- Im very happy with this manifesto. I try to influence the opion making in The Netherlands for years already. see my blog: www.pietkeizer.nl. I will discuss this manifesto on my blog, of course
- Money is just bearer contracts for labour. http://allweneedismoney.blogspot.com.br/2012/06/what-is-money.htmlMonetary sovereign nations can create this money/contracts at will, up to the point of full employment, with no negative effects whatsoever. When the money/labour contracts exceed the available pool of labour, inflation starts creeping in, but at the moment we are very far from that – 10-20% ish away, as per the unemployment figures.Dear governments, as per this manifesto, create money and spend them, only good things will happen!
- The false theories about how to fix the economic crises show the politics behind the decisions of policymakers. The economists should awake and not get scared of trying new ideas.
- A great value of this is that it gives us a brief that can be circulated, and that it will help provide a consistently repeated vocabulary used to advocate for effecting changes in policy.
John B. Stubblebine, Ph.D.
- More austerity in a context of slow or even negative growth can not produce more employment and wellbeing; if any, it is exactly the opposite effect.
Alonso de Gortari
- This manifesto could be the basis for a class discussion.
- I great idea!, to star changing the focus of our points of views of economic assumptions
Marco Escobar Valenzuela
- We need a new public discouse on: austerity;recovery; public spending; and the long term drivers of prosperity like skills and innovation.
- This professorial intervention is in the collective interest of humanity and more narrowly, the Economics profession;it is therefore enobling.
The basic starting point is the need to appreciate the fact that theory is to explain reality and must change as the latter changes. What has been on offer in neoclassical economics is a fruitless and expensive attempt to make reality subservient to prejudiced theoretical economic postulates.
- I would merely add to what the authors have said the following: the recent crisis has shown that nominal wages are sticky downwards, and that “internal devaluations” do not work. This has obvious implications for what ECB policy should be, and for the desirability of other countries joining in this experiment.
- It is time to learn from history, both of the 20th century and the 21st century. The “austerity” approach has not worked, has never worked, and–it is logical to conclude–will never work. Its time to face the facts.
- Agree. Public deficits were fuelled by heavy public financing and rescue of private banks. Remedies are killing taxpayers spending, increasing unemployment and reducing budget receipts.
Fernando Jorge Cardoso
- There may well be real supply-side constraints waiting in the wings (most likely increasing cost to access oil), but that won be clear until we get demand back on track, so thats the first objective.
- “History teaches us that no-one has learnt from History” – Hegel
- Does not help that one of the men incharge of setting up policy is not exactly knowledgeable about economic policy. However this manifesto clearly underlines the problems that have resulted in the policies set out.
- My coauthor and I have introductory text (McGraw-Hill-Ryerson) that has been Keynesian throughout its 7 editions.
John E Sayre
- Competitive markets can maximize economic benefits and keep prices aligned with costs of goods and services. Unfettered markets will tend to drive out competition and deliver disproportionate benefits to the market makers. A key role of government in markets is to assure that they remain competitive through proper regulations so that they deliver pricing signals that are in kilter with costs of goods and services. Concentration of pricing power in markets leads to just the kind of boom and bust situation with which we are currently dealing. Ironically, truly free markets require constant oversight to keep them competitive.
- Let wisdom prevail.
- It is indeed crucial to give these arguments a higher profile in the public debate. Its a piece of enlightenment in times of obscure moralist reasoning and growing nationalist reflexes.
- My career has been in IT and programming, but over the last year or so Ive immersed myself in reading about MacroEcon issues. Ive forced myself to plow through cognitive dissonance, switched views on some issues a few times, but ultimately Ive become convinced that the PK and other Keynesians have the most accurate and verifiable views on the economy, and more specifically how to end this recession most swiftly and effectively.
- This is just common sense. We need to listen to those of us with specific experience and intelligence in this area.
James W. Bracke
- If they keep on with this kind of policies, they will lead us toward totalitarism. Extreme right is already rising everywhere…
- I agree that austerity measures alone will not solve the current financial and economic crisis. But the international community needs more responsible public fiscal and monetary policies–especially within the EU–than we could witness until now, beside investments and economic growth.
- The sub-prime credit induced financial crisis was mainly the result of too little public sector control over the activities of financial institutions. To turn the disaster into an opportunity to trim the power of the public sector still further has perhaps been a brilliant stroke of lobbying by persons who do not need the states ordinary public services (or perhaps just ideological path dependence), but it could have tragic consequences for the many, hard-earned rights and entitlements ordinary people have secured to level the playing field during the 20th century.
- Could you tell Mrs. MERCKEL with 7% interests, economic reforms do not work, SPECIALLY WHEN YOUR COMPETITORS ARE PAYING ALMOST ZERO%. What is being saved by lowering wages is spent on higher interests, so improved competitiveness, in this environment is a big lie.
josé joão fonseca
- The debate definitely needs a sound economic foundation. But, the next question is: what is preventing the policymakers from recognizing the widely-agreed economic principles?
- I agree with the broad thrust and the depression concern underscored in the manifesto. However, as usual the devil might be hiding in the details. I for one would have liked to see some discussion on the importance of the composition of demand. Consider the case of Turkey, not an advanced one, but a largish emerging economy which pulled of an impressive growth record amidst a global recession. This is attributable to the surge in internal demand and was facilitated by the ability to finance large current account deficits. During this time the government followed prudent fiscal and monetary policy, and improved tax collection. Wisely it did not follow the stricter austerity proposals of the IMF but did not try to stimulate demand either. The growth was accompanied by a real estate boom and an unprecedented increase in private borrowing. These developments provide the markings of a bubble. This particular combination of internal demand surge and deficit financing strikes me as something which is not sustainable. Returning to the manifesto, I have to ask “building what?”
- Good to see some common sense . Economies would do well to follow it although experience so far suggest it will be hard to shift approach given that austerity is an approach taken by the rich and powerful at the expense of the poor, disadvantaged and powerless
- I agree that the world is acting drunk on credit. Most nations are also terrified of taxes. When will we learn that countries can run without funding and that most funding comes from taxes, from residents, but also from the corporations who seek tax benefits or off-shore their funds to avoid paying their fair share!
Carole Campbell, Ph.D.
- The supply side will not spend while there is no demand. Recovery can only start when the demand side is stimulated, and that means people with jobs and money in their pockets.
- Thank you for making this important statement to out policy makers. Hopefully they will listen and respond with stimulus measures.
- The present policies are all the more puzzling because they represent electoral suicide for the parties pursuing them (my field of research is electoral behaviour).
Professor Paul Whiteley
- To a physicist or engineer Keynesian fiscal policy makes perfect sense. It is called negative feedback – suppresses or mitigates all sorts of instabilities. If we had paid down some of our debt during the Bush years, as Al Gore advocated we would be in less trouble today.
David W. Ross
- It makes no sense to strangle economic recovery with misplaced cost-cutting.
- The current crisis, a significant cause of which was inadequate financial regulation, has been seized upon as an opportunity to push a conservative political agenda.Cuts in government spending are dismantling many public sector institutions that support the most vulnerable (as well as average citizens) while the wealthy are enjoying tax cuts that incentivise work.What makes this all so much worse is the way that politicians are quite simply lying to the public on a day to day basis – and getting away with it.
Agnes Norris Keiller
- Hopefully one day they will diagnose the problems we are facing correctly and address them adequately.
- I have no economic background at all but even I can see the unfortunate pattern we are repeating. Thank you for trying, we have got to get those in power to open their eyes and stop the damage.
- We have to take closer look and analyse the reasons why the drachma devaluations against the dollar at a rate 15% in 1983 and 1985 did not have any positive effects on GDP and why the Greek exit of the euro and return to drachma will not have the same effect now.
- As you so clearly emphasize, the austerity policies currently forced upon our european neighbours cause unnecessary human suffering and confuse the causes of the crisis. They endanger the whole post-war european project of peace and mutual understanding. Please make your voice heard.
- Economists and well-informed politicians know that a balanced budget expansion has an expansionary effect on aggregate demand. If this is achieved through taxes on CO2 and investments in sustainable energy production, public transportation, housing insulation etc., it will help to combat global warming and unemployment in one stroke. That is my recommendation.Richard Murray
- We need more data driven decisions.
James Carneal, Ph.D.
- An investor should hope policy makers will target Net GDP growth and employment and start seeing inflation as a side effect.
- should mention work sharing as a way to keep people employed. There is nothing wrong with more leisure, people may find they like it and it could change long-run growth patterns.
- The longer the depression persists, the lower the growth of productive potential because investment is postponed and cancelled when prospects remain poor. Any policy of reflation (in the form of extra demand needed to reduce unemployment) is an opportunity to shift the growth of productive potential towards a more sustainable and equitable structure. This can be done by emphasising “green” investment, especially employment-intensive investment such as insulation of buildings, and shifting demand towards low-income groups, who tend to have lower savings rates.
However, the underlying problem is one of trust in the banking system and in the money created by the banks. This cannot be restored by demand reflation, but requires the open market valuation of bank assets, such as derivatives and property loans, rather than a protracted period of banks avoiding such valuations. The massive accumulated debt must be written off in some way before the system can return to previous growth rates.
- Historians will look down at our times dismayed by the mediocrity of the present political and ruling class who did nothing to avert the approaching disaster. They will also wonder in amazement how a pervasive and fallacious ideology could have blinded all and cause all this suffering.
- The only problem I see here is that we need reality based responses to much more than just our economic problems. Things like energy, climate, health care and foreign relations are all areas where current policy seems to be driven by delusion and wishful thinking coupled with a willful dismissal of fact and reality.But, I guess its best to fight one battle at a time.
Don Richter M.S.
- I would stress that the maturity profile of UK gilts has a long average life (some 12 years), that the major holders of UK gilts include the Bank of England (it buys through QE rather than sells) and that UK pension funds are heavily weighted in equities and have to retain gilts to reduce risk.The confidence argument of the coalition is weak. Moreover,overseas central banks still regard UK as a safe haven.Yields are very low (near zero in real terms) which makes it most unlikely that a reduction in the present speed of deficit reduction will upset the market for gilts.
- I’m not an economist but I agree wholeheartedly with the analysis. My fear is that it’s very convenient for our government in the UK to recommend austerity as they see it as a way of reducing the public sector, and indeed events have conspired against public sector workers in the UK to make them appear as scapegoats for the problem as we are seen as overpaid and unproductive. The country needs to be constantly reminded that the cause of the problem was unregulated private sector borrowing , not the salaries of hardworking public servants
- Thank you for the manifesto! Sadly, such simple, obvious truths need to be restated in the face of our obtuse policymakers.
Ignacio Gomez Montejo
- I don believe those who favor austerity to foster growth are being honest. What they really want to do is “starve the beast” and thus foster less government. Oh, I wish these issues were publicly debated with people stating their real intentions.
- I agree with the substantial contents of the article. We need to have a new orientation to resolving most of our economic crises.
Usman M Balkore
- From a collective point of view on the economy, money must keep flowing, such as a flow in an (almost) closed-system.Austerity plans create artificial wells preventing it from keeping flowing.Even I, who has no clue when it comes to these subjects, was able to come with this simple analogy which shows that the current decisions are not relevant.
- Thank you for doing this!
- My business used to support me comfortably. Now, I struggle every day to make ends meet. If I and every other small business owner were making more money, wed pay more taxes, buy more stuff, and hire more people. Those people would spend more money, pay more taxes and so forth and so on until, what do you know, any investment the government had made in stimulus would pay off.
- Government spending cuts at the state and local level are resulting in many layoffs for school teachers that negatively impact economic growth now and for their students future.
- Unfortunately solutions have been focused on politics and satisfying the wealthy without any consideration for what has worked and what hasn in the past. Great work and good luck.
- I think that the manifesto is a great idea and everyone who wants to help the unemployed should sign up immediately.
Carlos Castaneda Waack
- I support every line of this manifesto.
- There is no doubt the debt in Spain is private: banks overextending loans and big corporations (building and construction). Budget cuts and austerity lead nowhere
- Puzzling – to say the least – why this appears so difficult for so called leaders to comprehend. It really is nowhere remotely in the vicinity of rocket science. I do think my cocker spaniel could probably get it. Heres hoping the manifesto helps the penny to finally drop!
- We are bereft of political leaders of vision at a time when that lack of acuity risks hurling Europe over the precipice. Plan A could never work and isn working, instead it is part of the problem -Plan B is long overdue.
- We are experiencing a failure of proper government in the UK, part of which is ideologically driven (private sector good, public sector bad) and part is out of ignorance of the economics of enabling and sustaining a recovery in current conditions. I agree entirely with the analysis of Paul Krugman and Richard Layard and hope that, even at this late stage, the government will listen.
- Finaly we begin to have a debate on principles of economic theory based on recent history.
- People are at their best when they struggle and a struggle for a common good is better still.
- This manifesto points clearly what is important and what is not to overcome the deepening of current crisis. I agree with it in 100%
- Something like this may not turn the tide quite yet, but it can certainly change the conversation for the better.
- The solution to the Latin American debt crises taught us taught us that international cooperation and leadership are needed to find the way out of an obscure tunnel. Brady program brought back the region from the lost decade.
- We need public policy based on facts and analysis. Many U.S. leaders, particularly on the extreme right, have put ideology above the public interest. The debt ceiling circus of August 2011 is a striking example. We must organize to stop them.
- Monetary policy across the G10 should be working far more aggressively to counteract the deflationary impact of fiscal contraction.
- Speaking from within perhaps the most crucial of the ailing sectors of the US infrastructure, the field of education (higher education in my case), I can say that I am already seeing destructive results of the panic response outlined in the manifesto. Underfunding of education has of course been endemic in the US since the 1970s, but it is currently reaching a point where I fear that the transmission of skills and knowledges to the younger generations may be fatally compromised. There is no going back from such an outcome, if it transpires. Historical precedents, grim as they are, have not included the failure of maintenance and control of anything so dangerous as nuclear weaponry or a climate in full transformation.
Mary Baine Campbell
- I taught Macro in a local high school for thirty years, as Mr. Krugman has reiterated numerous times this is “Economics 101”.
- Im not an economist, but I do own a business. Im 66 so I grew up in progressive America. Im also a Viet Nam war vet.
- Although I agree entirely, I wish the manifesto had been written so that it were clear to the average reader. It would not by any means to clarify fiscal and monetary policy and especially “structural imbalances”. After reading more than half dozen economics books (including Krugman’s Conscience an articles of Stiglitz) I was still unprepared for structural problems. And beyond terminology, there is too much vagueness, e.g. “private sector borrowing”, which covers a lot of territory.
- I fully agree with your analysis. My only concern relates to a re-starting of traditional growth patterns against a context of climate change and similar. A return to norm may be equivalent to jumping from the frying pan into the fire. Can we have green intervention and green growth please?
- It is important that as many economists as possible sign up to this general statement to make it clear to politicians and policymakers that they do not have our support.
- A solution exists under our noses in the going from strength-to-strength on the local scale of employee ownership (eg John Lewis Partnership) and Co-ops. As Joseph Stiglitz has convincingly argued, it is the near-exponential increase in inequality that has destroyed the broadly prosperous post-war consensus economy. A responsible government should be seeking every possible means of encouraging the former, while restraining the latter.
- Im a rising freshman at Penn and have been raised in the demand-side of economics. Im furious at Republicans who insist on implementing policy detrimental to recovery and Democrats who refuse to unify in support of their own ideals. Only things like this will show those in power what their constituents want.
- Fear and uncertainty is reducing both consumption and investment decisions, which at the individual level is completely rational, but at the macro level is reducing aggregate demand and worsening government finances.
This, in addition to a banking crises, that is sapping confidence in much of Europe, requires concerted and coordinated fiscal policy to stabilise the situation and embolden capitalisms latent entrepreneurial animal spirits to lead us out of this austerity ridden darkeness.
- Excelente . Necesario, imprescindible para ir consolidando las nuevas formulaciones alternativas de una nueva teorìa econòmica .
- I agree in particular with the focus on the banks – they must be forced by law and regulations to anticipate more and to share more of the burden of their potential failures.
Also, the focus on maintaining effective demand in a severe economic crisis is well taken.
- I am unemployed in spite of holding a 2/1 honours degree. Am embarking a masters course on the hope this will reverse my fortunes.You
e so right Paul, there is no reason why youth unemployment should be so high with such an educated workforce. Im fully behind your campaign to change government economic policy which is quite frankly folly.
- Keynesianism works. It worked in US in the 1930s, in Germany in the 1930s and throughout the Golden Age of the West (till the 70s.) It’s high time people gave Keynes a bit more respect.
- Please leaders of the US and Europe, make common sense politically feasible.
- Je ne suis pas un économiste, juste un bibliothécaire, un historien et un wikipédien, et je rejoins les conclusions de ces économistes.
Not an economist, just a librarian, historian, wikipedian, and I agree.
- Os recursos do planeta são finitos e portanto o seu uso tambem deve ter limites e devem ser usados de forma sustentável. Mas, o que se observa por toda a parte é o desperdicio jamis visto em toda a história da humanidade. É preciso colocar em prática o uso sustentável dos recurspos excistentes.
- One of the greatest revisionist con tricks in history is the transfer of deficits off private sector bank balance sheets onto the public sector balance sheet only to be explained away as public sector profligacy! Beyond belief!
- I am an economic historian, who studies the history of capitalism, slavery, and similar issues. All empirical and historical evidence supports this manifesto.
- I hope your appeal will be heard. Signed : a desperate french man !
- DeLong, 1998:
“A world in which the Great Depression had not cast its shadow over post-World War II fiscal policy would be a different world. It might be a world in which many post-World War II macroeconomists called themselves Hayekians rather than Keynesians, discoursed on the “monetary overinvestment,” and argued that deep recessions were a necessary price for the dynamic growth efficiencies of market-led economic development. It might be a world in which many governments responded to depressions by cutting spending and raising tax rates to keep the budget balance and so prevent investors from losing confidence and making the depression worse.
In such a world an outbreak of inflation—like that seen in the 1970s—would have been highly unlikely. In such a world a repeat of the Great Depression would have been somewhat more likely. To the extent that the social and economic costs of the outbreak of inflation in the 1970s were low relative to the probability cost of another episode like the Great Depression, we are no fortunate indeed that the post-World War II fiscal policy has been made in the shadow of the Great Depression.”Title: Fiscal Policy in the Shadow of the Great Depression
Volume: The Defining Moment: The Great Depression and the American Economy in the 20th Century
Retrieved from NBER at: http://www.nber.org/chapters/c6888Heath Nieddu, Information Security Analyst
- Broadly agree with the recommendations listed here, but I have a problem with your explanation of the cause of the crisis. From an Irish perspective – yes, the crisis was caused by reckless lending and borrowing in the private sector. But thats only half the story. Our government balanced its books by stealth – it encouraged the public to borrow recklessly, then taxed that borrowing to fund its own activities. In other word – the government did indeed borrow irresponsibly, but it got a second party – the public – to do its borrowing for it, then set about inflating the earnings of public servants. In the end, the point is moot – demand has fallen off a cliff, and our governments must find a way to take up the slack. But I will say this – the crisis is a global one, requiring a global solution. And if over-extended governments borrow today thinking they can repay tomorrow when groth returns, they may be living in a dream world, because unless a new model of capitalism found to replace the faulty one we have, the much hoped for return to growth we all depend on may not materialise.
- Have we forgotten the lessons of the 1930s?
Don cut government spending when the private sector is cutting.
Don create more obstacles to trade when trade is falling.
- To summarize in a sentence and to paraphrase Einstein “We can not solve problems by thinking like when we created them”
Antonio Garcia Leal
- Now more than ever, rational, dispassionate, (directly) disinterested minds must prevail so as to avert a global credit market train wreck. Mismanaged banking and sovereign debt on a grand scale, threaten to destabilize the entire credit system in the developed world. Tax revenue needs to be both raised and collected to both stimulate demand for goods and services, and to generate technological innovation, infrastructure development, and cheaper, renewable, sustainable energy. These are prerequisite in order to stimulate sustainable GDP growth throughout the developed and developing world, including emerging markets. A manageable level of inflation will preserve asset values, assuage the debt burden, and buoy tax revenue. Lets get to it.
