Finding good sense in the Wall Street Journal

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:

1. Governments must reduce their deficits before a recovery can begin.
2. Governments must reduce welfare spending
3. Governments must reduce welfare spending in order to secure long-term growth
4. It is a mistake for governments to tax the rich
5. 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.

Related articles

• 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)