More on Secular Stagnation

Tom Palley has an interesting piece on his blog re differing approaches to the theme of secular stagnation, drawing a distinction between Marxist and structural Keynesian perspectives. As he notes, neo liberals such as Summers  have got on the bandwagon without really exploring in depth the roots of the problem.

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  • The Job Guarantee

    “The recipe for restoring prosperity is to create jobs and raise wages at the bottom so that sales to consumers will grow. We do not want to rely on another debt-fueled consumption boom. We cannot rely on investment because even in the unlikely event that confidence fairies could convince firms to invest more, the multiplier impact on aggregate demand would soon be outstripped by the reality that the higher productive capacity effect on aggregate supply would outstrip growth of demand. In any event, private-sector-led expansions invariably run out of steam and often end in a financial crisis due to the build-up of debt.

    To break this cycle we need for government to play a bigger role. Government-led growth actually improves the financial strength of the private sector, and it does not need to rely on confidence fairies as it directly results in more jobs, higher incomes, and more sales.

    There is growing recognition that direct job creation by government should be part of the plan.

    – See more at: http://www.economonitor.com/lrwray/2014/01/16/growing-recognition-of-the-need-for-the-job-guarantee/#sthash.sG378sb4.dpuf

    More background on the Job Guarantee at http://www39.jimdo.com/app/s549fe6ed5b0b8c04/pe3c63833f6f931c6/

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