- The manifestos position on a need for increased government stabilization of western economies is sound and reflects a consistent analysis of the failures during the great depression. Why make the same mistakes again because of ideological posturing?
- I am a mathematics professor with a strong interest in economics. I sincerely hope leaders around the world will take a look at this manifesto and the ample empirical evidence supporting it!
- We all have to try to change the rules of economic trade all around the world, therefore international policies must have to change too.
- I fully agree with the contents and objectives of this manifesto.Time as come to put an end to this insanity that is driving the world economy (and our social organization) to the ground.
Vivaldo M. Mendes
- Evidence-based approaches to our ailing economy and our unfolding environmental disasters don get enough air-time in our societal discourse. Entrenched interests and limp political will stand in the way of real solutions that are easily within our grasp. Retooling for a green revolution which quickly abandons the burning of fossil fuels altogether is just the stimulus we need to drive our collective economies forward. Quixotic? Perhaps. Necessary? Absolutely!
- Très bonne analyse, il est temps que nos hommes politiques de tout bord sorte la tête du sable et soient un peu plus à lécoute des vrais spécialistes.
Courage vous êtes sur la bonne voie.
- Our population now has the mind-set that characterized the 1920s. We are such slow learners.
William H. Davis
- I’d have included failure of the regulatory systems,in evaluating the various players, as also a huge factor, but this is a start.
- I sincerely hope that rational analysis will win out over partisan gamesmanship. Good luck tring to get information to the disinformed. They have Fox and Drudge and Talk Radio working the propaganda campaign, and much of the rest of the media clueless or trying to achieve a phony “balance.”
May truth, reason, math, science, and the plain old decency of most people win out!
- I have read the manifesto and agree generally with the premises. With interest rates at todays levels, the government should borrow, invest, and earn a rate of return higher than its borrowing costs, which are again at historic low levels. This seems more Finance 101 than Economics 101 to me; as long as the rate of return exceeds the cost of borrowing, economic value is created.
Mark A. Sherman
- When a recession lasts years, it seems a daunting fictional theme to actually not give macroeconomic theory a chance. The manifesto should include at least 4 or 5 policies towards reducing debt + augmenting demand in the US (with numbers, not just words), as an example to the world.
Pablo García de Paredes
- Economics isn quite a science; at best its an art and at worst a revealed religion. Religious fundamentalists tend to cling more tightly to an article of faith when it doesn line up with reality.Its tragic that a degree of regulation and fiscal responsibility during 2000-2008 would have prevented the bubble from forming. But it did, and here we are. Increased deficit spending isn nice to think about, but what FDR called pump-priming is necessary for money to flow again. Without it we shall continue to drift in the doldrums indefinitely.
Reginald Stocking II
- A rational approach to the problem. Politics have failed us.
- Could an economist, preferably one to whom the NZ government listens, please advise in simple terms, how an austerity programme which increases business risk and therefore unemployment is supposed to overcome a recession. Unemployment increases with the attendant benefit costs on government,income tax drops because people don have jobs, business drops because people don have money to spend, which puts more people out of work and the spiral continues. Or is it all smoke and mirrors aimed more at power and control, than creating jobs and income.
- We need the government to stop picking winners and losers and go back to taxing all forms of income the same. We need to stop government subsidizing of profitable companies like those in the oil and gas industry, the big agriculture companies, and the private health insurance industry, to name a few biggies. We can only afford lower taxes when we have fair taxation and government responsive to people rather than money from powerful I interest groups.
Mark S. Krasnoff
- It was the turn of the century, and I was arguing to anyone who would listen that the economy was in a classic asset bubble and that taxes needed to be raised to improve fiscal positions and improve the long-term funding of the welfare state, and my province preferred to cut everyone a cheque and flatten taxes… now, of course, having starved the beast, they complain the beast is so weak, it can do little for those needing the most help.Never again.
- It is tragic to see this incredible mismanagement at such a crucial period in world history – let us hope the manifesto will be listened to.
- Let’s go back to the left side of Keynes:1) The Insufficiency of the Demand.2) The Repartition; as a valuable way to create an efficient economy and a valuable society.
- I saw the ICT and stock crises coming and I did not buy a house at the end of 2006 because I heard the same things. I have tried to describe the problem on my website (linked below). Basically it boils down to word “in the public” that a lot of money can be made with a certain thing (like ICT, stocks, houses) that everyone starts buying into, raising values, even though there is no real long term demand for those items.http://www.koosswart.nl/Main/Economics.htmlIf everyone would make a lot of money on for example ICT, it would create inflation. There is a limited amount of money in circulation because there is a limited amount of commodities and goods for sale and there is no way that a lot of people can make a lot of money on the same thing. It is impossible.
I hope this helps, I had the web page out anyway as I noticed this every time.
- This makes sense to me; I only wish that prominent members of the Labour Party here in the UK would sign up.
- As a student, as a representative the upcoming generation I speak. To those in power I state:
Stop destroying my future with your orthodoxies on market capitalism. When I vote I for democracy. I do not vote for a federal institution that narrows down politics to the economic integration of the Eurozone in favor of those that have money to invest in ways that it will return in consumer demands the quickest. I am a citizen and i wished to be approached as such. The political debate as such has been an insult to my intellect and to my generation. I fear that my children will get to read history books narrating the story of how the most wealthy and technologically advanced civilization instead of focussing on sustainable solutions for income distribution and production applied ancient economic measures that have proven to not work in order to keep the world order the way it was as much as possible. I want change because thats the choice we have now. Change or lose everything we have. Thank you!
- All that I would ask is that we make policies based on evidence and not simply to achieve our political ends.
- As a German lecturer in Economics and a professional economist for an industry association and a convinced European citizen I strongly support this manifesto for Economic Sense and declare my opposition to the disastrous policies of austerity in times of crises, mass unemployment and public underinvestment.
Kai van de Loo
- Because of misattribution of origins of the Asian financial crisis, the IMF also made mistake by imposing excessive austerity measures as conditions to aid. the IMF today should be more proactive and reveal what economic policy responses should be to kill the crisis especialy in the EU
- Just as the gold standard was the fetish that brought the European economies to disaster between the wars; budget and debt fetishists risk the same for own age. There Is An Alternative.
- I agree with every detail of this manifesto.
- The economic system needs more stabilizing feedbacks – thats Systems Analysis 101 – and only governments can provide them. It is really hard to understand why so many politicians and business leaders find it so difficult to grasp the obvious. Would that Keynes and Rooseveldt were still alive!
- Thank you for relentlessly trying to get the message out.
- Fully agree.In fact, you may be understating the problem. Austerity may not only be socially very expensive – it probably will not work at all in likely circumstances, or be counter-productive. Happy to expand!
- I agree with the manifesto.
Flavio M. da Silva
- Totally agree with the board. Greece, the most suffering EU country, has given the proof to the whole world that austerity measures lead to nothing but harder contraction of economy from year to year and worsening socio-economic situation as well. What really surprises is incomprehensible stubbornness of key European Union country leaders to follow austerity, their genetic fear of inflation and calmness to upcoming total unemployment across continents.
- Brilliant initiative, could it need an addendum on (Euro-) political newspeek turning econ101 upside down by redefining the latter concepts? (ex: fiscal integration = enforcing budget controls)
Antonius van Oosten
- Agree with the broad thrust. However it is obvious that the demand/supply causal argument doesn factor in globalisation in two ways : 1. Discounts supply of goods from Asia where arguably unemployment is low and the Chinese economy is stretched even at a GDP growth rate of 6-8%. Relative to the time period of 1992 – 2008 Supply is being constrained. Just look at the massive amount of resources being imported to China from Australia, Brazil etc. in order to sustain this supply. This is not to mention the gerry built industrial machinary pooring toxic fumes out whilst trying to keep up. The boom times of this earlier period relied on cheap and sustainable supply of goods imported from China which is no longer happening.
2. Discounts the fact that the boom of the earlier period of 1992-2008 required huge investment of Chinese surplus dollars into U.S. and Europe. The Chinese are wary of these investment avenues and are now seeking alternative investments away from Europe and U.S.What Europe and the U.S. both need is massive governement stimulus not in sectors supplying their domestic economies, but in the sectors producing exports. Middle Class welfare in both countries needs to be drastically slashed and export industries heavily promoted in order to restore the balance of trade. The “service economy” is dead. Thats right corporations in the Western world have accumulated more “dead wood” than at any time in the last 100 years. The best paid people in many U.S Corporations contribute little or nothing to exports and their jobs exist solely on the basis of government bailouts and lax regulation of markets across all sectors. Yes, real competition is dead. People are being rewarreded for bing inefficient and non-competetive. All this needs to change and fast. The people in the U.S congress Im afraid need to vote themselves and may of their constituents out of their current jobs. Thats right vote in stimulus measures for export industries and vote out middle class welfare.
- Thanks, I am glad to hear the argument made by so many of the working and unpaid working public are shared by economists.Lets make it count.
- I could not agree more with the basic message in the Manifesto. Too many countries are shooting themselves in the foot.
Nonetheless, we should recognize that some countries (certainly not the US) have reached or are near their limits on borrowing–and that almost all countries need a long-run plan to return to sustainable deficits. Also, I do not agree that central banks can always fund deficits with “the bond market unaffected.”
Alan S. Blinder
- An excellent initiative. One may disagree about the detail, but the overall thrust is 100% right, absent a non-Capitalist alternative.
- This cannot be happening worldwide by accident. There has to be a steering force.
- New Keynesians are accurate. Neo-Classicals, Monetarists, and Austrians are obstructionists to recovery.
- Simply, in 2008, when retirement plans dropped 50% in value and the housing bubble burst, people saw that what was adequate savings and security was not. The new perspective highlighted the need to increase private savings, and plan on longer working lifetime. This squeezes the economy and the younger workforce. Add the response of a lower public safety net, in both support for future retirees and health care reduces risk taking for those who would want to “go out on thier own.” This does not serve a progressive forward thinking society.
