Twinsdad 16 hours ago
The standard Keynesian narrative that "Households and countries are not spending because they can’t borrow the funds to do so, and the best way to revive growth, the argument goes, is to find ways to get the money flowing again." is not working. In fact, former IMF Director Raghuram Rajan points out, today’s economic troubles are not simply the result of inadequate demand but the result, equally, of a distorted supply side as technology and foreign competition means that "advanced economies were losing their ability to grow by making useful things." Detailing his view of the mistakes of the Keynesian dream, Rajan notes "The growth that these countries engineered, with its dependence on borrowing, proved unsustainable.", and critically his conclusion that the industrial countries have a choice. They can act as if all is well except that their consumers are in a funk and so what John Maynard Keynes called “animal spirits” must be revived through stimulus measures. Or they can treat the crisis as a wake-up call and move to fix all that has been papered over in the last few decades and thus put themselves in a better position to take advantage of coming opportunities
Twinsdad 16 hours ago
+1 Vote
http://www.zerohedge.com/news/imfs-rajan-undresses-keynesian-emperor
Rather than attempting to return to their artificially inflated GDP numbers from before the crisis, governments need to address the underlying flaws in their economies. In the United States, that means educating or retraining the workers who are falling behind, encouraging entrepreneurship and innovation, and harnessing the power of the financial sector to do good while preventing it from going off track. In southern Europe, by contrast, it means removing the regulations that protect firms and workers from competition and shrinking the government’s presence in a number of areas, in the process eliminating unnecessary, unproductive jobs.
Rather than attempting to return to their artificially inflated GDP numbers from before the crisis, governments need to address the underlying flaws in their economies. In the United States, that means educating or retraining the workers who are falling behind, encouraging entrepreneurship and innovation, and harnessing the power of the financial sector to do good while preventing it from going off track. In southern Europe, by contrast, it means removing the regulations that protect firms and workers from competition and shrinking the government’s presence in a number of areas, in the process eliminating unnecessary, unproductive jobs.
StormCloudBrewing 11 hours ago
I think most people would be amazed at how deeply ingrained governments are involved in the global economy. A little cut in government spending causes ripple effects on many people. Lightening the load of government regulation allows companies to stop spending money on complying with those regulations. That causes government and private sector job cuts. This pervasiveness of federal government was never what was intended by our constitution, but I don't think any of our elected officials have the stomach to deal with the suffering that would result from setting the situation right.
louman 10 hours ago
but I don't think any of our elected officials have the stomach to deal with the suffering that would result from setting the situation right.
Wouldn't it be better now vs. later when it will really be painful?
Wouldn't it be better now vs. later when it will really be painful?
TheScott 6 hours ago
+1 Vote
Max - I made a comment on another thread yesterday that is quite appropriate to what your comment....
It is interesting that many polls show that Americans are quite aware of much of the corruption that is occurring with Washington and the rule of law. We know that we don't like the undeclared wars, the bailouts, the obfuscation of the facts around the real estate meltdown, multinationals not only moving jobs but our own intellectual hard work to other countries in the name of patent rights...... we know all of these problems and we know that we need a change, a radical change, yet, the majority of people this election cycle will vote for the same people, who went to the same schools and joined the same clubs and organisations, who are part of the same mindset and we will actually expect a different result..... and of course, anyone who comes along to challenge the status quo.... will be labelled a 'nut' and sidelined by the voting public as being a radical.... Strange that..... less
It is interesting that many polls show that Americans are quite aware of much of the corruption that is occurring with Washington and the rule of law. We know that we don't like the undeclared wars, the bailouts, the obfuscation of the facts around the real estate meltdown, multinationals not only moving jobs but our own intellectual hard work to other countries in the name of patent rights...... we know all of these problems and we know that we need a change, a radical change, yet, the majority of people this election cycle will vote for the same people, who went to the same schools and joined the same clubs and organisations, who are part of the same mindset and we will actually expect a different result..... and of course, anyone who comes along to challenge the status quo.... will be labelled a 'nut' and sidelined by the voting public as being a radical.... Strange that..... less
Maxyasgur 7 minutes ago
I guess I keep falling back on one particular train of thought - what goes on in Washington is no mistake. We vote for it. As a whole, perhaps people are not happy with the result. They are, however, very happy with THEIR representative. Look at our discussions here. If two people on this site can't get along and talk respectfully, how will that fix things in Washington when we each go to vote? Angry people are easy to take advantage of, we have seen this repeatedly throughout history. When people set aside their differences to start fixing problems locally, Washington will change.
louman 3 minutes ago
When people put country before their pocketbook things will change.
The I have mine I don't care about you has to change.
The I have mine I don't care about you has to change.
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