This entire structure is now in ruins. Our social-democratic income distribution has been upending in an appalling manner by the Second Gilded Age. Our government, here in the U.S. at least, has been starved of proper funding for infrastructure of all kinds since the election of Ronald Reagan. Our confidence in our institutions’ ability to manage aggregate demand properly is in shreds–and for the good reason of demonstrated incompetence and large-scale failure. Our political system now has a bias toward austerity and idle potential workers rather than toward expansion and inflation. Our political system now has a bias away from desirable borrow-and-invest. And the equity return premium is back to immediate post-Great Depression levels–and we also have an enormous and costly hypertrophy of the financial sector that is, as best as we can tell, delivering no social value in exchange for its extra size.
We badly need a new framework for thinking about policy-relevant macroeconomics given that our new normal is as different from the late-1970s as that era’s normal was different from the 1920s, and as that era’s normal was different from the 1870s.
But I do not have one to offer.Who does? The problem is not as much economic as it is political and there is no alternative being presented to voters so far. It's possible that Bernie Sanders could, but to say that he is even a dark horse just to get the Democratic nomination, let alone win the election, is an exaggeration.
We as a country (US) know what to do because we did it during the Great Depression and learned from the mistakes, too, like prematurely exiting stimulus.
WCEG — The Equitablog
Needed: New Economic Frameworks for a Disappointing New Normal
Brad DeLong
6 comments:
Well said, Tom.
I would add that we also face serious cultural problems that make economic change difficult. This is most apparent in Greece where over 70% want to stay in the Euro and 50% want to submit to the Troika.
Democracy only works when people are informed and educated. Perhaps democracy also requires a sense of duty to country and society as well? We fall short on all counts.
We are also held back by the oligarch-controlled media, since most voters believe whatever the mainstream media tells them.
Throw in climate change and Cold War 2.0, and it's hard to be optimistic about a way forward. These are times that try men's souls.
There is no enough pain being felt yet for any change to happen.
The Soma comes via a hand held device
@Tom Hickey, an excellent article by a Syriza MP who gets it.
Thanks. Promoted to a post.
Many think that CL would have been appointed finance minister rather than YV. But apparently CL was too radical for the Syriza leadership.
Dan Lynch:We are also held back by the oligarch-controlled media, since most voters believe whatever the mainstream media tells them. Most of those polls come from oligarch/mainstream media too - so many Greeks say they should be taken with a grain of salt. There was one Gallup poll (I think there was another similar international one that showed Greeks 53/32 for drachma over the Euro, the least support for the Euro in the EU.
IMO oligarch-media is losing control thanks to the internet. that's a BIG steep forward.
Young people hardly care about mainstream media, here at least, and I guess is the same in USA or other countries in Europe.
At the same there is hardly any class consciousness or critical thinking, so it's not all wine and roses certainly.
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