Eugene R Oberst
- I have taught Intro to Macro at Cornell for quite a few years now and tie my course quite closely to news reports on the economy and current policies. It is striking that a semester of macro based on a mostly Keynesian text (I use Case and Fair) gives students a better understanding of what is going on in the economy than most politicians or TV pundits seem to have. It is important to give them a good vision of how the economy works in the intro course because they are going to get the New Classical version of “reality” in the upper level courses that follow. It is hard to fight people whose intellectual capital relies on continuing to believe the fairy tales we all saw in grad school but I have one major advantage: the data are on my side.
- A read as essential as Happiness – Lessons from a new science (Layard 2005). Another piece of common sense in a world of confusion, denial and imposed austerity.
- I sincerely hope, now that the FED (and partly even ECB) has given such strong response and support, that the people responsible for the fiscal state of the world take the baton and deliver what the whole globe needs. Confidence. Clarity. Sanity.
- I have been writing about this for several years in my columns. Thank you for presenting this forum.
- I am a US citizen living and working in India as a hospital administrator. I came to India as even the US healthcare industry is weak in terms of demand for people with my skills (two Masters degrees and a track record of positions with increasing responsibility). I would like to come home if the US economy ever started producing competitive jobs that would be appropriate for someone with my talents.
- I am an economics editor in a newspaper myself and I think that we need this kind of new thinking and we need it badly!
- Keep in mind that the problem we have is also the direct result of the concentration of wealth in the hands of a few. Capitalism works best when all levels of society have access to money.
Ronnie L Goodson
- Very clear exposure of politics and economics
- All those who believe, as I do, that policy-makers should look to the evidence base in managing the economy, and that this principle applies as clearly at the macro-level as it does when designing micro-level interventions, should endorse this manifesto. It summarises, in clear, non-partisan language, what the evidence implies, on the causes of and solutions for the current economic and employment crisis.
- I am not an economist but have studied all sides carefully and agree with the Manifesto.
- Important and obviously correct. I do consider it generous to proceed on the assumption that our economic decision makers are mistaken in their choice of medicine. I appreiciate that the manifesto covers a wide breadth of nations, but in the UK especially the choice of austerity sits nicely with our incumbants predeliction for demonising the poor and slashing public spending.
- I strongly support this message and say “bravo” to those who have authored it.
David M. Brown
- Remember, money is just paper. It is all about the the incentive in people. If people drive themselves forward, work a little bit harder, try different ideas, pick themself up if they fail -that produces growth. Spending is a way to start this upward spiral.
- Maybe European economists could do a similar manifesto with a focus on the euro crisis. There might be a more urgent need for that.
- Deficits should be paying for infrastructure (investment in the future)while tax revenue should be paying the bills.
David W Truslow
- We need to get across the message that the era of lightly regulated uber-liquid financial markets, low consumer goods inflation combined with real estate price inflation, and heavy “financialisation” of mainstream economics is over and that historically this state of affairs was a very short, unsustainable blip.
- We should not let the economic nonsense and evidence-free policy exhortations spouted by our political masters continue to go unchallenged.
Peter J. Hammond
- In 2 years at Bocconi University I have never heard the name Keynes in any of the economics courses I have attended. Shame on them.
- Clear and uncluttered with technical language – this manifesto should be the frame through which all my colleagues in journalism view the crisis. May I add one point: making more profits with fewer workers has been the private sectors approach to business for decades. A few words on the social responsibility of the private sector in maintaining employment even in downturns should be included in an appendix to this otherwise excellent statement.
- It would be such a no-brainer if not for the people with closed-minds.
Peter H. Santschi
- Keynes brilliance was in demonstrating that macro-economics can be counter intuitive. Surely poltical leaders are intelligent enough grasp it – but they need to do so soon!
- I fully agree with this demand-side demonstration against the so-called mainstream supply-side receipe.
- We the people need to stand together for financial justice.
- This manifesto is a powerful wake-up call for three sets of people: IMF senior managers who despite their own researchers evidence insist on deep austerity now in return for puny (and expensive) short-term funding; U.S. Republicans who are both bent on destroying the Obama presidency and on shrinking further an already low U.S. public sector; and some European politicians from countries that managed wisely their economies in the last decade (but with gradual phase-in of fiscal and structural reforms) and now demand from the others the same discipline and structural reforms, only here and now instead of phased-in over 3-5 years. Germany, Finland, and the like must relax their intransigence on the timing of the necessary fiscal consolidation for profligate countries and must help concretely other countries that have adopted and are implementing tough fiscal (including primary balances) and structural reforms but that nonetheless are pushed by markets towards unsustainable levels for refinancing their outstanding debt.
- Brad DeLong, Krugman, Simon Johnson, James Galbraith,Joseph Stiglitz…Martin Wolf why I sign is due to informed citizen knowing good policy.
- Well as the only economist that ever really made sense to me was Keynes, I have to from a very humble position agree with Krugman. However, as I run a very small business I realised that there was going to be a lack of demand in March last year with the crisis in Japan. Unfortunately I have been proved right. So from the street….
- Einstein defined insanity as doing the same thing over and over again and expecting different results.
Since the Reagan administration we have been following the same policies of “trickle down” economics, deregulation, and blaming the poor for their being poor with devastating results to our country and the world.
During the post-WWII period till Nixon we had much higher taxes, government investment in our country, and worked to end racism and poverty. Since Reagan we have proven that our current policies not only do not work but they exacerbate the pain for the vast majority of us. It is time to give the policies that were working a new lease on life and see if they will help us prosper once again?
- I agree with the bulk of your argumentation, although I think in this crisis there is a high proportion of vested interests in its origin.
Alfonso Lasso de la Vega
- We need policies like these that will actually aid in recovery, not just provide cover for continued looting by the elite.
- I strongly support the manifesto: its economic arguments are sound.
- Especially in Europe there is basically a political crisis when ECB is not allowed to act as a normal central bank. But lately there has been signs that this aspect is becoming better understood. Unfortunately it has not been discussed much in public, where nationalists are able to gain votes by warning for a federal development, which decrease independency of the nations.
- Politicians and decision makers in the US, Europe, and elsewhere who believe taking no action will lead to recovery have in fact made things far, far worse.
- Outstanding! Wonderful to see that some of our preeminent economists have the courage to try to organize to force governments and other organizations to wake up and think more rationally in their approach to such important and central issues. I hope many more economists get on board: its their chance to correct a lot of wrongs and effect tremendous positive change for so many people.
Dr. Frank Wolf
- There is, and never has been, such a thing as an expansionary fiscal contraction. Says it all!!
- Los causantes de la crisis -más allá de las políticas a implementar- no soportan sus consecuencias; la sufren las clases medias. Es injusto.Y no se denuncia suficientemente, Sr. Krugman
Luis Fernandez de la Buelga
- While I agree with the broad thrust and purpose of the manifesto, it still, unfortunately, advocates the same neoliberal thinking which caused the crisis in the first place (loanable funds theory, existance of the money multiplier etc.)http://goo.gl/x1mc3
- I can only stress the famous caveat by George Santayana: “Those peoples that forget their History are bound to repeat it here”. And here we are again, throwing away 60 years of European integration, meant to avoid the mistakes and catastrophes of the 1930s.
Javier de la Puerta
- The arguments and analysis contained in this Manifesto are substantive and, more importantly, sensible. Simply put, if the private sector balks, then it is up to the government to step in to get the ball rolling again and this means unleashing capitol. If both balk, then disaster ensues.
- It is a mighty task to push through the formidable barrier keeping many elites from reason. Ignorance is one thing. Doggedly holding on to demonstrably perverse notions and falsehoods by those who should know better must be an illness. It is hard to overestimate the power of darkness.
- I wholly endorse this Manifesto.
The Austerity Agenda is totally inappropriate as a means of addressing unemployment and inadequate pay and benefits for most of those who are lucky enough to have a job.Bill Painter
- Lets move towards rational policy
- The Manifesto should have come much, much earlier.
I hope it helps to debunk the Big Lie on government “deficits”, fiscal policy and the role of the State in the economy trumpeted as religious dogma by vain, ignorant soi-disant economists and pundits for the last 30 years or so.
- I hope that not only economists will sign the document! So, heres one from a particle physicist…
Dr. J. Blouw
- Some debt writedown might be required to help households/businesses/currency users.
- Sadly, denial, ignorance and the downright egotism and masochism of leaders and other supposedly intelligent people are wrecking the lives of tens of millions. Common sense has never been in shorter supply. Thanks for putting this together
- It is time to turn the page. The thought that even a tiny number of return-to-the-gold-standard thinkers exists is frightening.
William Mark Parson
- by “policy should act as a stabilizing force, attempting to sustain spending. ” i include that that Fed should be nominal GDP targeting.As a long term budget solution, I would generally like to see federal and state&local expenditures limited to less than 1/3 of GDP over the business cycle, somewhat similar to Miles Kimballs idea.
- Unemplyment should be considered a loan people without work make, and it should be repayed with interests.
- The real test for economic policy is whether it works in the real world. The results are in and Keynes was right.
- The other side refuses to admit that there are collective actions that can be done by the goverment to help our nation. They are solely focussed on the individual so much so that I actually wonder what their concept of a nation is!
- The last two years have seen a tragic waste of economic potential and loss of output due to politically driven austerity. It is time for sense!
- I am profoundly concerned about how the continued mismanagement by and short-sighted policies of todays decision makers will effect the future of my two children. The United States is more than a short-term, profit driven economy and policy makers must act accordingly to benefit a great majority of its citizens today and in the future.
Elaine A. Needham
- The case for greater public spending as a response to the current economic situation has shown to be a better and more appropriate way to deal with the current state of the economy not only in theory (where it has been, historically, quite successful), but from a variety of actual economic data that has been compiled by a number of economists (Paul Krugman – not the only – but a good example). In addition, fiscal austerity has proved to be self defeating in many cases in which it has been thoroughly implemented; take Ireland for instance. This is a time for the government to take advantage of low rates to balance the de-leveraging process of the private sector.
Gustavo Gomes Pereira
- We need to be investing in renewable technologies which will not only create jobs and therefore growth but also sustainable growth which doesn damage the earth. This can also create energy security which in turn reduces the possibility of wars over resources.
- Agree but would like to see the urgent need for decarbonisation taken seriously and added to any economic plan.For a UK perspective on this economic mess AND a vision for the future see Will Hutton’s excellent ‘Them and Us’.
