Re: [OPE-L] Teaching Tautologies : a response to David L

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Mar 13 2005 - 16:45:35 EST

David L wrote:

>     Second, OPE folks need to be clear: this is an attempt at
>*immanent critique* of mainstream macroeconomics -- to get under
>their skin, in their own terms, and upset the dogma of policy
>ineffectiveness -- the main conclusion of the free-market hegemony.

What dogma of policy ineffectiveness? Isn't Bush claiming that his
policy of tax cuts has been massively effective in saving the economy
from the recession that the coupling of the NASDAQ crash and the
attacks of 9-11 would have otherwise caused? I would think the
questions presently are the two following:
1) Why has  a policy of budget deficits via tax cuts and military
spending, coupled with loose monetary policy, been so little
effective in raising real wage rates and in reducing unemployment? Is
the answer globalization? Or is the answer in the structure of
government spending? Or both? Or something else?
2) What has allowed Bush to run a stimulative policy with so little
impact on long term interest rates and without hitherto an
uncontrolled crash of the dollar?

Perhaps this dogma of policy ineffectiveness manifests itself in
Bush's unwillingness to run up deficits as large in relationship to
GDP as did Reagan?

But I am not quite sure what the dogmas are at present.

Yours, Rakesh

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