On Mon, Nov 18, 2013 at 7:15 PM, Julio Huato <juliohuato at gmail.com> wrote:
> One other thing: Krugman is alluding to Alvin Hansen's "secular
> stagnation" story centered on demographic, geographic, and
> technological shifts as prime movers, and bubbles as flimsy
> adaptations to them.
>
> Hansen came late to Keynesianism, but like many other converted
> economists --- Hicks, Harrod, etc., with Keynesian tactic blessing,
> who seemed to have felt that any endorsement was better than an
> explicit rejection --- he reframed Keynes to fit his prior views
> rather nicely. My totally uninformed guess is that Hansen was
> probably influenced by Schumpeter's idealist-Hegelian reading of Marx.
>
> Anyway, if you listen to Summers, it's clear that Krugman is right
> linking his views to Hansen. Whatever we may make out of this, it
> doesn't seem like Kalecki or Sweezy to me.
>
> On Mon, Nov 18, 2013 at 6:53 PM, Julio Huato <juliohuato at gmail.com> wrote:
>> Doug wrote:
>>
>> "I'm not sure that fits Krugman exactly. Summers, yes, no doubt, but
>> Krugman seems more open to political explanation. Christ, he was
>> quoting Kalecki on the risks of full employment just a few months
>> ago."
>>
>> Right, and he was also --- in a recent lecture (video posted somewhere
>> on the web) --- making the argument that (my words) EU austerity is
>> not inexorable, but a strategic choice aimed at weakening workers,
>> undermine their social conquests, etc. I'm not a knee-jerk
>> anti-Krugman. That's why I'm mystified by his sudden endorsement of
>> Summers' "secular stagnation" theory.
>>
>> Check out Summers' speech (it starts at 45'):
>>
>> http://link.brightcove.com/services/player/bcpid2816849869001?bckey=AQ~~,AAAACofWkTk~,d-cWVfCeeBFD0mJnTa0KQjzdh26lEmOv&bclid=2816973566001&bctid=2821294542001
>>
>> What I got was:
>>
>> 1. Before the financial panic, aggregate spending was not stressing
>> capacity utilization or lowering unemployment to levels threatening to
>> trigger accelerating inflation.
>>
>> 2. After the financial panic, in spite of the acceptable response by
>> the Fed and government, in spite of the banks being nicely rescued,
>> the private sector didn't increase spending as one would expect.
>>
>> 3. It is not a uniquely U.S. phenomenon, but common to rich capitalist
>> societies.
>>
>> 4. R&R are right about financial crisis being deeper traumas and/or
>> the demographic/technological/institutional parameters of rich
>> capitalism have shifted; in other words, the Wicksellian "natural"
>> interest rate (the one consistent with the exogenous parameters of the
>> economy: demographics, technology, culture) has dropped to negative
>> territory: "secular stagnation."
>>
>> 5. As far as policy is concerned: Monetary policy can help stop the
>> bleeding, restore some financial normalcy, but it cannot affect the
>> Wicksellian "natural rate of interest," lift it up to levels that
>> would make the private sector make up for the spending gap.
>>
>> Here's my reply: So what? What kind of Keynesians are you if you are
>> now believing that you have to tail rather than lead the private
>> sector?
>>
>> By the way, in the Q&A part, Bernanke noted in passing that the crisis
>> --- not being anything like the destruction of the country's
>> productive wealth by some natural resource, but being instead a
>> human-made disaster --- called for other (non-austerity) measures.
>>
>> It seems to me that they would love to wash their hands and pass the
>> buck. Bernanke, in spite of the Fed's official mandate, told Congress
>> it was mainly up to fiscal policy to deal with the recessionary gap.
>> If he didn't think the law granted him the tools to accomplish the
>> Fed's mission, why didn't he ask for expanded powers? Or, if Congress
>> refused, why didn't he resign in protest?
>>
>> They make noises, but they do neither name names nor take actions
>> showing they are serious about their noises. Capitalism, the inherent
>> tendencies of the system, can always be used as the place where the
>> buck ultimately stops.