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Keynes once argued that in a recession it might be good policy to pay people to dig a hole and then fill it in again. This was almost certainly hyperbola, but certainly be preferable to just letting people starve.

But the difference between Republicans and Democrats may not be about the level of deficit spending, at least when their own man is in power. Cheney, after all, said that "Reagan proved that deficits don't matter".

The difference between Reaganomics and Bidenomics may be that Biden insists on the spending being directly on public goods like relieving poverty, improving public healthcare, re-building infrastructure and reducing carbon footprints.

Trump, on the other hand, insisted that increased borrowing should be on funding tax cuts for the rich and for highly profitable MNCs, on the grounds that this would increase investment and eventually trickle down to everyone else.

But as Krugman has pointed out, this increased investment never materialised, to the embarrassment of its conservative advocates, which is one of the reasons they have remained strangely quiet about Biden's proposed spending splurge.  

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 29th, 2021 at 06:29:05 PM EST
[ Parent ]
Macron has applied his version of Trumponomics over the same period, with the same striking lack of results...
The axiom "give money to the rich, they will invest it" is a manifest absurdity, they didn't get rich by being stupid. If good investments are available, they will borrow to invest. Otherwise, they might as well spend it (witness the extraordiary boom in luxury goods and services these last few years).

Pushing on a piece of string...

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Thu May 6th, 2021 at 10:51:58 AM EST
[ Parent ]

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