Economist Joe Stiglitz warned back in 2010 that the world risked sliding into a "Great Malaise." This week, he followed up on that grim prediction, saying, "We didn't do what was needed, and we have ended up precisely where I feared we would."
The problems we face now, Stiglitz points out, include "a deficiency of aggregate demand, brought on by a combination of growing inequality and a mindless wave of fiscal austerity."
He says the only cure is an increase in aggregate demand, far-reaching redistribution of income and deep reform of our financial system. The obstacles to this cure, he writes, "are not rooted in economics, but in politics and ideology."
Indeed. Joe Stiglitz is right.…World Post
Future Economists Will Probably Call This Decade the 'Longest Depression'
Brad DeLong
Completely ignores Post Keynesians and MMT economists who were right in advance of the crisis and warning about it and who prescribed addressing the demand issue when the crisis hit. Imputes Hyman Minsky's financial instability theory based on the three stage financial cycle to Martin Wolf.
The disturbing thing is that Brad knows better.
2 comments:
Endless streams of pessimism. We've beat all time records in vehicle sales. Ports are handling record volumes. Fedex couldn't keep up with holiday sales on record volumes. Consumption of education remains near all-time highs. Sales of consumer discretionary items, things like pet supplies, boats, rvs, and tech all doing historically well. Housing of course remain depressed after the giant once-in-a-century bubble.. but that is a special case. Isn't it time to stop talking about endless predictions of demise and depression? Yes, growth could be better. And Yes, China's manipulation of raw material demand last decade has caused mis-allocation of capital that is causing places like Australia, Saudi Arabia, and Brazil to wean themselves off resource investment, but the world is hardly in 'Depression.' Even the mal-designed Europe is recovering from their woes despite having done little to fix their structural design flaws.
Of course it is all covering up the shaky foundation. It is impossible to get anything changed during a boom.
So it's about predicting where the sinkholes will show up first. But it will be further into the future and much further down the track than people expect, because it take a self-stabilising system a long time before it shakes itself apart.
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