Joe Scarborough, a former congressman and currently a co-host for the show Morning Joe on MSNBC, had Paul Krugman on his show the other day (you can view the clip in its entirety here). In the segment, Krugman gave what amounts to a standard Keynesian view of the global economic crisis–spending cuts damage growth, the stimulus package was insufficiently large, debt and deficits should be tackled only once growth has been restored, and so on. For those of us who check in with Krugman on his blog, they amount to the key set of Keynesian insights Krugman chooses to highlight. What is much more interesting is the opinion piece Scarborough wrote afterwards, in which he demonstrates that, like Jon Stewart, he is not an economist.
Tag: Keynesianism
Inequality: Krugman vs. Stiglitz
There’s an interesting debate going on within Keynesianism at the moment about whether or not the present economic malaise in much of the western world can be accredited to the persistent rise in inequality that has transpired over the last thirty years or so. Arguing in favour of the inequality connection is Joseph Stiglitz; arguing against is Paul Krugman. I’d like to examine what both economists have to say on the topic and deduce as best I can my own view on the subject.
Stagflation: What Really Happened in the 70’s
If you argue long enough about economics, you are bound to run into the stagflation argument. The stagflation argument claims that the big state and stimulus caused high inflation, high unemployment, and poor growth during the seventies. Usually this argument is not fully argued by those who believe in it–it is merely asserted, and the rest of us are expected to accept that it is simply the case that the seventies happened that way. Today I’d like to endeavour to illustrate what actually happened in the seventies, what the real causes of stagflation were, and what sort of lessons might be pulled from it.
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Keynesian Utilitarianism
In A Theory of Justice, John Rawls draws a hard distinction between his prioritarian conception of justice and the utilitarian one. We have mentioned prioritarianism in the past, and indeed, this post is a bit of a synthesis of that post with this other one. Prioritarianism is the notion that a just society always tries to improve the welfare of the worst off before anyone else. In other words, the welfare of the poorest is prioritised. In contrast, utilitarianism is about maximising total welfare, regardless of the distribution. These theories seem at odds (indeed, Rawls wrote about utilitarianism as though he were very much at odds with it). Yet, if we adopt a few Keynesian economic principles, I believe the gap can be closed and the two theories shown to lead to more or less synonymous societies, or at least significantly more similar societies than is presently thought.
If You Believe in the Fiscal Cliff…
Lest we forget, the fiscal cliff is still coming–the dismal set of negative economic consequences that come from cutting government spending and raising taxes too fast in the face of a weak economic recovery. While 87% of the general public do not realise that the fiscal cliff is about preventing spending cuts rather than making them, regular readers (and those of you who read the linked pieces) know better. That’s all ground we have covered. However, that there is a particularly interesting implication of belief in the danger of the fiscal cliff that I have yet to discuss, and this I seek to remedy.
Benjamin Studebaker 