Re: DeLong On Deficits, Interest Rate

[pdavidso <pdavidso@xxxxxxx>]

>===== Original Message From Robert Vienneau <rvien@xxxxxxxxxxxxxx> =====
>Has anybody been following Brad DeLong's weblog lately?

Why bother with such foolishness?

In many, many posts he
>has objected to the recent Bush tax-cut-on-some-divends policy. DeLong's
>objections
>have been overwhelmingly on the following grounds:
>
>(1) Higher deficits will ultimately raise interest rates. And economic
>growth will be
>slower as a result. It's all a matter of supply and demand, as taught in
>the first weeks
>of a freshman economics class. The laws of supply and demand have theoretical
>exceptions, but there's no particular reason to expect  the bond market to
>be special.
>One cannot really argue otherwise.

What nonsense!  This is only true if the economy is already at full employment
and is a closed economy.
>
>(2) Glenn Hubbard, the head of the Council of Economic Advisors, believes
>this, as
>shown by his textbook. So he is being hypocritical in his public
>statements, where
>he says otherwise.
>
>Paul Krugman has raised these points in his NYT column, too.
>

These are "three b;ind mice"  Remeber the nursery poem.  See how they
---write?

>So much for New Keynesian and Stiglitz's macroeconomics, which I don't know
>much about. I seem to remember some debate here about how open leading-edge
>mainstream macroeconomists are to something approaching Paul Davidson's
>views on uncertainty. Here's a data point.

Of course they are not anywheres near my argument.

 In fact, when Joe Stiglitz was editor of the JOURNAL OF ECONOMIC PERSPECTIVES
he tried to kill my manuscript on probability and uncertainty which was
ultimately published in the JEP -- but only after the paper went through 21
rewrites  (over more than two years)to delete or change things that Joe
disliked or felt threatened  by. [See one footnote in the paper for some
evidence that I managed to sneak through in galley.]

 And then when the JEP developed a symposium on Alternative Macroeconomic
theories" Joe (through his assistent at the JEP] in essence withdrew a
previous invitation to have me write a paper on Post Keynesian Macroeconomics
for this symposium.

>I guess it is good that Krugman criticizes the Bush administration's lies.
>But I
>cannot say I am comfortable with leading "respectable" spokesmen for my side
>putting forward such trash about economics.

You are right on target Robert.

Paul

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 503
Knoxville, Tennessee 37996-0550
phone # (561)369-1951; fax #(561)369-1951;
email pdavidson@xxxxxxx
http://econ.bus.utk.edu/davidsonextra/Davidson.html