>
> Back in the late 1970s I would have agreed with Keaney that the IMF's
> advice to Britain was counterproductive. But the fact that Mitterand
> and Carter both tried a "Keynesian" expansionary approach, and that
> their policies crashed and burned, has to make you think again. In
> retrospect, the IMF's fear--and not just the IMF's fear, the U.S.
> Treasury's fear, and the fear of strong currents of thought both
> outside and inside the British Labour Party--that an aggressive
> policy of expansion would bring much higher inflation with little or
> no reduction in unemployment--seems well founded.
>
During the first three years of the Carter administration, federal
expenditures as fraction of GNP fell from 21.6 to 20.7%, and lagged behind
inflation by about 2.5%. Only in 1980 did budget expenditures grow faster
than inflation, by 3+%. Volcker's high interest rate policies began in 79.
How does this count as expansionary?
More importantly, I thought the whole point of the criticisms of the IMF was
precisely this: that it has treated the financial crises of Mexico and Asia
like they were crises of excess demand and exogenous shock for the developed
world in the 70's. Why would the remedy for one be similar to the other?
I'm also a bit curious. Brad, you've said in other posts that you don't
believe in capital overaccumulation, really. And yet you seem to
retrospectively advocating policies that support that idea. If the
expansionary policies of Carter didn't work, is it your view that Reagan's
(and Thatcher's) policies did work? To what end?
Christian
