Comments on: Paul Krugman and the neo-Keynesian myth of full employment Wed, 16 Jul 2014 00:47:01 +0000 hourly 1 By: BajaArizona Sat, 23 Jul 2011 10:55:00 +0000 This article makes grandiose use of creative labels but avoids some critical facts:

A third of the stimulus was comprised of tax cuts. Another third went to shore up state budgets which were being slashed and so did not add new spending to the economy. The actual amount of stimulus was just over 300 billion, spread out over two years. Krugman estimated that for the stimulus to reverse the effects of the recession, it would need to be 2 trillion. So there really was no stimulus.

Krugman, and Keynes, never advocated stimulus in good times. It is a tool to be used sparingly and wisely only when capital and labor are idle because of a vicious cycle. Once the markets recover and growth resumes, both economists say that stimulus spending should not be used. Whalen conflates the pre-recession government support of the housing market with “neo-Keynesian” (an absurd attempt at slur) stimulus, which it is not. Further, the housing bubble wasn’t an American phenomenon. Investors around the globe grew the housing bubble. Is Whalen saying the US government policies buttressing Fannie and Freddie are to blame for the housing bubble in Spain, Ireland, Italy, etc.? This is a ridiculous and dishonest claim. Does Whalen know better or is he simply blinded by ideology?

The only moment in history when stimulus spending of the scale proposed by Keynes was actually deployed was during WW2. And it worked. The economy of the US was put back on track and the growth it enabled lasted decades. This fact is well understood by all who are not blinded by fear and hatred of American hegemony. The very term is a dead giveaway.

Finally, we have plentiful examples of the effects of austerity and raising interest rates on a global recession. Britain has gained nothing by cutting its public spending. Revenues are down because growth is still nonexistent. Businesses have cash but won’t invest until the economy begins to grow again. In the absence of public spending, the economy will take perhaps decades to begin growing again on its own, thus the recession deepens and lengthens.

This is all so elementary, but like most facts it stands no chance of being recognized by those who cling to their irrational belief systems.

Whalen is not credible.

By: prad0597 Fri, 08 Jul 2011 03:22:23 +0000 Full employment may be a delusional aspiration, but so is the “invisible hand”.

By: Kalib_Kersh Wed, 06 Jul 2011 20:36:17 +0000 In that corner, dogmatism advocating spending with no rational provision for said spending, the biggest chunks of the discretionary pie being military; the debate to allow the Bush tax cuts to be re-extended should have been discussed at the same time as the debt ceiling debate, if the true intent was to lower the deficit.

In the other corner, same “conservative” dogma as ever against taxes and government spending, even though spending on military is even acknowledged by former Sec of Defense Gates as being excessive.

Priorities, priorities: first, the priority was to extend tax cuts and now to reduce the deficit. Let’s just get it over and drown it in the bathtub like Grover Norquist said.

What will be left with? I’m not sure, but it’s not pretty, right now.

My solution: end tax loopholes, end Bush tax cuts, balance the budget, reduce military spending to levels that are much more sustainable & aligned with spending elsewhere, invest in domestic energy production especially carbon neutral ones, stimulate solar and renewable industries before we’ve lost the race, and let’s see the business community do what they say they’re good for, creating jobs and innovating.

By: Woltmann Wed, 06 Jul 2011 18:58:15 +0000 Go ahead if you want to call Krugman a socialist left-wingnut, I don’t think you’re really going to hurt his feelings but please don’t insult your loyal readers with obsolete fantasies like full employment, free tradeism or the tooth fairy. Only starry eyed econo-undergrads fall for that dreamy stuff ..

By: Adam_S Wed, 06 Jul 2011 18:02:27 +0000 Sir, you’ve basically outlined why you think Krugman is wrong, yet provided no concrete solutions yourself, that would both solve the problem, and have a chance of passing legislative muster.

I know, I know, it’s much easier to tear something down and build it back up. Way to do exactly what the person you’re attacking can do. He has a Nobel prize. Do you?

By: lnardozi Wed, 06 Jul 2011 17:32:21 +0000 Ah, so what you’re saying is, Ron Paul and the Austrians were right all along! Yes, we’ve been trying to tell people for years, but they’re actually listening now. Soon, people are going to realize that not only is Austrian economics the correct choice, it is also the only moral choice.

By: Kithara Wed, 06 Jul 2011 16:47:51 +0000 “. . . war as a means of economic stimulus — a policy still followed under President Barrack Obama.” A whacked-out lie!

“Conservatives from Hayek and Henry Hazlitt on forward have warned that the end result of the neo-Keynesian path is an authoritarian state and we have one today.” Pure paranoia and fear-bating.