The World seems to be turning slowly this morning, and the economic arguments are flying over my head; I tend to be a bit lazier around Christmas (yes, that is possible). I will first go on record therefore, and state that I don’t believe this article from Alan Blinder. I find that the greatest reason for the lack of Stimulus expenditure comes from lack of actionable potentials of growth.; that means very low chance of secondary generation of economic activity. I feel sure that Professor Blinder has a very lucid answer to that one, but I have yet to hear it. One of the elements acting against Stimulus comes from the still very high rates of Interest applied to pre-and early-Recession paper. Banks insisted on being Saved, but show little desire to help any of the rest of the economy to like success. Old businessmen from my era used to say that Profitability only truly came after you burned the mortgage on the place, but Banking today has tendency to make that style of business impossible; I just wonder if they managed to alter the principles of real Profitability as well.
Paul Krugman tries to define the context of Paul Samuelson, though I wonder if the later Paul would have been so categorical about his contribution. Samuelson always thought of the economy as a Chinese puzzle, where One could not consider the first Move without contemplation of successive Moves, else the crust of the problem could not be penetrated. The good elder knew that you had to understand the impact and the direction of impact to define the participation of any economic force. Paul Samuelson always had a schematic within his mind which many of Us could not see, and so the man was himself like unto a Chinese puzzle. Mr. Krugman does a creditable effort to explain the man’s success, but still lacks the total essence of Paul Samuelson.
I would first like to state that I feel that Greg Mankiw is flat wrong; an extreme claim considering how much Greg makes selling economics textbooks, versus my wondering if I should file for bankruptcy or not! Still, We must look to the Technicals. Business will not expend capital, until and if Consumption does increase. Business capital sits in bank accounts where they draw little Interest, awaiting the great opportunity for which no one is planning. Tax revenues, especially high tax revenues, find highly efficient Consumers; Politicians like deficit spending as they get to expend without any Cost to themselves–they neither have to anger by taxation, or find resolve to repay the expenditures; thinking they will have retired by the time of repayment. I favor elimination of the Bush Tax Cuts, imposition of a rigid program of debt repayment, and insistence of Business search for new Profitability by taxing their current level of affluence. It is indeed a radical program, but like I personally care–I am worse than a Politician! lgl