Finding good sense in the Wall Street Journal
8.8.2011 Leave a comment
Economist Ha-Joon Chang rightly informs his readers that the first phase of the post-2008 recovery had a distinct Keynesian flavor, and included activist government and stimulus spending. Most governments eventually abandoned the Keynesian approach, replacing it with one that reflected neoliberal verities. Ha-Joon Chang believes the neoliberal approach will end in failure. His reasons focus on the false premises embedded in that approach. These premises are:
- Governments must reduce their deficits before a recovery can begin.
- Governments must reduce welfare spending
- Governments must reduce welfare spending in order to secure long-term growth
- It is a mistake for governments to tax the rich
- Governments must reduce or eliminate regulation in order to secure long-term growth
Succinctly put, Chang’s analysis reflects an approach to modern economies which treats them as demand-constrained, not supply-constrained. I can’t argue with that.
- Global finance has dysfunction at its heart | Ha-Joon Chang (guardian.co.uk)
- US debt crisis: markets continue to fall despite Obama’s calming words (guardian.co.uk)
- Today’s Huge Lesson: The Stimulus Worked, But Keynesianism Failed (businessinsider.com)
- The zombie of neoliberalism can be beaten – through mass direct action | David Harvie and Keir Milburn (guardian.co.uk)