Okay, so Krugman explains where the spectacular GDP growth mainly came from:
- final demand excluding the increase in stocks actually grew faster than GDP. - housing grew at a 20 percent rate - spending on consumer durables rose at a 27 percent rate last quarter. - consumers take advantage of low-interest financing, cash from home refinancing and tax rebate checks This is very a similar story to New Zealand and many other developed capitalist countries. No wonder that we are dealing with jobless growth !! But a socialist would need to ask: who is actually doing the spending ? Which social classes are buying houses and durables ? How can you say that "tax breaks" accounted for growth, when we are talking about a consumer boom mainly fueled by loaned money and refinancing ? I haven't done a disaggregate analysis of the US GDP data, and anyway the quarterly figures usually don't provide that anyway. But even without seeing the data, clearly you cannot "borrow or refinance" without having some kind of collateral or asset already, and therefore the people spending must be in a position to spend, i.e. they must have property already, i.e. it must be a propertied class who is doing the spending. The effect of Bush's Keynesian pump priming via tax breaks is thus prima facie not genuine industry growth as shown by a significant expansion of the capital goods sector (Department 1) but rather personal consumer spending by people who have assets already. It looks more like a Kaleckian "electoral business cycle" strategem. In previous mails, I noted two important insights by Karl Marx: (1) GDP should never be confused with the total national income or the total income distribution, since it refers only to net new income generated by "production" (which excludes a portion of net interest receipts by financial institutions, and includes the rental value of owner occupied housing). (2) Net output growth should not be confused with private capital accumulation, since, with the aid of a sophisticated credit system, high physical output per worker in material production, and monetary manipulations, capital accumulation can become semi-autonomous from net output growth. I am not a professional economist, but even just applying these two simple insights, I could elaborate a whopping socialist critique of Government economic policy and suggest basic alternatives which benefit ordinary working folks. J.
