Tuesday, March 1, 2016

Bernie Sanders' Economic Advisor Defends His Recommendations

Bernie Sanders has followed recommendations from an economist who does not share the assumptions of many mainstream economists.  Mainstream liberal economists believe that economic stimulus is necessary and useful during a recession.  However, they do not believe that economic stimulus will increase the productive capacity of an economy over the long run.  It is primarily a method of dealing with blips in the business cycle.  Consequently, they have attacked Sanders' economic proposals which are dependent upon an increase in the capacity of the economy in order to fund the social welfare programs advocated by Sanders.  This is the defense of the economic assumptions employed by the economist who advises Bernie Sanders.  He argues that an economic stimulus can increase the output capacity of the economy by using latent human resources and encouraging investments in productivity. 

I am sympathetic to the idea that government programs can increase the potential output of the economy.  Larry Summers has argued that our unemployed labor resources are becoming less productive over time.  He believes that this is one of the reasons why we may be in a period of secular stagnation.  Most of my concerns about about how we can best employ our slack resources and the formidable political resistance to any efforts to use government programs to increase our economic potential.  Sanders claims that we need a political revolution to achieve his goals.  He is probably correct.  We are now experiencing the consequences of a political revolution from the right that has been underway for decades.  Donald Trump has been capitalizing on some of the effects of that revolution.  His only practical solution to the problems is to put him in charge of the government. He has no workable ideas that will deal with our major problems.  Perhaps he could pave the way to some solutions by destroying the Republican Party which has been the source of many of our problems. 

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