RE: [OPE] Interview with Hillel Ticktin, Financial turmoil heralds return to Keynesianism

Date: Thu Apr 24 2008 - 12:45:22 EDT

> I don't really understand what Hillel Ticktin is talking about, because I do not know what exactly he means by "Keynesianism".
Hi Jurriaan:
It's not really that hard to understand. Keynesian policy 
in a 'recessionary' period emphasizes fiscal policy -
in the form of increased government spending and/or
decreased taxation - as a way of stimulating the growth
of consumption, spending, employment, and aggregate
The Bush administration's "tax rebate"  could be seen as a 
tax cut consistent with Keynesian principles - it's certainly
different from the 'supply-side tax cuts' (of the capital gains
tax, corporate taxes, and the tax rate of the highest income 
earners in the federal income tax) that we have 
seen since the early 1980's (the Reagan administration 
and after).  Under the circumstances (which include
worsening expectations on the part of both consumers
and investors), I anticipate that the effect of these
rebates on real GDP - even after the 'multiplier' is 
taken into consideration - will be negligible.
While I don't think that there will be something that
resembles the "New Deal" (whoever is elected President),
an increase in government spending is quite likely, imo.
Most likely it will take the form of increased military 
spending and that will most likely mean further 
increases in the budget deficit.  Rather than the "New
Deal" being the "model", I suspect that increased government
spending in the 1930's in Germany is more likely a model
that will be emulated in the US.  This dynamic suggests 
that - ultimately - the US capitalist class will attempt to
wage another war as a way of stimulating the economy. 
But, of course, there are other possibilities.
Frankly, I'm not sure that there is any segment of the capitalist
class in the US which has a well-developed and thought-out
perspective on how to overcome the crisis. In some ways, I think
the current crisis has caught them by surprise. Maybe they were
victims of their own ideology and believed that the economy 
would continue to be "Bullish".   Perhaps, for this very reason, 
a lot of them seem to be wringing their hands in despair and
anticipating the worst.
In solidarity, Jerry

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