Very good article. Just to pick up on the statement that 'While a small economy cannot stimulate its way out of the crisis, even if the public finances were not in tatters, things can be made worse. And more unjust.' I think that a targetted stimulus package could have a significant impact - along with other measures and reforms. However, I would agree that a generalised increase in spending - especially without the necessary complementary measures would be wasted. The 1977-1979 Keynesian trial by FF generated a lot of problems. And it was paid in part by PAYEE taxpayers. Ironically, when FG and LP were in power 1982-1987 FF presented itself as an alternative to the what they styled 'monetarist' policies of FG-LP Coalition. McSharry and Haughey quickly clarified the nature of their response in 1987-89! The health services still bear the marks.Rather than just stem the tide of unemployment, inequality and further deflation it seems to me that progressive economic thinking needs to chart out a credible and coherent economic policy based on renewal, fairness and new ideas to create wealth.
An article in the New Republic by a Keynesian convert is worth a read here: http://www.tnr.com/article/how-i-became-keynesian#"Baffled by the profession's disarray, I decided I had better read The General Theory. Having done so, I have concluded that, despite its antiquity, it is the best guide we have to the crisis. And I am not alone in this judgment."
Could there be at play a pre-programmed collective consciousness' recollection of trying to kickstart an economy in the 70's, pouring money down the tube; and then heading into another decade of indebted monetary misery.Maybe the key difference here - and the reason that these fears can be negated is that we now have a high functioning economy. We have the companies, the structures, the employees, some of the infrastructure, recovering export markets, a public that can recall positive consumer attitudes and though a diminshing wage intake (and large amounts of personal debt) - still a significant amount of money is in circulation.In the 70's there, of course, was an oil crisis a key element of the actual economy disrupted in a largely manufacturing based Irish economy. While there may well be serious resource difficulties in the coming decades (and accompanying recessions), this isn't one of those occasions - there is a readjustment to be made, fiscally and psychologically and certainly the housing boom would have repurcussions and the banking crisis needs time to right itself and all of this offers a crisis/opportunity for social change. Having attended the TASC conference at the weekend and hearing a number of economic arguements as to the negative impacts of deflationary economics I feel that it is imperative that the cut campaign is defeated and the message of keyensian governmental intevention is put forward and that just as much as we should have regulated in responsibility during the boom we should regulate in some opportunity at this juncture.
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