pre-Keynesian

[Christian Gregory]

>
> Harry Hopkins represented the radical wing in FDR's adminstration. This
was
> in 1930s. Harry fought hard for make-work programs. He had been a social
> worker, he knew how personally demoralizing it was to not work. He wanted
to
> make sure every American had a job, even if the job was useless and
stupid,
> like raking leaves in the park. He did not want to simply give money to
> people without requiring them to work, he felt strongly that the money
would
> be demeaning to the people who got and engender a backlash against the
> program. He was too much of a humanist to think of it in merely economic
> terms - the restoration of aggregate demand.
>

Just out of curiosity, I'm wondering if you think that there is something
ennobling or good about make work. I mean, given the choice between _not_
working and receiving transfer payments and getting paid for meaningless
work, I'd choose the former, just for the time to read, learn, and be
politically active.


>
> From what I've read, the whole world has suffered in subtle ways because
of
> Japan's wasted 10 years. My understanding of the situation (based on very
> limited knowledge) is that public spending was done on a large scale, and
> toward some infrastructure projects that were, perhaps, genuinely needed
or
> helpful.

An interesting argument in this regard is Adam Posen's "Restoring Japanese
Growth." Among other things, he argues that public spending through 1999
hadn't been stimulative enough. As for "genuinely needed," the reports I've
seen have been unanimous in declaring them worthless. Aside from that,
though, in Keynesian theory, isn't it completely beside the point what the
money is spent on? Aren't the short run stimulative effects supposed to be
the same for retrieving money buried by the government and building roads?

But also there is the feeling that much of the money was spent
> propping up businesses that would not have survived in a more competitive
> environment, especially one in deep recession. In a sense, the money was
> spent propping up the status quo. That has made the recession relatively
> painless, and with the lack of pain there has been only limited impetus to
> change, and with such limited impetus, no real change has happened. Thus,
> the massive public spending did more to prolong the recession than end it.
> Needed reforms were postponed.

Painless for whom? The employment numbers can't tell this kind of story, but
I've seen umpteen accounts of former business executives who are now
cleaning toilets (figuratively speaking).  Japanese high tech firms are
cutting their employment even in outposts across Southeast Asia--a first for
the region. Meanwhile, the Japanese electorate has been offered or produced
no electable political alternatives to the LDP. It looks incredibly painful
to me.

Christian