Thursday, November 03, 2011
There has been a bout of fire-flecked muttering on possible ‘Plans B’ for the economy.
Now I do have misgivings about some of the coalition strategy – because I feel there is no magic solution and any strategy has strengths and weaknesses. It would be helpful to recognise the weaknesses and deal with them rather than ignore them. Still less just demonising and insulting those who try to point them out.
Do we need to look again at very basic economic ideas seemingly absent from public discussion?
For example, what happened to the Keynsian concept of the multiplier? I have seen no real discussion of this in our defences of the Coalition strategy. And does the Coalition economic strategy imply the resurrection of the version of Saye’s Law (so-called) that Keynes claimed to have refuted? In other words, is the idea alive again that there is a natural level of employment which will be achieved when the economy balances?
As an Old Keynsian (J.K. Galbraith flavour in my youth) I need to go back to some basic texts and think these through. Anyone else for the journey?