Edward Harrison summarizes a recent article by Daniel Alpert, Robert Hockett, and Nouriel Roubini, The Way Forward: Moving From the Post-Bubble, Post-Bust Economy to Renewed Growth and Competitiveness. Harrison's summary is short and to the point and definitely worth a read if you don't have time to read the paper.
I think that most MMT economist would agree with the overall approach, which sees the problem as a "balance sheet recession" (Richard Koo) morphing into debt-deflation.
What is particularly promising is that more economists are getting closer to getting MMT. Roubini seems to be moving in this direction.
4 comments:
Tom,
I think Randall Wray has engaged with Roubini's group... this drift towards MMT may be a result of that MMT tie in at Roubini's shop...
From Ed Harrison: "The integration of these high-savings, lower wage economies into the global economy, occurring as it did against the backdrop of dramatic productivity gains rooted in new information technologies and the globalization of corporate supply chains, decisively shifted the balance of global supply and demand. In consequence, the world economy now is beset by excess supplies of labor, capital, and productive capacity relative to global demand."
MMT knows how to fix this.
The demand is really there as far as households/business consumption desires, there is just not enough settlement balances being provided to the non-govt to both enable true desired transactions and satisfy global USD savings desires, we are being over-taxed, the deficit is too low.
I dont necessarily agree per se that supply is somehow 'naturally' outstripping demand globally, there is no 'invisible hand' in all of this. Human policymakers have implemented policies that result in these economic outcomes thru trade and fiscal. The US can increase it's consumption (demand) at anytime with the appropriate fiscal/trade policy adjustments... Resp,
Well Wray is blogging on Roubini's website after all. Good stuff.
Matt, increased productivity through specialization, innovation and scaling naturally result in excess supply and diminished demand unless there is an offsetting factor. In a closed system, and the global economy is a closed system, that institutional factor must be exogenous to the economy, which means government. It really is a no brainer.
I'm just glad Roubini escaped from Jon Stewart's supply closet.
http://tpmlivewire.talkingpointsmemo.com/2010/07/jon-stewart-fox-news-is-wrong-about-unemployment----just-ask-the-economist-tied-up-in-my-closet-vide.php
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