It's striking that there is not a word on why people smoke. Could that be because they like the taste so much they're ready to risk death? Or could it be marketing, so powerful that it is able to make people consume poison (if so, don't ban tobacco, ban marketing, for every product !). Or could it be that like other drugs, tobacco provides a feel-good effect and help people socialize ?
It is probably preferable not to smoke, but if you don't understand why people do smoke in the first place, you have no business telling them to quit.
Why does it have to be about productivity growth? Innovation can trigger a boost in demand as well. The post-war period was marked by fabulous inventions that everybody wanted to own, but with little effect on productivity: cars, fridges, tv-sets (they admittedly were invented long before, but technology suddenly made them affordable). Demand for individual goods may be saturated. Smartphones and the like are not going to make a long-term difference. If there is something demand for does not look saturated, it is public goods: education, transportation infrastructure, health care, etc. And that's what the governments save on. No wonder the economy is not taking off.
@Mark Pitts: the point is that what Krugman says is that long term rate on inflation-indexed bonds are at record lows. This means that the market does not believe at all in the return of inflation in the mid-term, which contradicts the article of Mr Feldstein. This does not mean that inflation will not eventually return, just that the market does not fear it.
Apart from the predictions of the new classical model, that have been repeatedly proved wrong for the past five years, what kind of evidence do you have that supports your fear of inflation? Certainly not future interest rates (see Krugman: http://krugman.blogs.nytimes.com/2012/08/25/inflation-lessons/). So, when you say that "financial investors are increasingly worried that inflation will eventually begin to rise", that's just not true. You may be worried, but the market is not.
Neo-classical theories, those of Lucas and the Chicago School, predict that crises can't happen. You have to seriously depart from the model (introduce various market distortions) in order to generate cycles. And even so, free-market would be supposed to promptly restore equilibrium. This is why neo-classical theories may be of some interest, but they are not fully relevant. It becomes more and more obvious that the most influential proponents of neo-classical theories are driven by ideology, as shown by the controversial support statement of 5 Nobel Laureates (including Lucas) to Mitt Romney. Economists with a more balanced ideological approach need to remain aware of that. In this respect, thank you for that most useful article.