At 06:25 08/06/2010 -0400, Steve Kurtz wrote:
The 'hair of the dog' doesn't work for a debt based consumption hangover.
Sachs finally integrated scale (overpop) into his thinking in the past few
years after receiving many critiques.
Unfortunately, like much else that's written in the FT by pundits, Sachs
contributes no new insights into what is actually happening in the modern
world. Despite his new-found anti-Keynesian rhetoric, his five guidelines
are hardly more than pious restatements of what advanced governments have
been trying to do since the Second World War.
A few brief comments on his "guidelines" follow:
Time to plan for post-Keynesian era
By Jeffrey Sachs
Published: June 7 2010
Mainstream Keynesian economics is facing its last hurrah . . . . . . .
snip ---->
Here are some suggested guidelines.
First, governments should work within a medium-term budget framework of
five years, and within a decade-long strategy on economic transformation.
Deficit cutting should start now, not later, to achieve manageable
debt-to-GDP ratios before 2015.
Maybe, but how are decade-long strategies to be maintained? In the West we
have fickle electorates and a system of adversarial politics in which
policies are reduced to epithets and slogans. We simply have no system to
discuss and explore policy proposals by all who would like to make a
contribution.
Second, governments should explain, and the public should learn, that
there is little that economic policy can do to create high-quality jobs
in the short term. Good jobs result from good education, cutting-edge
technology, reliable infrastructure and adequate outlays of private
capital, and thus are the outcome of years of sustained public and
private investments. Governments need actively to promote post-secondary
education.
This entirely overlooks the fact that the shaping (and blunting) of
potential abilities starts in the earliest weeks, months and years of a
child's life. Secondary education would mainly look after itself if
equality of opportunity started early enough.
Third, governments must of course also ensure social safety nets: income
support for the poor, universal access to basic healthcare and education,
a scaling up of job training programmes and promotion of higher education.
All these have already failed lamentably when carried out by highly
centralized governments. We need to decentralize all these objectives as
one or two advanced countries such as Sweden and Denmark (and even the new
UK government) are now trying to do.
Fourth, governments should steer their economies towards needed long-term
structural transformation. External-deficit countries such as the US and
UK will need to promote exports over the next few years, while all
countries must promote clean energy and new transport infrastructure.
More pious expectations about governments which have proved themselves to
be hopeless at any sort of economic transformation.
Fifth, governments and the public should insist that the rich pay more in
income and wealth taxes -- indeed, a lot more. The upward re-distribution
of the past 25 years has made our economies into extravagant playgrounds
for the super-wealthy. Politicians of both the mainstream left and right
in the US and UK have fawned over those who pay their campaign bills in
return for low taxation. Even playgrounds should collect tolls -- when it
is billionaires in the sandpit.
What makes Sachs think that governments of the future will be any more
successful in taxing the rich than they have been so far? And if they were
successful then exactly when would the process stop? Until every adult had
an equal income?
He ends:
We need, in sum, to reset our macroeconomic timetables. There are no
short-term miracles, only the threat of more bubbles if we pursue economic
illusions. To rebuild our economies, the watchword must be investment
rather than stimulus.
Successful investment is never a forecastable, totally rational process
that can be successfully arrived at by governments. Investment ideas arise
only in the minds of single individuals and most of them are failures. The
essential nature of governments is to protect the citizen from physical
threats and criminal predation and to give every child as equal a chance as
possible. If governments did these jobs well enough then a great deal else
would take care of itself.
Keith
The writer is director of The Earth Institute at Columbia University
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Keith Hudson, Saltford, England
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