Nathan argued: [deletions] >Wages for younger folks have dropped like a stone, job security has >disappeared, etc. Maybe things would have been worse without the 80s >deficits, but it's quite obvious that more Keynesian deficits would not >have solved the economic problems we face. >Which means that Keynes is dead as a solution, even if the effects of his >mechanisms register on multi-variate models of the economy. They aren't >showing up well in people's lives. I repeat my earlier post about what is a keynesian deficit? the style of deficit has changed over since the OPEC shocks. the fight-inflation first strategy has seen deficits driven a lot by low levels of activity rather than high structural components. deficits by omission rather than commission. i have been appalled reading all this stuff on pen-l about how we should see poverty as something other than soul destroying involuntary states that none of us would ever choose, and in that sense, I really liked Mike M's two emails this morning (OZ time). But for all of that i have to admit to having a real tension with the old line about how expanding structural deficits will help our lives. so to a certain extent i share Nathan's claims. i say that not in the context of band-aid solutions now to offset the vicissitudes of capitalism. i share doeringer's famous line that not once has the government failed to create jobs when it tried. i also recognise that a lot of public spending is wasted. my own bugbear is educational spending. i don't really want to excite all the left wingers on the list who send their kids to private schools. been there done that. but i repeat the point. if you want the government sector activities to be vital, targetted and productive (in the sense of getting the goals achieved) then join the system and do not take private solutions. the fact that as the middle class became larger and achieved higher education standards (through large-scale government education schemes in the 1960s etc) it has also become more selfish, private and anti-collective. trade union membership has fallen around the world, public education participation by the middle income groups has fallen. etc etc. my view on this is that the problem with usual deficit approaches (in the band-aid context) is that the tax base has gone and/or shifted. governments only reflect the people that vote (talking about the sort of countries that have votes and deficits). don't tell me that the fact that the tax base has shrunk is some exogenous force. no way. it is b/c the middle class have pursued private options and pressured govts to let them do this. they should have their choice taxed to hell i reckon. force them back into the public system by making the private system too dear for them. then their middle class energies - the do-gooder energy - might help the public sector schools to be a place where nathan and his gen-X pals (when does gen-X run out? in age?) to see the public allocation system as being relevant. but moreover, we have briefly mentioned this before here. but significant parts of federal and state deficits in OZ and the USA and elsewhere are comprised of "business or corporate welfare" - smokestack chasing of all sorts of types. in OZ out of a forecast budget deficit (94-95) of 11.7 billion, 5.2 billion was this sort of handouts and unemployment was 9.5 per cent of labour force. huge. I have written an article on this if anyone wants to read it. so in other words, the deficits have been wrongly targetted. why do these so-called "robustly profitable" firms want money from the taxpayer? obvious. they can't hack it in the real world. and i am talking about the big multinationals. they are rapacious and will extract profits directly through the margin and then again via tax transfers in their favour. so yes, deficits of this type are the anathema of a left wing view. they are wasted $s. there is little return visible from a lot of this rent. finally, and the real point i wish to make in relation to why Keynes is dead. what the left has to embrace is that the efforts to makes capitalism more humane or make it more stable or whatever, even if they work, are mostly irrelevant for the future. we cannot sustain the growth rates of the past or present (mediocre though the latter be). we are facing much lower growth rates b/c the natural environment cannot carry the material aspirations of the people, not to mention the greed for margin by the capitalists who drive all of this. and so unemployment and poverty are going to increase to accord with environmentally sustainable levels of activity. in that sense, appealing to old-fashioned notions of deficit pump priming can only, at best, be palliative care - for the current generations, definately not the future. and it of-course continues to assert the primacy of man/woman which is a philosophical position i for one cannot ascribe to. the natural world is the primate, we are just a part of it. what we need is fundamental changes. motherhood statement - sure. but where it begins is in each community. the middle class ones too. where it starts is that you take your kid out of private schools and put them back into the public schools and start putting pressure on the authorities. where it starts is that you hang out around the local area and lie in front of tractors and sabotage development sites, and rip all the packaging off things in supermarkets and leave it on the floor, and rip your lawns up and plant food, and win positions on local councils and take over areas and plant trees and all of this. throw your lawn mowers away and have a shed at the end of the street where community tools are kept. and of-course, lower the material dreams of your children. under a world like that, deficit spending would take on a new meaning. the promotion of community collectives. i am off to ride my bike! kind regards bill #### ## William F. Mitchell ####### #### Head of Economics Department ################# University of Newcastle #################### New South Wales, Australia ###################* E-mail: [EMAIL PROTECTED] ################### Phone: +61 49 215065 ##### ## ### +61 49 215027 Fax: +61 49 216919 ## WWW Home Page: http://econ-www.newcastle.edu.au/~bill/billyhp.html