Yes, the clarification Jim makes identifies the kind of austerity I was
thinking about -- falling real wages. Of course that is well underway in the
USA already. It is not welcome now nor as a long term plan. I should not have
said "Dean Baker recommends austerity" but rather "... seems resigned to
austerity." For he doesn't mention income redistribution.
A massive redistribution of income in the USA is necessary right now,
along with or as an alternative to stimulus. It would be useful to mention
that in any comment on the macro economy. And if the US $ falls in value, that
redistribution must be amplified to offset it.
On top of all that, RIO + 20 reminds us, or should remind us, that a separate
redistribution from global north to global south is demanded. To protect
middle and lower income groups as that takes place, add another step to the
domestic redistribution in the USA, to avoid austerity for the middle and lower
income groups.
Gene
On Jun 21, 2012, at 2:48 PM, Jim Devine wrote:
> Doug Henwood wrote:
>> I'd sooner believe that I could be accused of supporting austerity than Dean
>> Baker!
>
> This isn't the standard Angela Merkel sado-Monetarist kind of
> austerity, but Dean does say that
>>> this will require that the dollar fall in value relative to the currencies
>>> of our trading partners, making U.S. products more competitive.<<
>
> The fall in the US$ exchange rate -- especially if large -- means that
> real wages fall as the price of foreign goods rises in terms of US$.
> This is better than the "Greek solution" of "hey, let's cut real wages
> by attacking money wages (and benefits, both private and public)."
> It's more the Icelandic solution.
>
> The problem is that, as Dean says, >> That is a process that will take
> time. With many of trading partners also in severe slumps, we cannot
> expect any major improvement in our trade balance in the immediate
> future.<<
>
> In the current mess, isn't it possible that we'll see competing
> depreciation? If the US depreciates the dollar, that hurts the
> Eurozone's exports, so they depreciate, etc. It looks to me that the
> best venue for expansionary monetary and fiscal policies is
> international.
>
> Calling the World Government!
> --
> Jim Devine / "As far as the laws of mathematics refer to reality, they
> are not certain; and as far as they are certain, they do not refer to
> reality." -- Albert Einstein
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