- Paul Krugman once again laments the determination of anti-government fundamentalists to avoid learning the lessons that should have become glaringly obvious over 70 years ago:
In declaring Keynesian economics vindicated I am, of course, at odds with conventional wisdom. In Washington, in particular, the failure of the Obama stimulus package to produce an employment boom is generally seen as having proved that government spending can’t create jobs. But those of us who did the math realized, right from the beginning, that the Recovery and Reinvestment Act of 2009 (more than a third of which, by the way, took the relatively ineffective form of tax cuts) was much too small given the depth of the slump. And we also predicted the resulting political backlash.- Which serves as reason why Mike Moffatt's Keltner list for public policy proposals might be worth a look in evaluating the effect of gratuitous austerity.
So the real test of Keynesian economics hasn’t come from the half-hearted efforts of the U.S. federal government to boost the economy, which were largely offset by cuts at the state and local levels. It has, instead, come from European nations like Greece and Ireland that had to impose savage fiscal austerity as a condition for receiving emergency loans — and have suffered Depression-level economic slumps, with real G.D.P. in both countries down by double digits.
We entered 2011 amid dire warnings about a Greek-style debt crisis that would happen as soon as the Federal Reserve stopped buying bonds, or the rating agencies ended our triple-A status, or the superdupercommittee failed to reach a deal, or something. But the Fed ended its bond-purchase program in June; Standard & Poor’s downgraded America in August; the supercommittee deadlocked in November; and U.S. borrowing costs just kept falling. In fact, at this point, inflation-protected U.S. bonds pay negative interest: investors are willing to pay America to hold their money.
The bottom line is that 2011 was a year in which our political elite obsessed over short-term deficits that aren’t actually a problem and, in the process, made the real problem — a depressed economy and mass unemployment — worse.
- Romeo Dallaire is optimistic that the popular movements that emerged in 2011 are just starting to have their ultimate effect.
- Josh Dorner notes that "progressive" is by far the best-received political label in the U.S. - offering an opportunity to use the spillover effect of U.S. political attitudes to the advantage of the Canadian left for a change.
- Finally, David Berlin views Jack Layton's legacy as including both the building of a winning attitude within the NDP, and the transformation of that mindset into what may be the effective end of Quebec separatist sentiment.