- While I do not agree with all details of the manifesto and think that reducing public spending would be a good thing in countries such as Italy, the broad thrust is correct and urgent.
- As an UK IFA & Investment Adviser, the impact on peoples financial well-being I see every day. Unintended consequences of this policy are really beginning to bite and soon many more people will suffer the financial consequences of this austerity policy.
- I may not be a professional economist, but the need for a sensible countercyclical fiscal policy, based on long-term stability rather than short-term gain, is not exactly rocket science.
- Prof déconomie à la retraite,je partage tout à fait votre analyse, et minsurge contre ces politiques daustérité qui ne font que précipiter un peu plus les pays concernés dans la récession, le chômage et laugmentation des déficits. Je vous remercie de cette initiative.
- My only criticism is that by labeling Greece as a rare exception, it still perpetuates the myth that the Greek citizens were lazy/reckless/etc., when in fact many investment banks (Goldman et al, of course) played a large role in creating the problems we see today.
- It is more than clear that the policies of austerity are destroying lives. Its time for the public sector to do its duty by the people and invest for the betterment of all.
- One can only agree with this manifesto and hope it is widely disseminated and heard by policy-makers.
What however is missing is how to address unemployment – especially of youth – and growing social exclusion, in the EU and the US.Hedva Sarfati
- International acceptance and agreement to act on the thrust of this manifesto is essential, for example to prevent implosion of the Eurozone economies.
Professor David Rae
- The policies of the german government are guaranteeing as the head of the ECB, Mario Draghi, has indicated the most expensive fix to Europes problem possible. This is assuming that the euro currency as a whole remains intact. Forcing the southern tier of euro nations to effectively revise their currency downward through mass unemployment destroys wealth, the productive capacities of nations, and inflicts untold (and unnecessary) human suffering.
- It is time for a true United States of Europe, in many dimensions. And it is way past time to rebuild/modernize the USAs infrastructure. And time to get corporations and big money out of all politics. Read Republic, Lost by L. Lessig, and then Why Nations Fail by D. Acemoglu.
- Policy makers seem to be too proud to replicate something that worked in the past. Instead, they choose to replicate something that did not work in the past. Is “pride” the correct word?
- I sign this manifesto with total agreement to the arguments in favor of no, or less, austerity.
Luís Henrique Reis
- Despite being a Medicine student and having only an amateur economics training, I feel obliged to support anything which may stop disaster this current economic downturn is.
- I am not an Economics Expert but Ive followed Dr. Krugmans arguments for several years now and agree completely with the statements in this Manifesto. Viva la Revolution!
- Please bring the MMT folks into this.
- Concordo pienamente, le scelte politiche di Merkel & Co. sono sciocche e suicide, per lEuropa, per la democrazia, per leconomia e anche soltanto per il buon senso comune. O costoro sono rimbambiti del tutto o perseguono incoscienti obiettivi opposti a quelli proclamati. E ora di fermarli prima che sia troppo tardi.
- This “Manifesto for Economic Sense” Is another welcome, if brief, statement regarding a few of the shortcomings of the global politico-socio-economic system(s). It lists a few of the causes of these shortcomings; is essentially devoid of any specific, but contains only general, actions to be taken to correct the painful and unnecessary problems; and properly begs for more specifics and thoughtful action.The important questions are (1) what, specifically, is to be done, and (2) what about all the other myriad problems confronting humanity? After all, simply increasing “demand,” without regard to the environment, global population, etc., in a vulgar and blind attempt to increase “growth,” won’t resolve humanity’s numerous problems but rather simply transform them to a different yet just as deadly mix.I, for one, wish to complement most all the Commenters for their worthy remarks, as well as using their real names. It does help to keep the conversation and project focused on the important matter.
I wish to respectfully introduce Socioeconomic Democracy, which speaks directly to the concerns of this Manifesto, as will as at least many dozens of other societal problems produced by mal-productive contemporary politico-socio-economic systems.
Socioeconomic Democracy is a theoretically consistent and practically implementable socioeconomic system wherein there exist both some form and amount of locally appropriate Universally Guaranteed Personal Income and some form and amount of locally appropriate Maximum Allowable Personal Wealth, with both the lower bound on personal material poverty and the upper bound on personal material wealth set and adjusted democratically by all participants of a democratic society. This is trivially accomplished with elementary Public Choice Theory; that is “single-peaked personal preference distributions”.
The intimately intertwined and serious societal problems Socioeconomic Democracy will eliminate or significantly reduce include (but are by no means limited to) those familiar ones associated with: automation, computerization and robotization; budget deficits and national debts; bureaucracy; maltreatment of children; crime and punishment; development, sustainable or otherwise; ecology, environment, resources and pollution; education; the elderly; farcical “free-market” fantasies, the feminine majority; inflation; international conflict; intranational conflict; involuntary employment; involuntary unemployment; labor strife and strikes; sick medical and health care; military metamorphosis; natural disasters; pay justice; planned obsolescence; political participation; poverty; racism; sexism; untamed technologies; and the General Welfare.
A few, of many, relevant links:
Socioeconomic Democracy: An Advanced Socioeconomic System (Praeger Studies on the 21st Century, 2002)
“A Democratic Socioeconomic Platform, in Search of a Democratic Political Party”
“Socioeconomic Democracy: A Nonkilling, Life-Affirming and Enhancing Psycho-Politico-Socio-Economic System”
PelicanWeb’s Journal of Sustainable Development
“Introducing a Socioeconomic Democracy”
Prepared for Pakistan Futuristics Institute Silver Jubilee Publication: 4
Islamabad, Pakistan, 8 May 2011.
This article includes an analysis of the many similarities and a few minor differences between Socioeconomic Democracy and Zakat, one of the Five Pillars of Islam.
“Socioeconomic Democracy and Sustainable Development”
International Journal of Science, vol. 1, February 2012 (pp.33-48).
“Socioeconomic Democracy: a Progressive Societal Arrangement”
Studies of Changing Societies: Comparative and Interdisciplinary Focus, vol.1, June 2012.
A list of the historical development of the ideas of Socioeconomic Democracy, as presented by this writer, starting in 1968, is available at
We welcome and encourage feedback to this outreach, and look forward to working with all those interested in further peaceful development and implementation of these and other necessary changes aimed at the betterment of all humanity and the total planet.
Robley E. George
Director, Center for the Study of Democratic Societies
Coordinador, Nonkilling Economics and Business Research Committee
- the manifesto (even though up to the point) excludes Greece and has led to missunderstanding.
- The case made in your manifesto for economic sense is compelling.Without growth economic conditions deteriorate and social disruption becomes inevitable. Stimulating growth will have costs but they will be insignificant compared to the alternative.
- I agree completely with the manifesto. The world suffering from the paradox of thrift, and the suffering is man made and unnecessary.
- It perplexes me how many can ignore what they learn in principles classes and take such harmful detours in their professional careers.Were they not listening? Did they not understand? Or is there something altogether more sinister happening?
- We need to start learning from our experience, and the first step is a perspective shift – from a narrow individualistic view towards collective, yet smart and filled with sense. Though it is a long way to actual action, taking a look will only do us all better.
- What is needed for both social and financial health is not necessarily to pay people to make things but to pay people to do things: tobe artistically creative or to provide services through NGOs, for example.
- As a professor of public health working internationally (and former UN official), I am appalled at the exacerbated poverty resulting from these (morally) wrong policies, that cause short-term and intergenerational health and human development problems, and at the indifference of the current rich-country leadership to these.
John B Mason
- Congratulations on a brief, elegant and lucid account of whats gone wrong with the global economy. The situation is particularly absurd here in New Zealand, where we have one of the OECDs lowest government debt to GDP ratios but a very significant external deficit, driven to no small extent by property investment. We also have weak export growth, negligible investment in r&d and a massive expatriation of skills. Even so, our governments default obsession is with pruning more off its budget, in the apparent hope of impressing the money markets. And this dysfunctional approach still seems to resonate with a majority of voters. Such is the dismal and corrosive power of austeria!
- We need to stop treating economics as a predictive science that is divorced from politics and the human condition. We must return to putting people ahead of mere unproven academic theories that do nothing but shield the wealthy from the results of their foolishness.
David P. Lentini
- Just in time for the European leaders to take notice and start acting decisively against the building economic and social chaos. Before our tragic past catches up with us again.
Nelson Cardoso Rodrigues
- After nearly two decades as a City of London bank economist, I am probably more agnostic on macroeconomic theory than many academics, let alone bloggers. But economists should encourage policy-makers to follow the medical maxim of “First, do no harm”, and current government economic policy in many countries fails to meet that test.Warren Oliver
- The people at the bottom need hope. The system will get to breaking point without a change. We must move towards greater equality or there will be real trouble. This manifesto is somewhere to start from. Good luck.
- This manifesto rightly notes that current UK economic policy is built on the basis of outdated dogma. The people deserve a more rational discussion that doesn suggest that the economics of a country are anything other than tenuously similar to that of a working familys household budget.
- The Public Sector needs to follow the Keynes route to give people the confidence to spend (consumer spending is 60% of GDP). National House building schemes could provide employment, skills and solve our housing crisis.
- Does not address the issue of the privilege of a political nature. But this is important!
- When the facts contradict the theory, change the theory. This is what the manifesto stands for, and this is how science (even social science!) should work.
Dean L. Surkin
- Im not an economist, but have been following the discussion for quite a while. Agree wholeheartedly with this position!
- We are harming an entire generation and allowing large segments of the population to fall into a situation they will never recover from
- Besides the arguments shown in the Manifesto, there is a thing called “Instinct”, which has driven many successful business people. My instinct says this is the right approach!
- The developing world needs new economic models the most, because they are more flexible to change and have greater ability to establish new systems, they could form exemplary models for change towards future economics.
- Exactly why our current economic situation is happening is an interesting question, but to paraphrase Marx, it is more important to change it. Current policy is not only clearly failing but exacerbating problems and social difficulties, but the policies implied by the manifesto offer a more positive way forward.
- These arguments are grounded in logical common sense and have met the test of experience.
G C Harcourt
- While I agree with all the points made here, I believe that the true problem is deeper and includes a failure of leadership in defining an appropriate balance of market and social (government) constraints on the economy.
