Re: pkt seminar on the economics of the crisis

[Whitalone@xxxxxxx]

Thank you Ric for returning our conversation to the politics of economics.
The WTC and related events has changed the scope and analytical discussion of
what to do next. No doubt, Keynesian types of stimuli are already
forthcoming, via a $40 million investment on security and fighting terrorism,
not to mention the ill-advised tax rebates.

Now to the major problem.  In ordinary times, if such times truly exist, such
a stimulus might prove useful over the long term.  In the real short term
however, the propensity to spend is at a basic level for most Americans. Even
more important, there is no demand for true investment, meaning investment
that creates jobs via capital spending. Perhaps defense industries might
enjoy some outfall from our current situation, but even that is open to
question given the type of "war" that would be needed to truly control
terrorism.

I have in recent months come to appreciate Dr. Davidson's insight into
letting the natural market forces of capitalism via government help being the
driving force behind employment issues rather than some type of elr program.
Yet when faced with the current crisis that America faces, such a program
might be advisable given the mass layoffs that are occurring and will
continue to occur through the rest of this year. There is no doubt that the
"animal spirits" of capitalism have been terrorized by the events of Sept 11.
With true uncertainty controlling the markets, it is only natural to assume
that government will have to take a greater role in the marketplace in
America and elsewhere.

The problem will be on HOW the government perceives this role in the
direction of the market. The free-flow of capital markets has undoubtly
contributed to the terrorists ability to finance their activities. The
collapse of the airline industry and travel is a major shock to the
productivity and economic stimulus of a modern society. These are just two
areas that I am sure will need to be addressed.

If PKT theory is to be relevant, I think it is important that we not exploit
the tragedies of our recent collective past, but offer a solution and
critical thought on how we move forward as a civilized world in this crisis.
We stand at a crucial historical moment in history that will be recorded for
as long as man exists.

Questions

1.  What can any government do to stimulate demand under the current
situation while not evolving into what has been labeled Military Keynesian?

2.  Would capital flow restrictions, something akin to what Dr. Davidson has
outlined, provide more stability and demand, as well as, provide a trace for
terrorists activities?

3. In the short term, would a elr type of program might be useful and
beneficial to our world given the current lack of demand?

There are I am sure more serious questions to address at this moment, but
hell folks of PKT, this is a start!

Best regards

Scott Simpson