Exchange between Paul Davidson and Sir Harold Evans regarding the stimulus programs and the deficit
From: Evans, Harold Sent: Mon 7/19/2010 6:25 PM
To: Davidson, Paul
Subject: Reboot America – from Sir Harold Evans
Dear Paul,
Earlier today I was joined by Joseph Stiglitz, Alan Blinder, Robert Reich, Laura Tyson and several others in a call to action urging our leaders to get the economy back on track and the American people back to work. I am sending this to you with hope that you will join us with your support. Full recovery of the economy begins with replacing the lost purchasing power of the millions of unemployed and focusing on deficit reduction only after we create more jobs. If you would like to sign your name along with other leading economists and thought leaders to push Congress to support American families please respond to me here and pass this along to your networks as well.
With all of us together we may yet stave off a 1930’s economic collapse as long as we learn from the lessons that caused it.
Sincerely,
Sir Harold Evans
From: Davidson, Paul
Sent: Mon 7/19/2010 7:58 PM
To: Evans, Harold
Subject: RE: Reboot America – from Sir Harold Evans
I would love to sign your proclamation urging the government to do whatever is necessary to get back to full employment. There is, however, one phrase in your proclamation [the proclamation is at the bottom of this post] that I can not endorse namely “We recognize the necessity of a program to cut the mid- and long-term federal deficit ….” for that “recognition” is playing into the hands of deficit hawks like Pete Peterson who will immediately demand cuts in social security, Medicare, and other entitlements, etc that provide living comfort for our elderly who worker hard all their lives!! Jamie Galbraith has just challenged Paul Krugman about this recognition phrase– and Krugman has had to back off at least a little. You should read the Galbraith-Krugman debate on Krugman’s NY Times blog. I have attached an article I published entitled “Making Dollars and Sense Out of the US Government Debt” which explains why this “recognition” phrase in your proclamation is not only unnecessary but ultimately damaging! Those who do not study history — especially of the Roosevelt Administration vis-à-vis the Hoover Administration on deficits — are bound to repeat history’s errors.!! Paul Paul Davidson
Editor, Journal of Post Keynesian Economics author: THE KEYNES SOLUTION: THE PATH TO GLOBAL ECONOMIC PROSPERITY
http://econ.bus.utk.edu/davidson.html
Fourteen million out of work! Sixteen notable economists and historians have joined in a consensus statement for The Daily Beast demanding urgent action on unemployment and the faltering recovery. Joseph Stiglitz, Alan Blinder, Robert Reich, Richard Parker, Derek Shearer, Laura Tyson, Sir Harold Evans, and other thought leaders have produced a manifesto calling for more government stimulus and tax credits to put America back to work.
GET AMERICA BACK TO WORK
Fourteen million unemployed represents a gigantic waste of human capital, an irrecoverable loss of wealth and spending power, and an affront to the ideals of America. Some 6.8 million have been out of work for 27 weeks or more. Members of Congress went home to celebrate July 4 having failed to extend unemployment benefits.
We recognize the necessity of a program to cut the mid- and long-term federal deficit but the imperative requirement now, and the surest course to balance the budget over time, is to restore a full measure of economic activity. As in the 1930s, the economy is suffering a sharp decline in aggregate demand and loss of business confidence. Long experience shows that monetary policy may not be enough, particularly in deep slumps, as Keynes noted.
The urgent need is for government to replace the lost purchasing power of the unemployed and their families and to employ other tax-cut and spending programs to boost demand. Making deficit reduction the first target, without addressing the chronic underlying deficiency of demand, is exactly the error of the 1930s. It will prolong the great recession, harm the social cohesion of the country, and continue inflicting unnecessary hardship on millions of Americans.
Signatories:
Alan Blinder Alan Blinder was vice chairman of the Federal Reserve and served on Bill Clinton’s Council of Economic Advisers; he’s the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton University.
Daniel Kevles Daniel Kevles is the former faculty chair at California Institute of Technology and serves as a professor of history at Yale University.
David Reynolds David Reynolds is an international history professor and fellow at Christ’s College in Cambridge. His latest book is America, Empire of Liberty: A New History of the United States.
Derek Shearer Derek Shearer served as the ambassador to Finland from 1994-1997. He is now a diplomacy and world affairs professor at Occidental College in Los Angeles.
