[alessandrofiaschi]

Joe Stiglitz, the author, is a famous liberal economist and a Nobel Prize Winner. I don't like his way of thinking here expressed, in particular because he mystifies the reasons concerning current US Deficit. But it's interesting the fact that he uses the same arguments of Democratic Party, bumping all at once the progress in National Education realized during the last four years. Nostalgic of Clintonism, just like many other liberal economists, he repeats the old but wrong lesson of John Maynard Keynes, as if the new problems of our complex Economic System could be resolved through the old categories of "Consumption" and "Investment". Keynes, at his time, didn't know the role of Human capital accumulation, the fine tuning of consumption needs, and he missed to consider the powerful role of the supply side politics. Stiglits' article simply shows how liberals have lost the last 30 years of Economic Theory. I'd like to read your opinions.

[alessandrofiaschi]

PING

[Tamberlane]

Thanks very much for the article. Stiglitz is a giant in the field and I think it's unhelpful to dismiss him as a 'liberal' - he is a pretty mainstream economist.

[Ben Ficklin]

I got about half-way thru the first paragraph before encountering the democratic mantra. No thanks.

[dyed_in_the_wool]

That’s why tax cuts which increase CEO take-home pay won't have much of an effect. But tax cuts for the poor, conversely, easily could. Now imagine the worker who takes home $50,000, not $45,000, due to a tax cut. The poor — and middle-class — spend more, and save less, than the rich. That means tax cuts for them stimulate the economy more. And tax cuts for the poor were not the only option Bush ignored.

Erm, if he's so smart, how come he doesn't understand that the poor don't pay taxes?!?!?!?

[snowsislander]

A bit of deficit spending doesn't worry me, but the huge deficits that we have run and the concomitant increases in the national debt are bad in my opinion --- you can see more of my thoughts on our debt situation on my profile.

[pkok]

Got as far as: "Where is the borrowed money going? Under President Bush, it's gone to a 2001 tax cut for the rich..."

...and decided there was no reason to read more.

[Once-Ler]

Most American understand the concept of buying a gun on credit when neighbors make death threats. That factor is completely ignored in this piece. Wars have always come with deficit spending.

The switch in attitude about deficits is easy to understand. For 40 years rats spent tax dollars on their priorities. It was easy for Republicans to call for restraint. They weren't getting the money. Now Republicans are spending on our priorities. The rats don't agree with our priorities. Of course they're going to complain. If Republicans were spending on rat priorities rats would not demand restraint.

[jackbob]

But presumably, the Fed could have intervened more directly, by buying up long term government bonds, rather than just buying Treasury bills, as it customarily does.

What are long term government bonds? Who issues them?

Bush's huge tax cut for the rich, in fact, had little effect. (Interestingly, the converse is also true: The Clinton experience showed that raising taxes on the rich does not have the adverse effects that the critics claimed.)

These assumptions are not known. Clinton reversals, from the Bush Sr attempted reversals, from the supply sided policies of the 80s, were quite mild and gradual. As early as August 1992, there were clear signs of the coming upturn in the economy, that were realized shortly the Clinton election. Eight years later, in October 2000, the coming downturn was already being realized, regardless of who had won that election.

And while he may spend some of the extra $5 million dollars on enhancing his collection if Picasso paintings or European vacations, the fraction of his income that he will spend on goods produced in America is likely to be limited.

This is actually incorrect. While it can be argued from a long versus short term impact view, every extra dollar earned, is almost immediately spent, economically speaking, regardless of where it goes. More money spent on gold hoarded in a buried treasure on a south Pacific island, is more money spent in the economy. Unless those selling the gold stick it in mattress.

Say's law, that supply creates its own demand, still holds true, as does all his other laws. The writers obvious desire to enhance the private economic potential of literature instructures, home economic teachers, and high school band instructors, is not hidden by his use of the word "technology."

[MeekOneGOP]

The Parties' Flip-Flops on Deficit
Spending: Economics or Politics?

Please let me know if you want ON or OFF my General Interest ping list!. . .don't be shy.

[Bahbah]

"Mystical references to 'society' and its programs to 'help' may warm the hearts of the gullible but what it really means is putting more power in the hands of bureaucrats." Thomas Sowell"

Great quote from your home page.