those silly debt clocks that is supposed to keep us apprised of how much money the federal government owes. That's what you buy when you're a Wall Street billionaire who has money to throw around and wants to scare people in supporting cuts for Social Security and Medicare.

But if you don't have any money but you do want to tell people what is going on with the economy, you create a "lost output clock." This clock tells us on ongoing basis the amount of goods and services that we have lost since the recession began in 2007, due to the economy operating below its capacity. This is the value of the education and health care that the economy could have provided, but didn't. The value of the housing, the infrastructure, the research and development and all the other areas of economic activity that did not happen because we are operating the economy at well below its potential level of output.

On the flip side, of course this lost potential output corresponds to the 8.5 million additional jobs we would have right now if the economy was operating at its potential. At potential GDP we would also see roughly 4 million part-time workers be able to get full-time jobs. And we would see workers at the middle and bottom of the wage ladder securing real wage gains, since they would have considerably more bargaining power.

We have known how to boost an economy out of a slump since Keynes wrote the General Theory more than 75 years ago. But because people with superstitutions about the flat earth and balanced budgets control economic policy, we continue to have an economy operating well below capacity with massive amounts of unnecessary unemployment and underemployment. 

And the lost output clock tells the story.