>I think "quite limited" is exaggerated. No one has to adhere to any
>'far out' theories to recognize that *under certain conditions* a
>federal government has the ability to spend enough to affect employment,
>output, income, social services, etc in a significant way, without
>setting off serious inflation. "significant" meaning enough to make it
>worthwhile in terms of affecting enough lives (through job creation,
>income maintenace, etc.). "under certain conditions" being those
>conditions under which it is most desirable for government to do
>so--when there is significant unemployment. we can then take it a step
>further and say that government could spend even more if moderate,
>*expected* changes in the price level were not thought to be a problem
>(or were considered worth the trade-off). so I think we have gone off
>track here. when can argue that it is wrong to say that there are *no*
>limits to national debt or debt-gdp ratios, or argue against the
>'taxes-drives-money' view, or against the view that taxes and bond sales
>cant finance government spending, but to argue that government can't
>spend without it being inflationary is not an argument against
>'neo-chartalism', it is 'pre-Keynesian'. Mat
I said that it's not inflationary in an economy with slack resources, but there's a limit to that kind of spending. Limits in the narrowly economic sense - debt/GDP ratios, for example - but also, more importantly, in the political sense, that of Kalecki's analysis of the impossibility of sustained full employment under capitalism. As he put it, if workers aren't under any meaningful threat of "the sack," they'll get to militant - they'll become unmanageable, their wages will rise, profits will fall, and all the lines of class authority will wither. That's the political point behind all the orthodox eocnomists' worry about NAIRU.
Doug