tag:blogger.com,1999:blog-6245381193993153721.post3669072577373967870..comments2024-03-28T17:08:15.784-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: The UK hit by Double Dip Recession: The Wages of AusterityLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger32125tag:blogger.com,1999:blog-6245381193993153721.post-18621366911313916802012-05-07T08:09:06.283-07:002012-05-07T08:09:06.283-07:00"Japanese Average GDP"
I talk about &qu..."Japanese Average GDP"<br /><br />I talk about "gdp per capita" not "dgp".<br /><br />http://seekingalpha.com/article/288071-the-myth-of-japan-s-lost-decade<br /><br /><br />"Despite outpacing the US between 1980 and 1990, Japanese GDP has nearly flat-lined since. <b>Most people know that a large part of the problem is demographic</b>. The Japanese working-age population has similarly flat-lined over the same period, and the total population has actually begun to shrink."<br /><br />"<b>From 1980-2009 (as far as this data set goes, unfortunately) Japanese GDP/capita has kept pace with the US</b>. In fact, growth has actually <b>exceeded that of the US</b> over the whole period (US GDP per capita is still higher on an absolute basis though). This indicates that productivity has kept pace with the US even if aggregate GDP has not. Importantly, rising per capita GDP means that standards of living have risen, not fallen, which is the primary reason for economic activity: higher standards of living."<br /><br />http://menghusblog.wordpress.com/2012/05/07/on-the-mythology-of-japans-lost-decades/MHhttps://www.blogger.com/profile/10656881172906444719noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-21710208372596050742012-05-06T09:08:48.931-07:002012-05-06T09:08:48.931-07:00Thanks for your comments.
(1) yes, the ABCT expla...Thanks for your comments.<br /><br />(1) yes, the ABCT explanation of Japan's economic malaise in the 1990s is unconvincing.<br /><br />(2) yes, I have heard of Reich: I've seen a few interviews with him. Not much of his writing, though.<br /><br />RegardsLord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-65593973071925875072012-05-06T02:47:18.840-07:002012-05-06T02:47:18.840-07:00As for GDP:
Japanese Average GDP
Year | GDP
1980...As for GDP:<br /><br />Japanese Average GDP<br /><br /><b>Year | GDP</b><br />1980 2.82%<br />1981 2.93%<br />1982 2.76%<br />1983 1.61%<br />1984 3.12%<br />1985 5.08%<br />1986 2.96%<br />1987 3.79%<br />1988 6.76%<br />1989 5.29%<br />1990 5.20%<br />1991 3.32%<br />1992 0.82%<br />1993 0.17%<br />1994 0.86%<br />1995 1.88%<br />1996 2.64%<br />1997 1.56%<br />1998 -2.05%<br />1999 -0.14%<br />2000 2.86%<br /><br />Average GDP growth rate, 1981–1990: 3.95%<br /><br />Average GDP growth rate, 1991–2000: 1.19%<br /><br />http://wikiposit.org/am?WB.JPN.NY.GDP.MKTP.KD.ZG=101<br /><br /><br />Japan's average GDP growth rate in the 1990s fell to 1.19% from 3.95% in the 1980s: that is a considerable fall.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-5641785666757551452012-05-05T14:13:31.721-07:002012-05-05T14:13:31.721-07:00First off, this blog is just fantastic. I have bee...First off, this blog is just fantastic. I have been reading it for several months now, and it's one of the best I've seen.<br />Meng's link gave me a good insight into the nature of Japan's economic crisis in terms of the ABCT.<br />I can't help but think though of the fact that China, India, Poland, Turkey, and Saudi Arabia are among the strongest economies out there now with faster growing money supplies than the US since the recession, and they're doing fine.<br />Besides, interest rates affect how much you can invest, not what you invest in. Speculation is more of a function of market forces than interest rates.<br />A better explanation is income inequality; the rate of inequality expanded dramatically in Japan during the 1980s. <br />LK, have you heard of Robert Reich? He was former Labor Secretary under President Bill Clinton. THAT man gets it.HiddenBaithttps://www.blogger.com/profile/06901488356749798440noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-45887023635435399682012-05-03T14:20:56.169-07:002012-05-03T14:20:56.169-07:00"expansionary fiscal contraction"? Whil..."expansionary fiscal contraction"? Whilst I thought I had heard all of the possibly stupid things in economics, this proves there is always a greater fool out there.bamboo investmentshttp://www.greenworldbvi.com/alternative-investments-options/bamboo-forestry-timber/bamboo/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-24790094040500253022012-05-03T11:24:15.393-07:002012-05-03T11:24:15.393-07:00This is laughable.
