By Jonathan Power
My family is in a bit of a crisis. My earnings are cut by 25%. Writers never did earn a lot and now we have this economic catastrophe. We’ve cut our expenditures severely.
This is what happens to families in financial trouble. Cut. Common sense, eh? But when it comes to our country being in trouble we have to be counter-intuitive. Then a country must spend more. It has to grow faster to produce the wealth that when taxed can pay down the deficit. As the world’s greatest economist, John Maynard Keynes, wrote: “The boom not the slump is the right time for austerity”.
The Germans and the European Union Commission continue to push countries to cut and squeeze. Yet despite the evidence that the patient is not recovering, Chancellor Angela Merkel of Germany seems determined not to allow the Euro-zone members to let up. (The British government is following the same counter-productive policy.)
President Barack Obama has taken a different tack. Keynesian to his finger tips, he has saved the American economy and now growth has returned. Unemployment is falling, housing starts are up and people are spending. He saved the banks from going bust. Also the big auto companies. He won passage of a new health act, “Obamacare”, that will ensure that most of the poor are taken care of.Read More »




