More on the Battle over Prosperity Through Austerity

link here to article

This article is primarily about economic policy governance in the US, but it is also about the battle between conservatives and progressives in response to recession and financial problems in much of the world. Conservatives seem to place a higher value on restoring lost business confidence that they believe to be the result of government intervention in the economy. The also worry more about potential inflation than the reality of high unemployment. Progressives worry most about high unemployment and they do not see signs of near-term inflation when there is no pressure on wage growth. There are economists aligned with politicians on both sides of this battle.

Many progressives believe that there is little empirical evidence to support the claims of conservatives. They see politicians using the recession, and the budget deficits that always occur in recessions, as an excuse to attack labor organizations and social welfare programs that they have never liked. This article is supportive of the progressive position and it finds fault with those economists who make the case for the conservative politicians based upon theory that it not consistent with existing data.

My concern is that we have not learned from history and that we are making mistakes that prolonged the Great Depression. The intensity of the battle between conservatives and progressives is much as it was in the 1930's, however is not the same as it was in the 1930's when the battle was between capitalism and communism. Today the battle is over structural problems in global capitalism that will be with us for a long time. They include environmental issues as well as issues of inequality, demographics, corporate governance and the ability of our political systems to adapt to the changes that will be required.