The term "quadrupled" depends on the metric. Going from 30 to 50% of GDP is obviously not a four-fold growth in those terms. Interest payments rose in the same period as debt/GDP (80 to about 96) in relative terms, as you note.
>>
You call for a moderate rise in the debt/GDP ratio, but give no specifics
(as high as Japan?).>>
To be precise, I said a moderate rise is sustainable, though not indefinitely. Right now the budget is in surplus so there is no need to run deficits to finance higher public spending.
>>
The very moderation of your claim suggests your
awareness of some "limits to the mixed economy", as Mattick subtitled his
book Marx and Keynes. Even Michael Meeropol who presents the left Keynesian
view subjected to critique by Mattick, Cogoy, Rachleff, etc. openly
recognizes the less than stimulative effects of budget deficits on the US
economy in the last decade or so. See pp. 175-76 of his *Surrender*.
>>
I agree the stimulus effect is more obviously problematic now than before 1990. I'll have to leave that problem to the macro geniuses. My main interest is in preventing the institutionalization of budget rules that parade under the banner of fiscal virtue that are in fact designed to crack domestic spending and social insurance.
A reasonable budget rule is a constant debt/GDP ratio over time, with deviations above and below trend in response to the business cycle. The extent to which this can be accomplished with discretionary fiscal policy is questionable, hence the greater salience to me of the extent of automatic stabilizers in the fiscal system.
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In his recent call for a Main Street Alternative in *The Nation*, Thomas
Palley didn't even make a call for greater govt spending, esp. debt
financed; he basically emphasized redistribution to increase the marginal
propensity to consume. So it seems that the need for very moderate
increases in debt/GDP ratio has seeped into even the left Keynesian camp
>>
I'm surprized to hear that. I will try to remember to bring it up when I see him again. If we're talking stabilization policy, then the ratio or level of public spending are secondary to short-term deficit policy.
>There is a lot of public capital -- about 20-30% of the total
>capital stock, and that's just the tangible stuff, not the
>'human' capital. This functions as capital in the sense of
>boosting public and/or private output.
Max, the whole point of the critique is to underline that boosting output
may not boost the production of surplus value.
>>
I'm still in the dark on this. More private sector output must yield more surplus, since w/o surplus there is no private motive to produce (putting aside non-profits). Even if there is no multiplier effect in excess of one, if the Gov procures goods and services from the private sector financed by deficits, there is surplus on that account alone.
>On the other hand, there is stuff from Keynesians now on how
>the current boom MUST end relatively soon.
On this last, the Levy Institute has a lot of free material on their web site. Look for Wynne Godley in particular.
mbs