- I am an emeritus professor of economic history at Cambridge,and wish to emphasise as strongly as possible that governments – and especially the UK government – are making a dire problem worse by misguided pursuit of austerity policies that have proved self-defeating and inequitable.
- The manifesto, as it stands, makes good sense. But we should be explicit instead of implicit in our acknowledgement that certain “private sector” costs (health care, higher education) have risen far faster than the growth in the economy in part because of the “unintended consequences” of programs designed to make these more affordable by many more people. We cannot sustain the rate of growth in the cost of these services.In addition, by allowing our infrastructure to crumble as we have (e.g., navigable waterways, public transportation), we are increasing the cost to deliver goods and services even as we are trying to reduce our dependency on foreign sources of energy. This makes no sense.The artificial dichotomy between the “private” sector and the “public” sector is fodder for politicians but useless in terms of policy. Private investment has always followed public investment, whether it be through the use of armies to conqueror lands for agriculture or the construction of roads, navigable waterways, the power grid, etc. This nation was started by a Congress which taxed the public to raise an army. Would the private sector have done this on its own?
Sean McLinden, MD
- Merci pour vos propos. Comment vos “collègues” économistes ayant pignon sur média peuvent -ils mentir comme ils le font à toute la population ayant élu le PS pour tout changer.F. Hollande ne peut -il en tant que président jeter le pavé dans la mare et enfin adopter une politique réactive et claire dans notre pays et montrer la voie du bons sens contre les néolibéraux qui nous étouffent. On n’est plus dupe.Merci de vos actions éclairantes.
- In Europe, the non-sense economics is strictly tied to the decline of European Democracy, due to the failures of the Europe construction, as to the timing, as to the goals and as to the method.
- It is sickening to think of the suffering being caused by the republican politicians of this country in the name of obtaining political power. They know exactly what they are doing and are manipulating the issue to make sure Obama fails and they win without any regard to the social costs. In fact, the social costs play in their favor because damaging the middle class leads to higher bargaining power for those left with the money and political control.
- We need to accept that excessive (German) current account surpluses are part of the problem. We need an expansionary policy and rising wages in Germany and other surplus countries to foster imports, plus a slightly higher inflation target by the ECB, combined with structural reforms in countries like spain, portugal, italy,… We need more efficient, not less Government spending in GIPSI countries. This way, internal devaluation would be possible without lowering nominal wages and prices (which leads into a deflationary depression) and it would be possible to reduce euro area imbalances much faster. To gain more time, it might be helpful to collect private capital in (Current Account) surplus countries and invest it directly in real assets in CA deficit countries, which would reduce Euro system imbalances in the short run.
- Lets be sensible, and stop using politics to solve economic problems.
- Krugman and Layard are right. “Austerians” are wrong. As simple as that. People thinking about macro-economy as a big micro-economy are wrong. They need to consider in macro the feedback loops that don exist in micro.
Julio Gabriel König
- A base de uma economia saudável tem necessariamente de ser a produção de bens e serviços e impedir a especulação financeira e o enriquecimento fácil.
Luis Filipe Pamplona
- Spending should focus on maintaining current jobs in education, police and fire departments and creation of new jobs for repairing infrastructures, creating high speed trains and developing and implementing renewable sources of energy and energy efficiency.
- There must be a clear awareness of the deliberate manipulation of monetary and fiscal policy to benefit an exiguous minority whose main strategy in the political scheme of things is limited to jockeying for position, asset-stripping and the furtherance of crony capitalism because competitivity has very little to do with increases in “scientific investigation, e.g. reverse engineering is a piece of cake” and a lot to do with transfer pricing, locking-in mechanisms, eg. patenting and the fostering of opacity, and creating a reserve army of cheap labour because deskilling is what increased productivity is mostly about because only the very highly qualified knowledge economy can create real competitive advantage. I consider that all that real systemic structural questions need to be factored into macreconomic planning. The danger of overheating that has led to a transfer of capital away from the pruductive economy to the speculative one require a strong public sector, in natural monopolies and social services, first and foremost,and secondly subsidiaries of corpotions, smes and 2nd & 3rd tier suppliers should be helped to become going concerns by becoming coops for ex. We need a new concept in economics, that of critical mass, to estimate how non short-term efficiencies might be evaluated re. social and ecological questions in the same way that so-called exogenous issues could be factored into national accounting techniques if there were the political will.
- I like to see balance federal budgets like those in Clinton Administration; however, this is not the right time to do that.
- A sound summary that some of us were propounding way back in 2005 (see “Golden Ages At The Fenners Margin”), although we disagree about the management of the euro as a stabiliser in the international arena. Now for some constructive policies, please!
- Wall Street investment banks bear primary responsibility for our economic difficulties aided and abetted by a climate of deregulation.
James A. Pilant
- We now know the cost of deregulation, and the truth of the fact that “corporations can now regulate themselves” is one of the biggest, most economically destructive lies in history.
- This manifesto makes perfect sense. Historically, cutting public spending during a recession does not work as a cure.
Given the staggering growth in the divide between the rich few and the rest of us since 1979, current UK economic “policy” is not only wrong, but immoral.
- Policy makers have forgotten the lessons of the past and are risking a return to the extremist failed politics of the past.The economics of austerity have been proved to exacerbate the length and effects of recessions. Abandon the dangerous rhetoric and policies of austerity and return to the proven solutions espoused by Keynes et.al.
- The crisis has resulted from the flawed politcial, economic, and philosophical doctrine of neoliberalism. We must find an alternative and the economics profession must be involved in this.
Dr Clive Peedell
- It seems that the political leaders of Western economies can’t free themselves from financial markets lobbies. As a European citizen who can express herself without being killed by the army, and also as an “appalled economist” (économiste atterrée) observing our modern society, I’d like to voice the concerns of the many who have lost their job & the social benefits (& self-esteem) associated with it since the Great Recession. May my signature help this manifesto be heard at all levels.
- Glass-Steagall was clearly the right idea, as is evident by the result of its repeal. When deregulation allowed financiers to distort the “game” to their advantage, the resulting imbalance and crash was logically inevitable. As parents, we would agree that “deregulation” of our children would be insanity. As a society, perhaps the current scene will convince us that deregulation of the banking/finance industry is equally insane.
- These economists have been calling it correctly for many years. It is time the VSPs took responsible action.
- finally, a refreshingly sane analysis
- Yes, Krugman is absolutely correct in his assesment. I live in Madrid, Spain, on of the most affected countries now on radar.In the EU, Angela Merkel, Germany Prime Minister, has envoked her Austerity Plan for EU 17 Euro holding nations. Those especially from the south. THE RESULT: JOB DESTRUCTION! Unemployment is racing upward at rocketing rates. On top of that the governments are not cutting spending, but they are massively and rapidly increasing income taxes, sales taxes, municipal FINES, ENERY, etc.The Austerity measure does not work. I stand against it because it is extremely bad for business. Good medium size companies that work well and are strong are being wiped out because their bankers can no long financially support them.
- A flexible, free, private, mobile workforce has demonstrated its efficacy for employee and employer and thus governments role must be to enable, maintain, create, when necessary, an adequate demand for employment.
- Cutting programs & public works projects is cutting jobs.
- If we are to have capitalism, give it a human face.
J. Edgar Mihelic
- Putting politics aside and dealing with this crisis is the right thing to do. The numbers don lie. The dogma behind deficit concerns is clearly wrong. We need clear minds to examine this.
- The macro economic principles expressed in this manifesto are so clear and simple, only those with ideological blinders fail or refuse to accept them.
Tomas Manuel Matic
- What is most disturbing about this crisis is the positive feedback loop enforced by an academic cadre that ought to know better, or at least be willing to reexamine its beliefs in the face of evidence which contradicts them. The lack of reflection, and willingness to do so, is both shocking and hugely disappointing.
- This whole issue has become political rather than following what is well known. Time to get back to the Keynesian policies we know will work.
- It is time to recognize that the real crisis is unemployment and that throwing people out of work by cutting government budgets is not going to help the problem. We need large scale action on unemployment or we will face severe political and economic consequences.
William T. Dickens
- Radically withdrawing the state from the economic arena as advocated by the dominant ideology is likely to condemn a few generations to an unprecedented lack of opportunities. Investment is needed now, not just for those that need its effects now, but in order not deprive the children of today of a future that they can look forward to.
Alvaro A A Fernandes
- Let me add that, as a Dutch citizen, it is superbly frustrating to see how politics in the Netherlands have pushed any clear-headed economics-based approach to the Euro crisis to the side. Our government goes out of its way to convince the Dutch that it is only thinking of their interests, and to convince the European austerians that it is completely on their side and is pro-Europe, and thus our coalition follows a destructive line of signing on with half-hearted and ineffective measures (ESM), pursuing needless and politically distorted austerity measures (leaving many grotesque tax loopholes untouched and focusing on demand-depressing measures such as a higher VAT), and giving integral support to the policies which are pushing peripheral economies into increasingly impossible positions (forcing them to adopt crippling austerity measures while making it impossible for them to recover competitiveness or lower their bond rates). Our right-wing government has turned a blind eye to analysis, and prefers to do whatever its ideological bias suggests to be sensible. And even the centrists are along for the ride, clamouring in unison that the most important thing to do in this situation is to balance our budget.
- Watching this debate closely for four years. Austerity, as the core strategy, at this time is completely wrong.
- Just an average American who knows first-hand that “trickle down” hasn even remotely worked for the middle class! My husband is a self-employed contractor who sweats blood on the job and he pays more taxes than Millionaire Mitch. Thats just WRONG!
- As one of the 365 “wicked” signatories protesting Thatchers macro policies in the 1980s, the sense of deja vue is depressing.Politicians propensity to adopt “faith” based policies continues to amaze
- While I disagree there are no structural issues, I do agree that the bigger issue right now is a lack of general demand. I agree the actions suggested in the manifesto are the right ones to get out of the crisis.
- Amazing how history repeats itself, but not everyone pays attention to historys lessons. The Great Depression gave rise to Keynesian economics, which have their time and place.
Prof Lynn Prince Cooke
- As to depressions, make a habit of two things — to help, or at least, to do no harm.
