Democratic Underground Latest Greatest Lobby Journals Search Options Help Login
Google

Keynes Was Right

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
Home » Discuss » Editorials & Other Articles Donate to DU
 
dtotire Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Dec-31-11 12:10 PM
Original message
Keynes Was Right
Keynes Was Right

By PAUL KRUGMAN

Published: December 29, 2011



“The boom, not the slump, is the right time for austerity at the Treasury.” So declared John Maynard Keynes in 1937, even as F.D.R. was about to prove him right by trying to balance the budget too soon, sending the United States economy — which had been steadily recovering up to that point — into a severe recession. Slashing government spending in a depressed economy depresses the economy further; austerity should wait until a strong recovery is well under way.

Unfortunately, in late 2010 and early 2011, politicians and policy makers in much of the Western world believed that they knew better, that we should focus on deficits, not jobs, even though our economies had barely begun to recover from the slump that followed the financial crisis. And by acting on that anti-Keynesian belief, they ended up proving Keynes right all over again.

In declaring Keynesian economics vindicated I am, of course, at odds with conventional wisdom. In Washington, in particular, the failure of the Obama stimulus package to produce an employment boom is generally seen as having proved that government spending can’t create jobs. But those of us who did the math realized, right from the beginning, that the Recovery and Reinvestment Act of 2009 (more than a third of which, by the way, took the relatively ineffective form of tax cuts) was much too small given the depth of the slump. And we also predicted the resulting political backlash.

So the real test of Keynesian economics hasn’t come from the half-hearted efforts of the U.S. federal government to boost the economy, which were largely offset by cuts at the state and local levels. It has, instead, come from European nations like Greece and Ireland that had to impose savage fiscal austerity as a condition for receiving emergency loans — and have suffered Depression-level economic slumps, with real G.D.P. in both countries down by double digits



more:
http://www.nytimes.com/2011/12/30/opinion/keynes-was-right.html?_r=1&nl=opinion&em
Refresh | +3 Recommendations Printer Friendly | Permalink | Reply | Top
Enthusiast Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-01-12 01:30 AM
Response to Original message
1. K&R!
Of course he was right!
Printer Friendly | Permalink | Reply | Top
 
KoKo Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-05-12 08:54 PM
Response to Original message
2. I like to say: Keynes was Mostly Correct! (I worry that folks associate Right with Bad Stuff these
days) :-(
Printer Friendly | Permalink | Reply | Top
 
KoKo Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-06-12 09:01 PM
Response to Original message
3. Sigh...Another good one from Krugman.. K&R!
Printer Friendly | Permalink | Reply | Top
 
DU AdBot (1000+ posts) Click to send private message to this author Click to view 
this author's profile Click to add 
this author to your buddy list Click to add 
this author to your Ignore list Thu Dec 05th 2024, 06:00 AM
Response to Original message
Advertisements [?]
 Top

Home » Discuss » Editorials & Other Articles Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002 DCScripts.com
Software has been extensively modified by the DU administrators


Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC