Regarding this article.
To: Charles Lane
Perhaps I'm missing something, but isn't your "compromise" option precisely Krugman's position? I think it's the right idea, but I think that's exactly where Keynesians are. The tough part is figuring out how to get the pro-austerity crowd to that point.
Keynes actually advocated separating the current budget from the capital budget, and it was the current budget that was supposed to be balanced, not necessarily the two together. Most economists agree that you can run perpetual budgets and still maintain a stable debt ratio as long as the deficits aren't too large.
Daniel Kuehn
Doctoral student, Department of Economics
American University
I think you meant "perpetual deficits", not "perpetual budgets"
ReplyDeletePerhaps you might have wanted to point to the part in the CWJMK where Keynes opposed deficit finance and advocated the separation of the current and capital accounts, Daniel Kuehn.
ReplyDeletehttp://www.amazon.com/Collected-Writings-Maynard-Keynes-Volume/dp/0521230748
http://www.amazon.com/review/R3KHZ8K75Q0YZ0/
Also, perhaps you might have wanted to point Mr. Charles Lane to this post from November 2011, where you copied and pasted an Amazon.com review on Democracy in Deficit by the late James Buchanan.
http://factsandotherstubbornthings.blogspot.com/2011/11/more-on-democracy-in-deficit.html
For those interested in going to the original link for that review, please see the link below.
http://www.amazon.com/review/R163XIB3OP7PS3/
It certainly sounds plausible that politicians cannot be trusted to run surpluses in good times, to take away the punch bowl. But recent U. S. history indicates that it is the Republicans who cannot be trusted to do that, while the Democrats can be trusted.
ReplyDelete