(1) I do not claim that the lo...This is laughable.<br /><br />(1) I do not claim that the lost decade lasted 20 years.<br /><br />(2) in my view it ended about 2002/2003.<br /><br />(3) this is, as the name suggests, about 10 years.<br /><br />(4) in particular, it was the serious recession from 1997-1999 which was a primary characteristic of the lost decade as <br /><br />(1) asset bubble collapse,<br />(2) private sector deleveraging problems throughout the 1990s,<br />(3) the banking problems,<br />(5) and comparatively lower growth <b>in the 1990s.</b>Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-63825173630581915112012-05-03T10:16:47.521-07:002012-05-03T10:16:47.521-07:00I agree with the bubble collapse, not with the so-...I agree with the bubble collapse, not with the so-called lost decade.<br /><br />"If it were true that Japan has seen dramatically slower growth over the last 20 years than have other developed countries, Japan could not still have the same relative position in GDP per capita 20 years later. Judging by the size of the light blue 1987 bars, Japan had about the same relative proportions then as now (or as in 2007 in this case, just before the world financial crisis arrived). So, if Japan has been in a recession the last two decades, then so have Germany and France and other developed countries. In fact, Japan, after all its supposed lack of growth, still ranks above the OECD average."MHhttps://www.blogger.com/profile/10656881172906444719noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-86345692197218384542012-05-02T14:25:04.859-07:002012-05-02T14:25:04.859-07:00What is ironic in many ways is that the UK stayed ...What is ironic in many ways is that the UK stayed out of the Euro specifically to keep control of its own currency, yet is now not taking advantage of that decision at all.farmland as an investmenthttp://www.greenworldbvi.com/alternative-investments-options/agricultural-farmland/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-17109208824536538822012-05-02T10:54:27.317-07:002012-05-02T10:54:27.317-07:00The work of Alberto Alesina, one of the most dange...The work of Alberto Alesina, one of the most dangerous European economist, together with Hans Werner Sinn, has been refuted among others by Roberto Perotti, who by the way WROTE together with Alesina some of his most horrifying papers in the 90s about that stupidity called "expansionary fiscal contraction" (I applaud Perotti's recantation); by the IMF; by Guido Tabellini, another one of that Italian cult of Bocconi, just as Alesina, and many many others. Remember, I'm not quoting a single Keynesian, all these that I mention are all deeply orthodox people. Just not as stupid as Alesina, and as the stupids who quote him.<br />Pablo.PGBhttps://www.blogger.com/profile/00176679709411717528noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-88319299488942639682012-05-02T09:49:25.565-07:002012-05-02T09:49:25.565-07:00It is not a straw man, because nowhere do I assert...It is not a straw man, because nowhere do I assert or imply that Austrians advocate raising taxes in a recession or other situations.<br /><br />The point is that <i>under Keynesian macroeconomic theory</i> raising taxes is contractionary fiscal policy while you cut spending.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-80612901449088751972012-05-02T07:54:22.218-07:002012-05-02T07:54:22.218-07:00"raising taxes IS contractionary fiscal polic..."raising taxes IS contractionary fiscal policy while you cut spending"<br /><br />Straw man ? Austrians do not advocate raising taxes.MHhttps://www.blogger.com/profile/10656881172906444719noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-48506211020621752072012-05-02T07:49:17.822-07:002012-05-02T07:49:17.822-07:00LOL.. so you now don't dispute that the Lost D...LOL.. so you now don't dispute that the Lost Decade was a period of economic problems involving:<br /><br />(1) impact of the asset bubble collapse,<br />(2) the economic and deleveraging problems throughout the 1990s,<br />(3) the banking problems,<br />(4) bad recession from 1997-1999<br />(5) and comparatively lower growth in the 1990s.<br /><br />If so, our debate on this issue is over.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-8725848231677349072012-05-02T07:41:12.394-07:002012-05-02T07:41:12.394-07:00"the Mises article doesn't refute underst..."the Mises article doesn't refute understanding the Lost Decade as economic problems involving (...)"<br /><br />These economic problems stem from expansionary credit.<br /><a href="http://menghusblog.wordpress.com/2012/03/11/empirical-evidence-for-the-austrian-business-cycle-theory/" rel="nofollow">http://menghusblog.wordpress.com/2012/03/11/empirical-evidence-for-the-austrian-business-cycle-theory/</a><br /><a href="http://mises.org/journals/qjae/pdf/qjae5_2_3.pdf" rel="nofollow">http://mises.org/journals/qjae/pdf/qjae5_2_3.pdf</a>MHhttps://www.blogger.com/profile/10656881172906444719noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-73941155449320594062012-05-02T07:31:08.976-07:002012-05-02T07:31:08.976-07:00I am well aware of A. Alesina and S. Ardagna 2010....I am well aware of A. Alesina and S. Ardagna 2010. “Large Changes in Fiscal Policy: Taxes versus Spending”, Tax Policy and the Economy, ed. R. Brown (vol. 24. NBER), thanks. <br /><br />Refutation of Alesina and Ardagna:<br /><br />(1) Bill Mitchell: <br />http://bilbo.economicoutlook.net/blog/?p=10920<br /><br />2) Pablo Hernández de Cos and Enrique Moral-Benito, Endogenous fiscal consolidations:<br /><br />http://www.bde.es/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/11/Fich/dt1102e.pdf<br /><br />(3) Romer, C., "What do we know about the effects of fiscal policy: Separating evidence from ideology?", Hamilton College Speech, November 7, 2011. <br /><br />http://emlab.berkeley.edu/%7Ecromer/Written%20Version%20of%20Effects%20of%20Fiscal%20Policy.pdfLord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-71864591842557243442012-05-02T07:22:49.661-07:002012-05-02T07:22:49.661-07:00And notice how your parroting of the Mises article...And notice how your parroting of the Mises article doesn't refute understanding the Lost Decade as economic problems involving:<br /><br />(1) impact of the asset bubble collapse,<br />(2) the economic and deleveraging problems throughout the 1990s,<br />(3) the banking problems,<br />(4) bad recession from 1997-1999<br />(5) and comparatively lower growth in the 1990s.<br /><br />On (4) especially you don't even bother to refute what was a serious recession, which contributed to the economic malaise in Japan in the 1990s.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-60945726229213891952012-05-02T07:18:27.943-07:002012-05-02T07:18:27.943-07:00Confession of what? LOL...
Keynes's statement ...Confession of what? LOL...<br />Keynes's statement requires:<br /><br />(1) that in fact during depressions and severe recessions public works <i>are most likely</i> to be the right solution to "chronic tendency to a deficiency of effective demand". Hayek believed the same thing:<br /><br />http://socialdemocracy21stcentury.blogspot.com/2011/09/did-hayek-advocate-public-works-in.html<br /><br />(2) Public works "are not capable of sufficiently rapid organisation ... to be the most serviceable instrument for the prevention of the trade cycle". That is why Keynes advocated the socialization of investment: long term public investment even during booms to maintain aggregate demand.<br /><br />http://socialdemocracy21stcentury.blogspot.com.au/2011/08/keynes-and-pyramid-building-what-he.html<br /><br />There is no contradiction with Keynes's other beliefs here or confession or problem with Keynes's comment.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-66521833206599915102012-05-02T07:18:06.419-07:002012-05-02T07:18:06.419-07:00Another paper worth reading.
"What Do We Kno...Another paper worth reading.<br /><br />"What Do We Know and What Are We Doing?", By Alberto Alesina<br /><br />http://mercatus.org/sites/default/files/publication/Fiscal%20Adjustments.%20What%20Do..Corrected%20Table.Alesina.pdf<br /><br />Most recent research finds spending multipliers much lower than 1 even when financed with bond issues (i.e. when deficits increase). These results are consistent with the fact that the recent U.S. spending stimulus does not seem to have worked particularly well.<br /><br />In summary, there are two conclusions that can be drawn from this research. One is that fiscal adjustments can be associated with growth rather than causing or prolonging recessions. The second is that fiscal adjustments on the spending side are more likely to be expansionary than tax increases.<br /><br />A recent paper by Alesina and Ardagna (2010) investigated the empirical evidence of “large” fiscal consolidations on a sample of virtually all OECD countries from roughly 1980 onward.6 They define a period of fiscal adjustment as a year in which the cyclically adjusted primary balance improves by at least 1.5 percent of GDP. A cyclically adjusted definition for the deficit accounts for the fact that deficits go up during recessions and down during booms in response to the so-called automatic fiscal stabilizers. The cyclical adjustment tries to capture changes in the deficit that go above and beyond “business as usual” fluctuations.7 This definition selects 107 fiscal adjustment periods. Of these, 65 last only for one year while the rest are multi-period adjustments. Conversely, the same authors define a fiscal expansion as a year in which the cyclically adjusted deficit over GDP ratio increases by at least 1.5 percent of GDP.<br /><br />In the case of successful fiscal adjustments, about 70 percent of it came from spending cuts, and in the case of expansionary adjustments, almost 60 percent of them came from spending cuts. In the case of unsuccessful and contractionary adjustments, more than 60 percent of the adjustments were on the tax side.<br /><br />(I recommend you read the rest of this article)MHhttps://www.blogger.com/profile/10656881172906444719noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-53132173299404118422012-05-02T07:04:28.350-07:002012-05-02T07:04:28.350-07:00"If it were true that Japan has seen dramatic...<i>"If it were true that Japan has seen dramatically slower growth over the last 20 years than have other developed countries,"</i><br /><br />I don't say it was "dramatically": I said "comparatively lower growth in the 1990s."Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-38861195160490805412012-05-02T06:56:39.927-07:002012-05-02T06:56:39.927-07:00John Maynard Keynes, toward the end of his life, w...John Maynard Keynes, toward the end of his life, wrote :<br />http://thinkmarkets.wordpress.com/2009/01/25/keynes-as-public-works-skeptic/<br /><br />Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle.<br /><br />This statement sounds like a confession to me.MHhttps://www.blogger.com/profile/10656881172906444719noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-44907233055247889282012-05-02T06:56:03.614-07:002012-05-02T06:56:03.614-07:00Another document.
"Fiscal Stimulus to the Re...Another document.<br /><br />"Fiscal Stimulus to the Rescue? Short-Run Benefits and Potential Long-Run Costs of Fiscal Deficits"<br /><br />http://menghusblog.files.wordpress.com/2012/04/fiscal-stimulus-to-the-rescue-short-run-benefits-and-potential-long-run-costs-of-fiscal-deficits.pdf<br /><br />Freedman and others of the International Monetary Fund (IMF) use the IMF’s Global Integrated Monetary and Fiscal Model to compute short-run multipliers of fiscal stimulus measures and long-run crowding-out effects of higher debt.<br />Their work is noteworthy in that their findings relate to the world economy and include estimates for short-run stimulus effects as well as long-run effects when the stimulus leads to an increase in debt that must be financed. The model addresses both fiscal and monetary policy actions and includes a financial accelerator mechanism that accounts for difficulties business firms encounter when seeking additional credit to finance investments. The authors also assume that consumer budget constraints limit flexibility during a downturn.<br /><br />Freedman and others summarize their findings this way:<br /><br />“We find that the multipliers of a two-year fiscal stimulus package range from 1.3 for government investment to 0.2 for general transfers, with targeted transfers closer to the upper end of that range and tax cuts closer to the lower end. In the presence of monetary accommodation and a financial accelerator mechanism multipliers are up to twice as large, as accommodation lowers real interest rates, which in turn has a positive effect on corporate balance sheets and therefore on the external finance premium. As for crowding-out, a permanent 0.5 percentage points increase in the U.S. deficit to GDP ratio leads to a 10 percentage points increase in the U.S. debt to GDP ratio in the long run. Servicing this higher debt raises the U.S. tax burden and world real interest rates in the long run, thereby eventually reducing U.S. output by between 0.3 and 0.6 percent, with the size of the output loss again depending on the distortionary effects of the fiscal instrument.<br />These output losses are larger than the corresponding short-run stimulus effects for the same instruments. But much more importantly, they are also permanent. The real interest rate effect (but not the tax burden effect) affects the rest of the world equally and accounts for output losses of around 0.2 percent.”<br /><br />"The U.S. Experience with Fiscal Stimulus : A Historical and Statistical Analysis of U.S. Fiscal Stimulus Activity, 1953–2011"<br /><br />http://mercatus.org/sites/default/files/publication/US-Experience-Fiscal-Stimulus.pdf<br /><br />Comparing changes in federal spending to economic growth two years later reveals a slightly positive relationship, but again the relationship is statistically indistinguishable from a flat trend line (figure 13). Extending the time horizon out as far as 10 years reveals relationships between government spending and economic growth that are sometimes slightly positive (for 2-, 3-, and 9-year horizons) and sometimes slightly negative (for 1-, 4-, 5-, 6-, 7-, 8-, and 10-year horizons), but always statistically zero.<br />...<br />A counterargument is that what really matters is the relationship between stimulus spending and economic growth during recessions.<br />If we restrict our vision to recessions only (the red dots in figures 11–13), the same story emerges. There is no significant relationship between changes in government spending during recessions and economic growth at any point from one to 10 years later.<br />...<br />One could argue that because of a persistent baseline growth in per capita GDP, changes in federal spending should be compared to changes in per capita GDP growth. That comparison yields the same absence of results as do the previous comparisons. Figures 14 and 15 show the contemporaneous and one-year lagged relationships.MHhttps://www.blogger.com/profile/10656881172906444719noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-16405543028438948292012-05-02T06:47:51.213-07:002012-05-02T06:47:51.213-07:00Lk,
"The UK's austerity consists in cont...Lk, <br />"The UK's austerity consists in contractionary fiscal policy: raising taxes and cutting spending plans."<br /><br />Refuted. Again and again.<br />http://menghusblog.files.wordpress.com/2012/04/general-government-total-outlays-united-kingdom-oecd.png<br />http://menghusblog.files.wordpress.com/2012/04/general-government-financial-balances-united-kingdom-oecd.png<br /><br />"it does nothing to refute my statement"<br /><br />You did not even bother to read the article :<br /><br />"If it were true that Japan has seen dramatically slower growth over the last 20 years than have other developed countries, Japan could not still have the same relative position in GDP per capita 20 years later. Judging by the size of the light blue 1987 bars, Japan had about the same relative proportions then as now (or as in 2007 in this case, just before the world financial crisis arrived). So, if Japan has been in a recession the last two decades, then so have Germany and France and other developed countries. In fact, Japan, after all its supposed lack of growth, still ranks above the OECD average. (see figure 11, once again)"<br /><br />Valérie Ramey recently published a new paper :<br />http://www.nber.org/chapters/c12632.pdf<br />"This paper asks whether increases in government spending stimulate private activity. The first part of the paper studies private spending. Using a variety of identification methods and samples, I find that in most cases private spending falls significantly in response to an increase in government spending. These results imply that the average GDP multiplier lies below unity. In order to determine whether concurrent increases in tax rates dampen the spending multiplier, I use two different methods to adjust for tax effects. Neither method suggests significant effects of current tax rate changes on the spending multiplier. In the second part of the paper, I explore the effects of government spending on labor markets. I find that increases in government spending lower unemployment. Most specifications and samples imply, however, that virtually all of the effect is through an increase in government employment, not private employment. I thus conclude that on balance government spending does not appear to stimulate private activity."<br /><br />Evidence for fiscal consolidations here :<br />http://www.aei.org/papers/economics/fiscal-policy/a-guide-for-deficit-reduction-in-the-united-states-based-on-historical-consolidations-that-worked/<br /><br />"Alesina and Perotti (1996) report that successful consolidations were 64 percent expenditure cuts and 37 percent revenue increases. Unsuccessful consolidations were 34 percent expenditure cuts and 66 percent revenue increases. Alesina and Ardagna (1998) report that successful consolidations were 62 percent expenditure cuts and 38 percent revenue increases. Unsuccessful consolidations were - 79 percent expenditure cuts and 178 percent revenue increases. Alesina and Ardagna (2009) report that successful consolidations were 135 percent expenditure cuts and -35 percent revenue increases. Unsuccessful consolidations were 34 percent expenditure cuts and 66 percent revenue increases. Von Hagen and Strauch (2001) report that successful consolidations were 52 percent expenditure cuts and 48 percent revenue increases. Unsuccessful consolidations were 12 percent expenditure cuts and 88 percent revenue increases. Zaghini (1999) reports that successful consolidations were 77 percent expenditure cuts and 23 percent revenue increases. Unsuccessful consolidations were 2 percent expenditure cuts and 98 percent revenue increases. McDermott and Wescott (1996) found that expenditure based consolidations have a 41 percent chance of success; whereas revenue based consolidations have a 16 percent chance of success."MHhttps://www.blogger.com/profile/10656881172906444719noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-74459072796318792792012-05-01T22:45:46.650-07:002012-05-01T22:45:46.650-07:00"The German stimulus plan, they will say, was...