> “We need to actively step up our reflections about the longer-term > vision for Europe as we have done in the past at other defining > moments in the history of our union,” Mr. Draghi told members of > the European Parliament in Brussels.
In other words, Europe should wait for the long run, during which (as Keynes pointed out), we are all dead.[*] Further, when unemployment is so high (almost 25% in Spain, for example) increases in microeconomic "efficiency" (i.e., cutting the number of worker-hours hired to produce a given amount of output) is inefficient on the macroeconomic level. It's not just labor but also tangible means of production that are sitting unused, so that society is "forgoing" the production of a large chunk of real GDP. "Rationalization" and raising micro-level efficiency without attacking the problem of aggregate demand mean that this kind of inefficiency increases. (If the amount of output demanded is constant, then cutting worker-hours hired per unit of output means that employment of worker-hours falls.) Worse, it can cause a fall in the macro-level amount of output demanded by reducing consumer demand, making macro-inefficiency even worse. Keynes joked that the solution to the previous Depression was to build pyramids. Even though they were wasteful at the micro-level (except from the point of view of Pharaohs, of course), at least they would help deal with the macro-level inefficiency by increasing aggregate demand (complete with a multiplier effect). This idea was later put into action by the US military-industrial complex, but Keynes himself preferred socially-productive government investment in infrastructure and the like. Raising the micro-level efficiency of European production might help the zone's exports (as would allowing the euro to depreciate), but in a period when demand is constrained world-wide, it would be "stealing" demand from other countries. There are some Marxian criticisms of the purely Keynesian analysis above, but I'll leave them for another time. -- Jim Devine / "An atheist is a man who has no invisible means of support." -- John Buchan [*] I see nothing wrong with quoting someone out of context if it fits with their general point and perspective. It's out-of-context quotes that violate the general drift of a thinker's ideas that are a problem. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
