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NYT Columnist Wants Keynes on Steroids

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4 Responses

  1. Re: digitising medical records… The British National Health Service has been trying to do this for a number of years. The project is overdue and quite far above budget. Now, this is a disaster in Britain. But, in America, it would be a catastrophe, as there’s a greater suspicion of government spending in the States than across the pond.

  2. A.J. Sutter says:

    There are a number of things I think are fundamentally wrong about the Leonhardt piece, including (“without limitation” seems not too pedantic to add, in this case) almost every sentence he writes about economic growth. So as not to go off on tangents, I’ll simply say thanks for the link.

    Apropos of government spending though, I attended an interesting presentation earlier this week by Richard Koo, a former economist at the NY Fed and now chief economist for Nomura Securities in Tokyo (and an adviser to several Liberal Democratic Party governments here, so not a left-winger by any means). Looking at Japan’s experience in the 1990s, he points out that during the whole “lost decade,” Japanese GDP never declined. He attributes this to government spending. Koo claims that in a “balance sheet recession” such as the present one in the US, it’s up to government to borrow and spend when business and households aren’t doing so. He also favors capital injections to banks (Japan did that as well). Tax cuts and government purchases of bad assets don’t put the money back into the economy, he claims, and are a bad idea.

    Not that Koo’s logic would justify digging holes etc.; but to be fair, some expenditures Leonhardt advocates are a bit more constructive than that, even if his reasoning is awful.

  3. Frank says:

    I did not find the piece as unconvincing as you did. You ask “can only government” invest in EHR, clean fuels, etc.? No, but only government can create the types of incentives that can get private entities to try. And in extreme credit crunches, perhaps private entities won’t try even if there are good incentives.

    I will focus on one perverse consequence of a superficially compelling idea.

    As part of the proposed stimulus, the unemployed (and their families) will be granted categorical Medicaid eligibility. As an advocate of universal coverage, I am happy to see this. But I also realize that there is a shortage of doctors (and especially specialists) willing to see Medicaid patients now. So the real solution to the problem will involve more far-reaching reforms than a simple entitlement.

    As for electronic medical records: other countries are doing better than us with a more dirigiste approach. The key is how to create interoperability while also promoting innovation in the recording, recombination, and analysis of the data. I can think of few worthier places for government to invest research funds–especially if it leads us to try to learn from other countries approaches. Note that even Bill Frist has praised the way our country’s example of socialized medicine–the VA–has used gov’t funds to get EHR going:

    http://www.research.va.gov/news/research_highlights/medical-records-072705.cfm

  4. Susan Chan says:

    Regarding David Leonhardt’s “The Big Fix”. How is it possible to discuss fixing the US economy without discussing its place in the global economy?

    This is now a global crisis. As Obama said (if not yet fully acted on) – a global crisis needs a global solution.

    Keynes would have agreed. But commentators like Leonhardt ignore this. More international political leaders (e.g. Gordon Brown and now even Angela Merkel) have picked up the importance of international cooperation in economic policy (which Markwell’s account shows was crucial to Keynes) than US economists have.

    Maybe this reflects the elimination of genuine understanding of Keynes among US economists since the 1970s?

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