Sorry to contribute to your potential stagnation, but,
:-)...
"Historical failure of Keynesianism"? That depends on what brand of Keynesianism you are talking about. Certainly this is the media image as based on the self-satisfied neo-Keynesian synthesis of the mid-1960s. But the Post Keynesians were warning about aggregate supply and the need to deal with supply-side inflation from the 1950s onward. Countries in Europe that used effective incomes policies, such as corporatist collective collective bargaining as in Austria and much of Scandinavia, had much superior performances in terms of inflation and unemployment than OECD countries that did not, right through the oil price shock period of the 1970s and its associated heyday of monetarist revival in other OECD countries. Barkley Rosser On Thu, 17 Sep 1998 13:00:26 -0400 (EDT) Rakesh Bhandari <bhandari at phoenix.Princeton.EDU> wrote:
> Doug,
>
> 1. How much has this deficit reduction come from, say, selling off the
> assets from the S&L disaster or privatizing state enterprises or
> conceding govt lands--sources of revenue which cannot be drawn from again
> and again? Or how much has come from the taxing of fictitious capital that
> a few more bubble pricks will send up as hot air? And after substracting
> from GDP such fictitious wealth, how high are debt to GDP ratios corrected
> for the business cycle?
>
> 2. Why has Japan's efforts at fiscal stimulus shown no
> commensurate positive effect? Doesn't the absence of effect then
> undermine confidence even more as everyone doubts that the govt can lift
> the economy out of the depression? Isn't this a case of where it is worse
> to have loved and lost than never to have whored around with fiscal
> policy in the first place?
>
> 3. Isn't Big Daddy Al merely saving his big bang of interest rate
> reductions for a very steep decline in America asset values or a real
> downswing in the American business cycle? Big Al only believes in loose
> money at the right time just as the market was flooded with liquidity in
> the 87 crash; he is just waiting to come out of the closet at the
> right time. Some like James Galbraith may want to out him now, but he'll
> be an advocate soon enough. And then he may well find himself, just like
> his Japanese compatriots, in one big liquidity trap.
>
> 4. Could any govt loosen and spend without wage/price controls; is this
> anything more than trying to get out of recession by increasing the rate
> of exploitation and therewith the production and capitalization of
> surplus value through machinations in the realm of circulation, i.e.,
> letting the price level grow at a faster rate than the wage level?
>
> 5. If the goverment is going to employ people without undermining private
> intiative--that is, if the govt is merely going to supplement private
> investment--then what kinds of branches of production is the goverment
> limited to? Would Keynes rather have people dig holes in the ground only
> to recover bottles of cash that other workers were paid to bury? And
> doesn't he prefer this because he accepts the moralism that idle hands
> will only do the devil's work--that is, seize property and factories and
> put them to human use?
>
> 6. Since the govt is only to trying to supplement, not supplant, private
> intiative, it can't offer wages which would motivate workers to leave the
> private sector, bid wages up, compound profitability difficulties there,
> and thus reduce private initiative. In order not to set this chain off,
> mustn't the govt thus offer low to slave wages in its employment
> generating programs? If we look closely at FDR's progams, isn't that what
> we find?
>
> 7. Why do the Keynesians keep on bellyaching about the monetarists? They
> had their day, and couldn't explain how there could be both unemployment
> and inflation. It's not the strength of monetarism but the historical
> failure of Keynesianism that explains the former's strength.
>
> best, rakesh
>
-- Rosser Jr, John Barkley rosserjb at jmu.edu