Friday, June 15, 2012

The Schizophrenic Keynesian

From Robert Reich:
The major reason this recovery has been so anemic is not ...as some liberals contend, because the Obama administration hasn’t spent enough on a temporary Keynesian stimulus. The answer is in front of our faces. It’s because American consumers, whose spending is 70 percent of economic activity, don’t have the dough to buy enough to boost the economy
Wait, wait, wait. The whole theory behind the stimulus package--any stimulus package--is to put money in the hands of consumers.

Yes, Reich's article is about long term growth (he credit our long run problems with inequality). Stimulus is about short term growth; it's not like he's saying there's nothing we can do in the short term.
What to do? There’s no simple answer in the short term except to hope we stay in first gear and don’t slide backwards.
Okay, Okay. Maybe Reich isn't a Keynesian. It's not like he advocated for the stimulus back in 2011, only criticizing it for its meager size.
The economy is in crisis. People are hurting. So government must act, and act quickly. It’s irresponsible at a time like this to suggest that government should simply close down.

But a jeer because the jobs plan he presented isn’t nearly large enough or bold enough to make a major dent in unemployment, or to restart the economy.
I have no idea what Keynesians believe anymore.