G'day also,
Thanks to Rob for the summary of J. Galbraith' propositions.
There are some parts that I sincerely do not understand very well (e.g. what
Rob or James mean with "Keynesian managed globalization" -did such a thing
ever existed?). Anyway, I do not feel obliged to 'interpret' or 'explain" J.
Galbraith, even if he is a fellow of the Levy Institute.
Since Rob asks, I guess I could say something about the tax cut. When we
(Wynne & I) argue that a tax rebate could help postponing a technical
recession, we say it in the framework of a 'three-sectors' macroeconomic
analysis of the US economy, by which there must be a driven force from the
demand side to allow for economic growth. If such a force has been primarily
(particularly since 1992) the private sector, AND the private sector
expenditure pattern is reverting (at last, and too late, according to our
analysis), THEN a reversion of the public sector balance in the opposite
direction would help.
If, in some months or years to come the public sector cuts expenditures at a
faster rate than it relaxes taxation, the overall effect would be
recessionary. In our paper we indeed argue that either exports must grow
faster than imports, or the public sector would need to move to a deficit
level of 6% of GDP! The latter (alone) seemed to us 'implausible'. Less
unlikely, but not highly probable either, would be a sort of worldwide
coordinated reflation.
In any event, J. Galbraith is, IMO, right in stating that if behind a tax
cut there comes a sharper cut in expenditure, it would make the tax cut
futile. What we have used in our model is the CBO published documents up
until beginning June, and we accounted for tax and expenditure changes that
were incorporated then. We did not want to speculate on different budget
proposals, simply because we did not know.
regards,
Alex
-----Original Message-----
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED]]On Behalf Of Rob Schaap
Sent: Thursday, July 26, 2001 7:09 PM
To: [EMAIL PROTECTED]
Subject: [PEN-L:15556] Jamie Galbraith
G'day all,
Yesterday, Australian Treasurer and Prime Minister-in-Waiting Peter Costello
gave a long and (inevitably) simplistic speech on the virtues and
inevitabilities of globalisation (I won't repeat it - you can pretty well
imagine it verbatim). Tonight Jamie Galbraith graced SBS TV's Insight
programme, (he's here on a lecture visit) quietly and clinically put every
'point' Costello had made to the sword. He actually claimed (and it's the
first time an economist-on-the-telly has said it in my hearing) that not
only
inequality but also poverty has been growing world-wide since the era of
Keynesian 'managed globalisation'. He called for reregulation, pointing to
the trend to private monopoly that follows privatisation, and made much of
the
lesson afforded us by the Californian electricity episode. And he came down
heavily against indirect taxation (the salient policy triumph of Howard's
government) on equity grounds.
Interestingly, he came down more heavily still on Bush's tax cuts,
predicting
significant social service/infrastructure shortfalls in light of suddenly
diminishing public revenue projections. What say you, Alex?
Anyway, Jamie apparently sometimes looks in on PEN-L, and I'll take this
opportunity to thank him for sounding like absolutely noone else in Ozzie's
TV-Pundit Land. Good on you, mate!
Cheers,
Rob