Jim Hoge Jim Hoge is editor of Foreign Affairs and the former editor of the Chicago Sun-Times, which won six Pulitzer Prizes under his tutelage. He is co-editor of How Did This Happen? Terrorism and the New War.
John Cassidy A journalist and author of the book How Markets Fail: The Logic of Economic Calamities, John Cassidy has been a staff writer at The New Yorker since 1995, covering economics and business.
Joseph Stiglitz Joseph Stiglitz is the former chief economist of the World Bank, and a recipient of the Nobel Prize and the John Bates Clark Medal; currently, he’s a professor at Columbia University. He is most recently the author of Freefall: America, Free Markets, and the Sinking of the World Economy and The Stiglitz Report: Reforming the International Monetary and Financial Systems in the Wake of the Global Crisis.
Laura Tyson Laura Tyson served as the chair of Council of Economic Advisers and the director of the National Economic Council during the Clinton administration. She is a professor at the Haas School of Business at the University of California, Berkeley.
Lizabeth Cohen Lizabeth Cohen is the Howard Mumford Jones Professor of American Studies in the History Department at Harvard University, and author of Making a New Deal: Industrial Workers in Chicago, 1919-1939.
Harold Evans Sir Harold Evans is a journalist and former editor of The Sunday Times and the Times, who was knighted in 2004 for his services to journalism. His award-winning book, They Made America, chronicled the country’s most important innovators and inventors.
Nancy Folbre Nancy Folbre won a MacArthur Genius Award, is a professor of economics at the University of Massachusetts-Amherst, and recently wrote the book Saving State U: Fixing Public Higher Education.
Richard Parker Richard Parker, a former congressional consultant, is a public policy lecturer and senior fellow at the Shorenstein Center at Harvard’s Kennedy School of Government. He is the author of The Myth of the Middle Class, Mixed Signals: The Future of Global Television News, and John Kenneth Galbraith: His Life, His Politics, His Economics.
Robert Reich A professor of public policy at the University of California at Berkeley, Robert Reich was the 22nd secretary of Labor under President Clinton. He is the author of 12 books, including his most recent Supercapitalism: The Transformation of Business, Democracy, and Everyday Life.
Sean Wilentz Sean Wilentz is the Sidney and Ruth Lapidus Professor in the American Revolutionary Era at Princeton. His book, The Rise of American Democracy: From Jefferson to Lincoln, won the 2006 Bancroft Prize.
Sidney Blumenthal Sidney Blumenthal is a former senior adviser to President Bill Clinton and advised Hillary Clinton during her 2008 presidential campaign. His books include The Clinton Wars and The Permanent Campaign.
Simon Schama The author and host of the BBC documentary A History of Britain, Simon Schama is a historian who teaches at Columbia University.
I think the original note is clear enough. Austerity hawks do not need to be prompted to resist further stimulus, they already object to any such action. Meanwhile breaking ranks amongst supporters of stimulus gives the appearance of disagreement or discord – and perhaps a lack of support for action. I think the damage of the latter outweighs the need to tighten the language of the note.
Peter,
This comment is completely OFF TOPIC. But I was just reading your latest entry in “The Radford Free Press” and because there’s strangely no way to respond to your writings I though I might try it by posting a reply here.
You are right that Keynes General Theory is a difficult read. And the US public has certainly also some reservations to take advice from an English aristocrat ;-) So let me suggest an alternative.
What about Foster/Catchings “Profits”. They’ve written the book years before Keynes and also Kalecki. And the prose is clear, simple and brilliant. I’m always wondering why US economists are completely ignoring their work?
Cheers,
Stephan
Cologne, Germany
Thanks. You can always reach me at pacr@radfordfreepress.com.
I agree with Peter Radford!
Don’t you think it is a bit cynical while having a major crisis which effects millions of real people to deny them intellectual support just because the manifesto does not 100% go along with economic theory (MMT).
This is a fight we can have later and it will be much easier to argue and convince people once they realize that although through stimulus measures the deficit increased substantially the sky was not falling and the bond market was still buying treasuries.
I have to agree with Paul here. These small openings and concessions have been exploited to maximum effect in the neoliberal era. Lines need to be drawn in the sand sometimes and now is one of those times.
Peter Peterson won’t give up. Nor should we.