I wrote: > As for Peter Burns' question about the GOP actually stimulating private investment and thus the economy: yes, they can do that. But such a profits-led boom encourages investment to get further out of line with consumer demand, implying greater tendency toward recession.< Mike Lebowitz says: >>This may be true for a closed capitalist economy or for capitalism-as-a whole, but why should it be true for one capitalist country? Ie., don't we have both a logical and concrete basis to recognise that any individual capitalist country can pursue successfully such policies --- as long as others are not doing the same, that is?<< Absolutely! Not all countries can get away with the policy of promoting profits and investment to lead the economy. Only big, relatively independent, ones like the US. A country like Canada (note the singular noun used here) has a hard time doing it, since its economy is largely under the US thumb. The global economy cannot be ignored. One of the problems with world capitalism currently (in my view) is that _too many_ countries are engaging in profit-promoting and/or export-promoting policies and austerity, advertised as promoting national prosperity (in the short- or long-term). Partly, they are engaging in these policies "because everyone else is doing it": competitive austerity. This encourages world stagnation, and can encourage further austerity in response. But in the short term, promoting profits _can_ encourage an economic boom. I think one of the reasons why US GDP grew a lot last year and recent quarterly US GDP stats jumped is because wages are stagnating relative to productivity, boosting profits, and encouraging investment. (High profits on real investment have discouraged merely unproductive investment of the sort that Michael Brun points to, such as buying of rare oil-paintings, etc.) The boom has been despite the fact that fiscal and monetary policy have been largely contractionary. It also hasn't abolished the problem of low wages and poor jobs -- or the fundamental problems of the global economy. If investment booms in a generally stagnant economy, it can make things worse by creating unused capacity. Also, an economy that relies on investment spending to pull itself along is more volatile, because investment is flakier than consumption spending. Luxury spending, which is also encouraged by current policies and low-wage conditions, is also flakier than workers' consumption. (Sorry about the high-tech jargon, folks. ;-) We're going to party like it's 1929! ;-) Actually, that joke is too serious to be funny. The creeps who currently run the US congress are awfully reminiscent of those who held sway in the 1920s. And in some ways, Herbert Hoover was more admirable than Bill Clinton... in pen-l solidarity, Jim Devine [EMAIL PROTECTED] Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA 310/338-2948 (daytime, during workweek); FAX: 310/338-1950 "It takes a busload of faith to get by." -- Lou Reed.
