Source: Challenge, Vol. 53, No. 6, November/December 2010
From the Editor:
Should the United States inject more stimulus into the economy through a second round of government spending? We present pieces on this critical subject, all of which question the need for austerity at this moment. The recovery since mid-2009 has not been strong by historical standards–those that followed similarly steep recessions in 1973-75 and 1982 were much more robust. The reasons are not hard to find. The extreme indebtedness of American consumers, the overreaching of the financial community, and the collapsed housing values have made it especially difficult to regenerate consumer and business spending. For more than a year, the unemployment rate has exceeded 9 percent.
In light of these factors, big spending by government, according to Keynesian economists, makes enormous sense. But largely because of major tax cuts, the country entered the recession with large budget deficits. The sharp reduction in tax revenues since then has expanded the deficit even further.
Now, a group of passionate and influential economists, policymakers, and private citizens has arisen to demand, not fiscal stimulus, but the opposite–out of fear of generating future recessions. These deficit hawks are effectively putting a lid on any new stimulus plans. The economist Robert Pollin challenges the deficit hawks in one of the most comprehensive pieces written on the subject and shows a way forward.
– Austerity Is Not a Solution: Why the Deficit Hawks Are Wrong
– When Is Austerity Right?: In Boom, Not Bust
Arjun Jayadev and Mike Konczal
– Absurd Austerity Policies in Europe
Philip Arestis and Theodore Pelagidis
– The Massive Shedding of Jobs in America
Andrew Sum and Joseph McLaughlin
– America and the Crossroads of Capitalist Globalization
– Rising Inequality, Public Policy, and America’s Poor
– How Well Have Americans Been Doing?
Stephen J. Rose and John Schmitt’s
– The Failure of Capitalism