Positive features of U.S. policy

Hinrich Kuhls kls at mail.online-club.de
Tue Oct 19 14:13:45 PDT 1999


Seth wrote:


>But I think the net effect of
>the statement is very positive and certainly 180 degrees away from Goreish
>centrism. The idea is to convince the German left that there are choices
>other than Blairism.

Clintonism??? ----

Of course I agree that a public letter to colleagues who are teaching and researching at institutes in another country is a positive step when they are trying to back criticism of a desastrous deflationary economic policy pursued by the government of that country.

But please show me the arguments or the facts of "positive features of U.S. policy" which will convince the left in this country that there are U.S alternatives to "the real gains achieved by German workers over the last three decades". (Statement...)

The authors of the statement themselves don't believe in the policy which they suggest to pursue in other countries:

"The most important source of American growth has been a Federal Reserve policy of low interest rates and easy credit; this has fostered an enormous expansion of borrowing by households and by state and local governments for capital projects. This has proved successful so far, particularly when compared to stagnation in Europe. But we now fear for the sustainability of a boom built on these grounds. Consumer debt is now more than 20 percent above its previous peak as a share of disposable income. The U.S. trade deficit has soared. And the U.S. stock market has risen to price-earnings ratios that are more than twice their historic average. No one can say how or when these trends may be reversed, but they are clearly dangerous, and they suggest that further American growth may well require a stronger, not weaker, presence of government in the U.S. economy."

Maybe I don't get the point because I'm not a professional economist.

But if the conclusion of the statement ("positive features of U.S. policy") is wrong, then perhaps the underlying analysis of both the economy and the economic policy is not sufficient - neither for the U.S. nor for Germany.

Hinrich



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