Sirus Dehdari, PhD Student
- The distressing facets of human behavior you see in response to the crisis are by no means limited to economics but you have done a masterful job illustrating these failings and we can only hope that leads to a more positive outcome- at least in economic policy if not in more general behavior. Keep up the good fight!
- Not only do I strongly agree, but as an accountant by training,we have lost sight of a simple concept: a society needs to generate more value than it consumes if it is to save and fund its societys expectations and future liabilities. Understanding what builds realisable value in the skills of all the employable workforce, in the sustainable value of corporations and any entities including public sector service is poorly grasped. Value is destroyed by massive unemployment (see Spain in the next few years)by failure to educate, by false and bogus assertions about securities (the banking crisis)and even by changing mindsets so that demand collapses (the 1930s?).Well done this manifesto.Hugh Aldous
- Unlike Austrian “economics”, this manifesto is based in reality, not some magical world where where unbridled greed results in personal liberty. Adam Smith would cut his own throat if he were alive and knew the distorted lies attributed to him by fools and unscrupulous thieves.
- good job- please continue !
- Logically, complete scope downsizing in government spending can only result in complete scope downsizing of country economy output, all caused by even further decline in demand. As major solution for economy recovery I see in governments increased investment supports in production of strategic products for each countries, price for it is initial deficit rise and increased inflation rate. To make it so, all countries in each economic/political union must follow the same idea, supported by independent financial institutions. Unable to make this multi-party agreement, where each party follows its own particular interests, is major obstacle to economy recovery, indicating capitalism as inefficient system in current political/economic environment.
- Im a political scientist by training but I have had enough International Political Economy training to stand firmly and confidently behind this diagnosis of the problem.
Brian R. Urlacher
- Reading about this crisis, Im often reminded of the saying that those who fail to learn from history are condemned to repeat it (a sentiment expressed in different forms and variously attributed to Edmund Burke, George Santayana and Winston Churchill). Sadly, it seems that the lessons of 80 years of economic thought have been forgotten or willfully ignored by some economists and policy makers. Measures suggested by an understanding of economics 101 might have sufficed to end the economic crisis in which we find ourselves and thereby alleviate the suffering of many millions of unemployed.
- A great initiative! But someone should explain this to Angela Merkel rather soon. Hers is the logic of the thrifty “Swabian housewife” (her own words) – with all the catastrophic consequences for Europe and, possibly, the world.
- I have been claiming for this for a long time (search for stimlus or Keynes in my blog here: http://marques-mendes.blogspot.pt/).
However, the problem is not solved by demand management alone especially in some major economies like the USA and Japan.
- “Those who cannot remember the past are condemned to repeat it.” – George Santayana, in his Reason in Common SenseI agree the time has come to speak out for common sense and economic sense.
Richard W. Harris
- The broad lines of this manifesto make perfect sense. However, it should be remembered that current levels of public deficits and debts mean that any fiscal stimulus will actually mean borrowing against the future. Early repayment will be mandatory as soon as demand picks up, or we will end up trying to tame inflation for years. The current lack of confidence from investors towards sovereign debt also means that some structural changes in Europe are required, as well as improvements in governance in the US; without these, many countries will continue to face crushingly high interest rates that will only worsen the state of their public finances. Finally, fiscal stimulus will fail to spur growth in the absence of structural changes in the laws governing the job market in Europe and a reduction in red tape all over the western world.
- The biggest cause is because we (the people) are focused on our debt, mortgages and what car to buy next. Which drives us to miss and have a real view on what goes wrong, is wrong and will go wrong. 🙂
- I agree that the world is acting drunk on credit. Most nations are also terrified of taxes. When will we learn that countries can run without funding and that most funding comes from taxes, from residents, but also from the corporations who seek tax benefits or off-shore their funds to avoid paying their fair share!
Carole Campbell, Ph.D.
- Finally, a succinct, reasoned approach to the crisis at hand. Very different from the mindless, political soundbites we
e subjected to…..
Michael E Nicholson
- The core of the current debate is “we believe” (in austerity) vs. “analysis shows” (expansion is needed). Unfortunately “we believe” is easier for non-economists to understand and therefore easier to sell.
- “Basic Economics”
- Simple Manifesto, to be used as a base of discussion everywhere.Please better specify that what is needed and urgent now is a PUBLIC demand increase.
- Most people have no idea how the federal budget works – not like your home budget – You don have to worry about the Veterans down the street – but the Federal Budget does. Also, there are a lot of people who claim they want small government who depend on Government Contracts. On Morning Joe a couple of weeks ago, they were talking about a private company that could hire more people if they got a govt contract with the state of NY — no one on the set even noticed that it was GOV that was adding to the economy
- We are facing two crisis: a debt and confidence about banks and the euro original sin ( a single currency in different strength areas) weaving and getting stronger. In the contest of shadow finance it becomes the nightmare we are experiencing.
- We should take advantage of our very low government borrowing costs to rebuild infrastructure, bring down the cost of secondary and post-graduate education, and transition to carbon-free energy sources.
- Society must pull together to address the challenges of this economic crisis. Government must stabilize the economy by spending on socially valuable projects, and reign in the private speculators. We as a global society will need to cooperate and reorganize our economic prioritis to rise to the challenges of resource depletion, climate change and population growth.
- I agree completely with the entire Manifesto. Thank you for writing it and in general for promoting economic sanity in these difficult times.
- As a life-long student of the Great Depression, Ive wondered how so many “experts” could be so wrong for so long. Now I know. Now Im seeing the same play in real time.
Marc G. Schulmanmeister
- I thought at first this time would be different from the thirties because we had learnt that lesson. But its now quite frightening.
- In order to solve our economic woes we need the public to be educated about the complexities of globalization and the interrelatedness of all members of the human family. By bringing a historical context to the crisis this manifesto is an important step to providing the insight required to turn the discussion away from ideology towards a more empirically based and scientific examination of the crisis
- I’d be interested in more hard details about the role of private indebtedness. To me, this seems to be true in the US, UK, and Spain, not in France or Italy. And to the extent it is true, it helped compensate globalization constrained wages, thereby creating artificial growth, for which we have to pay through some form of contraction today (even though it does not make sense to amplify such contraction with inadequate budget policies).
- Well written.
- I agree with this analysis and have been outraged since 2010 about the lack of appropriate policy response. And Ive been even more outraged by the lack of reasonable discussion and analysis available to the public – this is straightforward Econ 101.
Jason A Richter
- en espérant que ce manifeste inspire de nombreuses personnes
- Many people who favour smll government are using the crisis as an argument for reducing the role of government, regardless of the consequences. Either they do not care about unemployment, or have an absurd faith that private demand is always forthcoming. It is clear that grinding the economy down is not a way to reduce public debt.
- Many of our governments (Canadas especially) are rejecting sound economic policy and empirical evidence and opting instead for ideologically-driven public policy. The particular form of any economic system is a social construct and as such must serve the needs of people (and the planet). Today government and institutional leaders seem to think that people are no longer citizens but simply consumers here to serve as tiny parts of the economic system.
- Too often in this crisis has the discussion hinged on the morality of burdening future generations with increased debts. It is widespread involuntary underemployment that is most immoral of all.
- I have watched for 22 years “Demand” reduce , i am not an economist ,I am one of those people who contribute to the data ,In my state (NJ) there are only a handful of independent bedding stores left ,I am one of them , is that enough credibility for this statement ?
- Even though i disagree with many parts (eg part of the causes and the nature of the crisis) I strongly agree with the rest of it. Spread the word.
- The US system is becoming over regulated and unwieldy. A complete revision is essential. I see this where I work, with grant funding from Federal government having so many burdensome requirements that projects get delayed and lose their impetus.
- I have written articles for this important cause, eg Demon Debt for IPPR, January 2012.
- It is time to wake up. Face the facts. Look at the evidence. People are suffering on muliple levels. End this madness now!
- I have been reading Krugmans column for years, and wish that it was required reading for politicians. I hope that this succeeds!
- Ce manifeste me parait extrêmement clair, je ne comprends pas comment la logique décrite ici ne balaie pas les dogmatiques
- The united states currently had a GDP/debt ratio around 90%. The higher a countries GDP/debt ratio is, the more likely it will default. Last Time I checked both the UK and Japan have sustained a GDP/debt ratio that is much higher, and have done so for a longer period of time. Have they defaulted? Have they ever defaulted? Are they in danger of defaulting? The answer is no, so then why are american policy makers so worried about our own deficit if it is in better shape than other countries?
- Time to stop the financialization of the public policy debate and put the macroeconomic interests of the many front and center.
Paul A. Myers, CPA
- A good analysis of the worlds present economic predicament.
- Analyse correcte, mais le FMI après un constat sans faille continue à faire nimporte quoi.
Un seul mot dordre mondial : nous avons assez payé, de lAfrique à lEurope, arrêtons de rembourser (voir discours de Sankara à lONU)
- Four years of “laissez faire” by governments has dragged out this depression. With amazing lack of hindsight we are not only repeating many of the failed policies of the 1930s but the tragic policies that exacerbated the Great Famine in Ireland 1845-1850 where in 1846/47 where Trevelyan in reorganising the relief scheme the government decided that, ” there was to be no government importation of food from abroad and no interference whatsoever with the laws of supply and demand”.
Those mistaken beliefs led to the death of over one million Irish people and e economic emigration of over two million more.
When a politicians only “raison dêtre” is to be in power, and they make all decisions to pander to their electorate, how can we really expect them to be able to begin to sort this problem out. Unfortunately it is not in their DNA. Something seismic has to happen before sense prevails.
- A very welcome initiative — hopefully it will have the impact it deserves.
- Alas, when you look at who the big winners are when unemployment is very high, inflation is low, government – especially regulation and inspections – is being cut, you know why this is happening and why it isn about to change without massive efforts like this.
Oren E. Stembel
- É preciso que os economistas sérios declarem claramente que os governos não tomam as providências adequadas e não mudam a ordem das coisas porque estão a serviço da nova forma da escravidão planetária que é a globalização, e do predomínio de capital predatório no planeta.
Os governos europeus que imaginava-se agora infensos à barbárie do capitalismo primitivo,já tendo atingido um estágio de evolução social mais justo, sucumbiram e retroagiram para o serviço das finanças escravocratas.
