Here's the problem in Europe and in the United States. Neoclassical
economics has triumphed over Keynesianism. This means governments are left with
only monetary tools, stimulus spending is out. So its Dullsville everywhere.
Moreover, capitalism as portrayed by Piketty is not going to provide the
American (or European) dream of a picket-fenced house, a couple of cars, etc.
Labor is increasingly strapped. There are some things going on Europe which may
show a third way - Worker Self Directed Enterprises (WSDE's), but such is
probably too exotic for Samuelson. BTW, Cuba has decided to de-emphasize
state-socialism in favor of WSDE's.
@marxistWhen it's already debt everywhere you look, Keynesian
tactics are no longer an option. Short-sighted stupidity is what that was.
The economic paradigm in the Euro nations (and just about everywhere else) is
Keynesian. As long as the argument is framed in terms of GDP growth and
stimulus, it is Keynesian. These two concepts are its holy grail. If the economy
is weak or failing in terms of GDP, the solution is to artificially stimulate
borrowing through manipulation of interest rates or to increase government
spending, or both. The ultimate goal is to increase spending because it is
assumed by Keynesians that GDP can only be raised by increased spending. If the
economy is weak or failing in terms of GDP, the solution is to increase
spending. GDP is the health of the economy.Paul Krugman, for
example, has written that the US should prepare for a huge alien invasion by
making massive expenditures for war materials. Keynes himself suggested we could
accomplish the same thing by building pyramids. The theory says that with enough
spending, the pump will be primed and the economy will achieve "escape
velocity." Make no mistake, we are in uncharted waters. The
Keynesians-in-charge are grasping at straws as they bring down economies
throughout the world.
SEYAnd I still worry about the national debt. Unless basic
principles of economy don't apply at those levels, I just can't
believe that one day as we continue to borrow more money to fund our government,
there won't be a collapse. The credit will either be shut off or the
interest rates will go so high that it will ruin what economy we have. And with
all that paper debt waiting in the wings out there to the tune of 17 trillion,
it just begs for inflation to set in. Maybe this is what the Keynesians really
want. A collapse of the capitalistic economic system that will usher in New
What's this blather about Keynesians? People dump on Keynes for
advocating spending as stimulus, but completely ignore the other side of the
Keynesian coin: in economic booms, cut spending and save surpluses for a rainy
day. The debt problem isn't Keynesian economics, it's politicians who
can't be bothered to curtail spending when it isn't necessary.
Res Novae: this “blather” about Keynesianism has to do with the real
economy. The theory espoused by Keynes recommends that politicians reduce
spending and save for a rainy day during good times. The only years (after 1950)
when federal outlays actually dropped from one year to the next were 1954, 1956,
1969, 1987, 1993, 2010 and 2013 (adjusted for inflation). Those reductions were
mere blips, almost accidents, but not significant drops. In other words,
you're going to be waiting a long time (forever?) for politicians to reduce
spending in a meaningful way even in the best of times.Yes, the
problem is Keynesianism and its many permutations. Even if implemented
“correctly,” it would cause economic bedlam. But that's another
I know deflation isn't exactly a good thing for an economy and a sign of
things awry, but I would say at this point in America, with stagnant (and low)
wages for most of us, that deflation would be welcomed.