<i>"The German stimulus plan, they will say, was 73% tax cuts, so therefore it was austerity, not stimulus."</i><br /><br />As you say, that shows the most extraordinary ignorance: tax cuts have been, for example, a regular feature of post-WWII American Keynesianism :<br /><br />http://socialdemocracy21stcentury.blogspot.com/2011/01/keynesianism-in-america-in-1940s-and.html<br /><br />MMTers propose some radical tax cuts as well: basically, slashing that evil pay roll tax!Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-17798194822650889512012-05-01T22:40:59.834-07:002012-05-01T22:40:59.834-07:00You have no idea how much trouble explaining this ...You have no idea how much trouble explaining this has caused me.<br /><br />Everytime I point out that a government has followed a stimulus plan that was successful, I am told by someone that it wasn't really a stimulus.<br /><br />The German stimulus plan, they will say, was 73% tax cuts, so therefore it was austerity, not stimulus.<br /><br />I think, "What?!" It seems that the other side has really come to believe that we believe the opposite of everything they believe.<br /><br />They think we are against tax cuts during recession, because they are for it. The truth is that both sides are in favour of tax cuts as part of stimulus.Prateekhttps://www.blogger.com/profile/15287835907015065883noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-82375923084968346162012-05-01T14:24:09.871-07:002012-05-01T14:24:09.871-07:00"It's especially worrying given that Brow...<i>"It's especially worrying given that Brown himself has a fairly strong Keynesian inclination."</i><br /><br />In my opinion, he "converted" to Keynesianism when the crisis hit. Yes, the UK was running deficits before 2008 because of some increased social spending, but I'm not sure how "strong" Keynesian inclination was before 2008.<br /><br />Certainly, Brown faces a lot of responsibility for deregulating the London financial sector:<br /><br /><i>"Gordon Brown institutionalized the new relationship in 1997 by creating the unified Financial Services Authority, which claimed to operate according to ‘principles’ rather than binding rules: one central principle was that the Wall Street banks could regulate themselves. London thus became for New York ... the place where you could do abroad what you could not do back home; in this instance, a location for regulatory arbitrage. "</i><br /><br />http://www.newleftreview.org/?view=2759<br /><br /><i>"The uk’s role in the crisis deserves emphasis, because contrary to conventional wisdom, the dynamics at its heart started there. The Thatcher government set out to attract financial business from New York by advertising London as a place where us firms could escape onerous domestic regulation. The government of Tony Blair and Chancellor Gordon Brown continued the strategy, leading Brown to boast that the uk had ‘not only light but limited regulation’. In response, political momentum grew in the us over the course of the 1990s to repeal the Depression-era Glass–Steagall act, which separated commercial from investment banking. Its repeal in 1999 produced a de facto financial liberalization, by facilitating an unrestrained growth of the unregulated shadow-banking system of hedge funds, private equity funds, mortgage brokers and the like. This shadow system then undertook financial operations which tied in the banks, and it was these that eventually brought the banks’ downfall."</i><br /><br />http://www.newleftreview.org/A2739Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-54797512458608232932012-05-01T11:23:44.588-07:002012-05-01T11:23:44.588-07:00As for your link:
http://mises.org/daily/5170/The...As for your link:<br /><br />http://mises.org/daily/5170/The-Myth-of-Japans-Lost-Decades<br />See figure 11.<br /><br />it does nothing to refute my statement: <br /><br />"This plunged Japan back into recession and sealed its fate in suffering a lost decade that persisted until the early 2000s."<br /><br />(1) I assert that Ryutaro Hashimoto's austerity in 1997 plunged the country back into a bad recession that lasted from June quarter 1997 until the September quarter 1999. That is correct.<br /><br />(2) By lost decade, I and other people do not mean that Japan had 10 years of recession. Any idiot knows that Japan went through cycles of both growth and contraction from 1992-2003. The lost decade refers to the <br /><br />(1) impact of the asset bubble collapse, <br />(2) the economic and deleveraging problems throughout the 1990s, <br />(3) the banking problems, <br />(4) bad recession from 1997-1999<br />(5) and comparatively lower growth in the 1990s.<br /><br />In fact early on, after the early 1990s recession, the Japanese government passed a decent stimulus program in 1996 and got good growth, until Hashimoto's fiscal contraction that took its effect by 1997.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.com