Tuesday, December 30, 2008

Required Reading

I'm still puzzling over Krugman's op-ed from yesterday and have decided I don't understand economics well enough to have an opinion about it. But I welcome the opinions of others.

1 comment:

mlutwak said...

Well he is a modern Keynesian -- believes that deficit spending is not inherently bad, particularly if its being spent productively -- to create potential for the future, whether it is actual infrastructure, education, or just enough jobs so people keep buying things. (Better than Republicrat military Keynesianism, which spends all that money on stuff that goes up in a puff of smoke).

He's concerned that national Keynesianism will fail in the face of state laws which forbid states to do the same. They cannot legally borrow, and so not only will not be able to replace missing tax money, but will turn to DC in desperation, drawing down the money that the feds would have otherwise spent nationally...

A couple of recent Monthly Review articles suggest that the top-heavy financialization of our system might be terminal -- we've gone too far with derivatives & repackaging & so on -- and that we're really ripe for a serious tumble.