Stiglitz' analysis is both insightful about the past and profoundly wrong about the future.
While pointing out that the Fed got it wrong about what the problem was and is, Stiglitz describes a fix which is based on a stimulus to get us back on the path to (clean) growth. That is not going to work, though the stimulus spending he advocates is certainly necessary and in my opinion desirable. Yes, there must be a shift in the real economy, as Stiglitz advocates, but his is not the shift that we need. More education spending? What are those graduates going to do? Well, some of them will improve production while reducing the use of constrained physical inputs as he recommends. But most of them will face the bleak jobs that today's graduates rightly dread. Reagan saw that threat when he was governor of California. What is it that locks economic policy makers to the vision of getting back to growth as the solution to the jobs crisis? A curtain, not iron but an ideological curtain, keeps growth as the objective. Some, like Stiglitz, would invest in education, roads, technology, clean energy. Others would try to pull off a jump in investment by cutting taxes and regulation to free up the "job creators" to create some jobs. But in the end they are advocating the same fix: Growth, so that in a bigger economy next year, and the next, and the next after that, there will be jobs for all. That hasn't worked, won't work, and cannot work. Stiglitz rightly criticizes the dependence on monetary policy and would substitute enlightened fiscal policy. But neither he nor another "respectable"" economist will mention, let alone advocate, a third economic tool, reducing the work week to create jobs. That reduction will not only create jobs, it will be a solid basis for a national income-redistribution in favor of the workers, as more of production goes to wages and less to profits. That redistribution will, in turn, eventually change the culture itself as growth slows and jobs are plentiful. That is the shift that we need, not simply a large fiscal stimulus, however well directed. Gene Coyle On Dec 27, 2011, at 12:56 PM, Louis Proyect wrote: > Forget monetary policy. Re-examining the cause of the Great > Depression—the revolution in agriculture that threw millions out of > work—the author argues that the U.S. is now facing and must manage a > similar shift in the “real” economy, from industry to service, or risk a > tragic replay of 80 years ago. > > full: http://www.vanityfair.com/politics/2012/01/stiglitz-depression-201201 > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
