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How can you write an article about Japan Syndrome and stagnating economies without mentioning Bernanke, Krugman, or Keynes? Capitalism isn't itself the problem
by skywhopper 12y ago
How can you write an article about Japan Syndrome and stagnating economies without mentioning Bernanke, Krugman, or Keynes?
Capitalism isn't itself the problem. It's the way out of our current doldrums. But there's this idea that government institutions have no way to intervene to kick-start capitalism's more virtuous cycles.
As Keynes first recognized, and as Bernanke and Krugman both clarified in respect to 1990s Japan: when you hit an economic slump driven by lack of demand and your control over interest rates has hit its natural limit (you can't set an interest rate lower than zero... you wouldn't want to risk deflation in any case), the only way out (besides waiting) is to increase demand.
So how do you do that? Well, we have tons of options. Governments can take the opportunity to borrow at essentially zero interest and use the money to build stuff we need and fix stuff that's broken. Build out gigabit Internet to every house in the country; commit to curing diabetes in 20 years; build 200mph+ high speed rail networks between clusters of large cities, and improve airport capacity for longer-distance travel; replace aging water and sewer systems; invest in offshore wind and tidal power sources; build out a national power grid to maximize efficiency; provide research grants to increase battery efficiency x100 by 2025.
All of this will create millions of jobs, in addition to providing the cash to soak up all the industrial overcapacity that's out there. But there are more direct routes as well. Raising the minimum wage would stimulate a huge amount of new consumer spending and debt reduction, while increasing payroll and income tax revenues for the federal government and putting upward pressure on wages across the board, which would lead to additional spending, tax revenues, and growth.
Or if you want to go full Bernanke, just have the central banks print money and drop it out of helicopters. That, or just mail everyone a check. That money'll get spent, and add jobs, and then we can let capitalism take back over from there.
- _yosefk 12y agoSo do you think it worked for Bernanke after he went full Bernanke and the article misses this point? Or do you think it didn't work - if so, why didn't it?