Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
I disagree. Even when you look at the short term view Keynes had, there are very clear losses in waiting for the market to return to equilibrium. Having an economy operating under potential capacity will result in less output than if it ran at full capacity. It's perfectly straightforward - idle labour will just sit around instead of creating value. This is mainstream, at least if you consider Krugman mainstream.

The thing you refer to as mainstream seems like nothing but Austrian morality play ("we've spent more than we have - now we must face the painful but healthy catharsis").

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Nov 3rd, 2011 at 12:24:20 PM EST
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You know, I remember wandering around the spa town on the German/Austrian border that we stayed near for a week on our honeymoon and being somewhat disturbed by the number of businesses offering things like enemas and colonic irrigation and whatnot.
by Colman (colman at eurotrib.com) on Thu Nov 3rd, 2011 at 12:27:31 PM EST
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Cleanliness is next to godliness. Your body is a temple. Scourge the money-changers, purify the temple gates. Retain within the gold refined by fire.

From a lost essay by Freud on anal Austerianism.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Nov 3rd, 2011 at 12:59:45 PM EST
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Yes, but it the central tradition pretends that this cost only imposes itself during the recession itself, and has no influence on, say, GDP ten years from now (assuming the depression does not last ten years, which theoclassicals are swift to assure us that it will not, based on historical data from back when we were actually doing something about industrial depressions).

Yes, they really do believe this. I'd quote you chapter and verse, but I don't have my textbooks at hand.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Nov 3rd, 2011 at 12:33:42 PM EST
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But those are only short term losses. Once we get to the "long run" growth path, there is no further losses under the mainstream models, no matter how much short term costs were imposed.

Whereas, in the real world, there is no distinct long-run growth path, and we are living inside a permanently smaller opportunity frontier if we pursue austerity policies.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Nov 3rd, 2011 at 02:47:19 PM EST
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