David Harvey, doyen of Marxist theorists of neo-liberalism, offers the view that Keynesian reflation can't work in the States:
"One of the three legs of a Keynesian solution, greater empowerment of labor, rising wages and redistribution towards the lower classes is politically impossible in the United States at this point in time. The very charge that some such program amounts to “socialism” sends shivers of terror through the political establishment. Labor is not strong enough (after thirty years of being battered by political forces) and no broad social movement is in sight that will force redistributions towards the working classes."
But, he says, it can work in China - there are lots of infrastructure projects to be funded, implicit political control of the banks and the political space to allow for some redistribution. Which means there will be less Chinese money to invest in the American economy...
The Clintonite pro-liberalisation Keynesians disagree, violently.
So we have a laboratory test of different economic theories before us. Unfortunately, it feels as though we're the test rats in the laboratory
H/T Econospeak
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