1. The high levels of unemployment in this country are covered up by the stock market boom. As excess capital flows into the stock market and inflates share values and thus contributes to a top down spending spree, employment has not yet crashed. With the piercing of the bubble there will be a steep fall in such employment generating spending by rich people, revealing the terrifying industrial unemployment that has been silently mounting.
2. The same decline in the rate of profit that will eventually take expression in declining equity values puts limits on the social democratic or redistributive fiscal stimulus vaguely called for by Prof DeLong. Already everywhere in the world the welfare state is in retreat, exactly as Mattick predicted. I know we have suggested a real discussion about the meaning of the govt debt/GDP ratio as it stands, and Doug, Nathan and James Galbraith have insisted that the US is in good shape to carry out an aggressive redistributive fiscal policy. In late capitalism, fiscal policy may indeed remain destiny.
yours, rakesh