Bleeding Out the Excess Humors: Government Spending and the Financial Crisis

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1 Response

  1. Mike Zimmer says:

    Agreed, the talk of cutting government spending now is crazy, if meant to be taken seriously. It is part of the kant that takes the place of serious thought these days.

    We need many things. Behind the mortgage crisis is the fundamentally deeper credit crisis to most of Americans. With the average family credit card debt north of $9,000, most people, whether or not they participated in the subprime crisis, need higher incomes to maintain their present life styles. With most two adult families now including two wage earners and with credit capacity maxed out, change has to come by building the economy for the typical American. The size of the overall pie is important but just as important, and critical now, is the issue of the distribution of that pie.

    The far right wing has been very successful in getting Chicago School economics established as the prevailing wisdom. Thus, politicians say, in response to any problem, cut government spending, shrink the government, cut taxes (especially on the top of the economic pyramid). We need to renounce Chicago School economics and go back to Keynsian economics, as it has theoretically been advanced while in exile.

    Then, the idea of an active government role in the economy to do good for the American people, rather than the top 1%, can be reestablished and acted upon.

    I am agnostic about what to do about the present credit crunch and Wall Street collapse, other than to be certain that any plan advanced by the present administration is presumed to be worthless. But, in the longer run, the question of economic policy cannot be about cutting spending, lowering taxes, etc. It has to be about undertaking sensible government programs that will expand the incomes of most Americans in ways that move us positively toward a stronger future.

    The present ideology has about bankrupted us. It is time for a fundamental change. And that starts with rejecting every aspect of the Chicago School ideology.