Friday, January 27, 2017

I Know a Keynesian when I Hear One

Note well what Trump says here:

“Sometimes you have to fuel the well in order to really get the economy going.”

I sense huge deficits are on the way, even if Trump makes some politically-motivated cuts here and there to government spending. And just as I predicted here, the way to sell it to the public is by saying that it’s all about rebuilding the military and patriotism.

We all know that the Republicans have a fetish for balanced budgets and deficit hawk hysteria. They cannot return to that loser program now.

As Trump seems to be slyly indicting here, America is about to be driven into huge deficits by tax cuts and massive increases in infrastructure and military spending. Military spending, by the way, has always acted as a type of crafty and covert industrial policy in the United States, and part of the way in which the government funds scientific and technological R&D to some degree.

When an effective protectionist policy and immigration restriction have been implemented, a huge stimulus will do wonders for the US economy and reshoring of manufacturing (the most serious threat to this, incidentally, is if the infrastructure spending is “privatised” in public–private partnerships, which is not a good idea).

Yes, protectionism means higher prices at first. But, in the long run, it means more employment, more industry, more income, falling trade deficits, and rising real wages.

But you can bet all these liberal New Keynesian hacks and (I am afraid) many heterodox Keynesians won’t give President Trump credit, if and when he implements these policies and starts to drive America back to the prosperous shores of rebuilding manufacturing and full employment by Keynesian economics.

A final issue: Trump’s “America First” trade policy will inevitably mean that the Trump administration will push trade deals on other countries and even some of the more odious US corporate vulture-style capitalism, such as opening up, or pushing privatisation, of nationalised industries and the public sector in other nations, with predatory US capitalism.

The answer to this: the rest of the world – particularly the Western world – must learn its own protectionism, guard public sectors, and rebuilt its own gutted manufacturing. The rest of the world needs to grow some balls and learn some economic nationalism of its own.

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  1. Exactly my thoughts, its strange that no one on the left give him credit for this.

  2. Steve Keen has a slightly different take on Trump, although he sees a positive outcome in the long run. Looks like it's a free download as of now:

    Hearing out the clip you shared, I do appreciate that he emphasized the Multi-Trillion dollar black hole the Middle East has become. I don't share your enthusiasm for Military buildup, and actually it's been proven to not be as good for the economy as some suggest. There are even empirical studies done that have tested this hypothesis:

    FInally, what you think you need Nationalism to accomplish, I can accomplish with a broader humanism that puts People first over Tribalism. Putting National Interests first has driven the world to the brink of total Nuclear destruction. Re-thinking our relationships to Nations, Employers and Landowners is long, long overdue. I'd start with the Communalism or "Libertarian Socialism" ideals such as what the Green Party endorsed this last election.

  3. Tulsi Gabbard in being interviewed by Tucker Carlson talks about her initiative to stop US funding of Terrorists in the Middle East. THAT'S true progressivism! People over Profits:

    1. The problem is simple kevin most of the world is not humanist and most of the world dont feel solidarity toward diffferent values and culture as well as economic solidarity toward other people.

      So kevin even thoug humanism is a beautiful idea.

      Humanist utopiah is currently a fairytale.

      Maybe when the world will change then we will talk about that more.

  4. Michael Hudson understands what I'm talking about: His work on the Jubilee and Debt Cancellation policies of the Bronze Age points to a Broader Humanism that puts people over profits:

    You won't see Dr. Hudson writing about the good 'ol days of Nationalism. That's because those days just got us young men killed in some far off overseas war. The key is not "What benefits my Nation," but "What benefits us all?"

    1. Jubilee been made because most of the debts been owned not to private entities but to the government and it was not a humanist tool but a tool to decrease restlessnes of the population, not to mentiom its ended when most of the debt started to be given by private people (rome).

      Its have nothing to do with humanism.

    2. First off, read Hudson's blog post.

      Then take a look at these:

    3. Also, in re-reading my comment, I never said anything about the Jubilee policy itself being "humanism." Please read my posts more carefully before you respond. Thank-you.

  5. Trump doesn't "say" anything, there. The video is unavailable ;-)

  6. "Yes, protectionism means higher prices at first. But, in the long run, it means more employment, more industry, more income, falling trade deficits, and rising real wages".

    That's assuming you can make it work decently. It didn't save Detroit, it hasn't done wonders for France either.

  7. What fascinates me about the whole debate over protectionism is that people seem blissfully unaware just how widely it's been practiced: