Thomas I. Palley is a well published, but underrated, Post Keynesian economist. He is the author of Post Keynesian Economics: Debt, Distribution, and the Macro Economy (New York, 1996), which is a useful textbook for Post Keynesian economics.
There are two videos below. In the first interview, Thomas Palley talks about the structural problems of neoliberalism: how the stagnation of real wages has been a severe underlying cause of neoliberal bubble economics, where people are driven into private debt. We need a fundamental reform of macroeconomic policy, not merely effective financial regulation (although the latter is, of course, important).
In the second video, Thomas Palley talks about the problems of the Eurozone - the flawed design of the euro system (introduced in 1999), which robs Eurozone countries of their monetary and fiscal indepedence. The Eurozone is a grave threat to social democracy. The role of central banks in the neoliberal Eurozone (where they have become “detached,” as Palley says) is even worse than the old neoliberal idea of central bank “independence.”
I hope I have not reached any absurd conclusions, but given that a public surplus is a private deficit and vice versa, and given that public debts are private savings...
ReplyDeletewould it not follow that any or all kinds of 100% deficit- or bond-funded public works programs, no matter how wasteful, during all times (boom or recession) would reduce the level of private debt or slow its rise?
...thus giving a reason for perpetual government deficits in order to curb the rise of private debt?
...which is justified, because families can't lay off children in order to pay back private debt during hard times?
"would it not follow that any or all kinds of 100% deficit- or bond-funded public works programs, no matter how wasteful, during all times (boom or recession) would reduce the level of private debt or slow its rise?"
ReplyDeleteIt might slow the rise of private debt, but it would have costs that outweigh any such benefits:
(1) in boom times during times of real realative scarcity increased spending is inflationary.
(2) the surge in demand would probably drive your trade deficit (if you have one) too high, causing a balance of payments crisis.