- Public spending needs to stimulate the economy but more focus should be put on how money is used
- Krugman has being saying this for some time. The Dummys Guide to Economics says you cannot cut your way to growth.
Yet the austerity policy continues. Krugman thinks the hidden agenda is the Conservatives want a smaller state and austerity is they way they see of getting it.
- I agree with the thrust of this manifesto. My fervid wish is that this Manifesto will contribute to changing the course of the way this crisis is handled.
Henk de Vos
- Personal blog http://robsant.altervista.org
- Excellent proposal and a great idea in general agree with the manifest
Eduardo Ramírez Cedillo
- People find this all too complicated, when its really just common sense.
To make money, you have to spend money, and theres no business without customers.
- I have been writing articles on this subject in the same fashion with the manifesto. The core of the problem lies in the false belief that “national wealth” can increase at higher rate than the GDP growth. “The public” as a whole cannot get rich by investing in real or financial assets.Now that there is a crises those who got rich by speculation and caused the crises (without bad intention) must get poor. To make them poor the government must borrow their “savings” at a negative rate of interst and spend it. So that economy resumes the normal speed.
Ege Cansen, Business Columnist
- One would think that The Great Lesson of the 20th Century would be the enormity of our ability as humans to rationalize practices that are in fact indefensible. This tendency explains the bad behavior of war criminals, cynical politicians, and as we can now see, academic economists.
- It is disappointing and shameful that a country that treasures “We the people …..” refuses to implement the wisdom of A Manifesto for Economic Sense for the people. Citizens of the US and the World have and are being harmed by the ineffective responses to date of the business and government decision makers. For example, with more than 50% of youth under 25 in Greece and Spain unemployed, their future is at risk as it is for youth in many countries. We all need to persuade our neighbours, those who are business and government leaders, to see these insights and follow the path of Economic Sense.
- Give every person who is officially ranked as “in poverty” $500 to $1000 a month. That money would immediately start percolating up to the wealthy, but first pass through the middle class hands. Continue until signs of inflation appear.
- I agree that fiscal policy is reinforcing the damping effects of private sector spending cuts.I believe that the fiscal policies being agreed at a European level are primarily driven by national interests; this will be almost impossible to change. I believe that a partial renunciation of sovereignty in this area is sufficient, but not more than sufficient.Tim OConnell
- For nominal GDP targeting and counter cyclical Govt investment . Right now we have the monetary foot on the gas and the fiscal foot on the brake- no wonder the engine and transmission are going up in smoke.
Fulton E Rockwell
- It seems like ideologies are far too strong to be convinced by reason and common sense. Humanity will commit the same mistakes as long as truth is open to subjective interpretations.
- Herman Feshbach Professor of Physics,
Nobel Prize 2004
— if that helps. Economics is harder than physics, but I can recognize the difference between empirically informed thinking and bullshit, which is whats at stake here.
- I completely agree that the nature and causes of the crisis have been completely misunderstood by those who have most benefited from the eurozone.
It is frustrating to see the crisis depicted as some sort of morality play, complete with a cast of european stereotypes, probably because its easiest to imagine it that way.Its probably difficult to see Germany as a China. But thats closer to the truth.Germany enjoys the benefits of an undervalued currency,runs huge surpluses without encouraging domestic consumption and so it sowed the seeds for the crisis just as much as a lack of competitiveness in Europes south and fiscal profligacy in Greece did.
Germany understandably finds it difficult to imagine the pain or perhaps feels the pain is justified, but irrespective of who has been good or who has been ad, the crisis will get to everyone if it is not contained.
- Krugman & Layard are absolutely right in their analysis – the central issue. They may be too generous in assuming policy makers do not understand. Policy makers may be focussed on reducing the size of the state. The crisis provides an opportunity to pursue an ideological objective of its impact on growth or deficit size.
James W. Durcan
- When the euro zone introduced austerity, those who knew better were left out of the argument.
Rosemary Alexander Freitas
- I strongly support this. Privatisations and deregulation have exacerbated the weakening of governments ability to stabilise economies. It is the poor and powerless who suffer the most.
- I have taught macro for nearly 20 years since earning a Ph.D. from UCLA and endorse this completely.
- Es urgent trencar el cercle viciós en el que estem instal.lats. Hi ha moltes persones patint profundament per causes evitables. Gràcies per difondre aquestes idees
Pia Bosch Codolà
- Austerity can work and I am not entirely against it but in bite sizes. Right now austerity seems to be synonymous with phrase:”kick him while he is down”
- The world is running carelessly on credit/major risk taking. As a general citizen we are always advised to not get into debt & not waste money or make extreme risks.What are these financial leaders doing breaking all of these rules? We should not get into debt for warfare that is not our own problem, we should not be bailing out banks.The banksters have a crazy monopoly, how is it that they have been allowed to make the most profit ever this year (corporations), while the entire world suffers.
What about Glass-Steagall? This would protect us and help us build our economy back up or else the entire globe is headed for financial doom, riots, homeless people, businesses bankrupt etc etc
… is this what the Government wants? Put someone in power that has some sense.
I have a degree, but there are no jobs … get the country back on its feet so businesses can thrive instead of dive!
- Great for this excellent initiative. Economists and much more professional people must be close to citizens interests and fight against conventional policy wisdom.
Jose M Mella
- Thanks Dr. Krugman for this down to earth analysis. Your text appeals to the common sense of the reader and is perfectly readable and understandable also for those people who are not deeply involved in economics (like me). Since we non-experts are obviously the vast majority of society, communicating and explaining the current economic turbulences in this common sensical way is of utmost importance and there is hope that you can make a difference! Keep the effort up, I would say!
- Excellent effort. I will send this around to everyone that I know.
- I hope this initiative have enough impact for repairing economic policy. Europe and the US are doomed by politics and their economic policies. On one side of the Atlantic theres a political party blocking fiscal attempts that could diminish unemployment and sustain an economic recovery. On the other side, the too-far-from-optimal currency union has been threatened by wrong-based economic policies and unemployment has already achieved a depression-like level.
João Ricardo M. G. Costa Filho
- I cannot agree more.Let me suggest one thing.
I wish you could have included the significance of international policy coordination.Namely, Japan and Germany should be more fiscally expansionary. We are major creditors in the international financial world, after all.
- Economic management in any country is a fine balancing act.
Austerity not only reduces spend, but also drastically affects confidence, and reduces taxation income dramatically.
Some growth must be preserved as an integral part of policy, to keep income streams flowing, and to support public confidence, keeping up spending levels by business and the public.
Cutting too fast is idiotic and short sighted, killing growth feeds scepticism and kills confidence. Leading to the downward spiral we are currently in.
Drastic but measured action is required urgently, removing the charlatan chancellor would be a start!
- Free market ideology has a big part to play in the bubble of the last 30 years. Countries like UK became established and rich under mercantilism, not free market policies.Free market ideology led to an unrestricted pursuit of irresponsible lending by banks, while governments enriched themselves from this via taxation.However Britain and the USA cannot hope to repeat the recovery achieved by the New Deal and rearmament in the 30s, without the manufacturing base they both had then.
Sustainability is the only viable answer to the worlds economic, population and resources problems. It is achievable but requires real leadership across the board, and popular acceptance of reduced standards of living, only acceptable within a more just and equitable society.
- Does one need to make some reference to the Rogoff 90% Nat Debt knife edge? Even if he is correct, then even in countries above that level,the costs of a current sharp cut-back will outweigh its benefits (hysteresis strenghtens this argument). A committment to future (gradual)reduction should suffice.
- Many private sector firms depend on strong government spending so that hasty cuts can have an adverse multiplier effect.
- There are two missing pieces to this manifesto: (1) global/regional imbalances and the unsustainability of mercantilist approaches to competitiveness, and (2) the necessity, when the needs of incomes and employment are in conflict with those of accumulated wealth (over matters of debt writeoff and inflation risk, for instance), to choose the former.
- This next year America has to do something about employment! Congress has it wrong and is holding up recovery with their nonsensical ideas, then rejecting any non-GOP ideas just to win an election. I have never seen the GOP so full of hate for a president that they would actually harm the American economy to defeat Obama. Im in.
- The harder the problem- the more simple the solution is!
Jerri Anne Miller
- This manifesto is a step in the right direction. For too long, conservatives and their believers have framed solutions to economic problems with nonsensical nostrums. Even in light of the high volume of contradictory data and analysis, they refuse to change their rhetoric.
It is time for an entirely new perspective on Capitalism and the free market system. Adam Smith noted the benefits of his invisible hand, but neglected to mention how the free market system can fail. Market failure has been long denied by conservatives because it has little impact on the privileged. But it defines the fundamental need for Government intervention.
I am writing a book “Market Failure: Sucker Punched By the Invisible Hand. In it, I will detail many examples of market failure, expanding on its traditional focus on externalities. Many timely examples will be detailed, including the present macroeconomic market exclusion of tens of millions of people, economic investments from spending on political influence in lieu of producing goods and services, and the destructive results of the markets singular focus on optimizing economic efficiency at the expense of a society its supposed to benefit.
More than any other factor, ending the depression will rely on people starting to think beyond the economic baloney they are spoon-fed. And that constant, loud, ubiquitous baloney comes courtesy of those whose interests would be most impinged by any effective remedy.
- Do you not know, my son, with how little wisdom the world is governed?1648, Axel Gustafsson Oxenstierna, Lord High Chancellor of Sweden
- Congratulations on the Manifesto. As a spanish citizen I think I live in the eye of the hurricane of this crazy magical thinking about the benefits of austerity for our economies. Sadly, these ideas have taken root in our current policy-makers in Spain and Europe and this seems to be going to go on a long time. We need to fight back. Thank you.
- We have enabled a neoliberal philosophy free reign not only in the economic, but also in the social domain. We need to rethink not only our economic philosophies, but also our social presumptions.
- I agree…BUT, as Italian, I know that deficit spending is a subject to handle WITH CARE, when in the hands of politicians!
- Thanks goes out to Paul, Brad for their consistent voices.
Kevin G Johnson
- it has some interesting ideas.
The system will get to breaking point if it doesn´t change in a near future.
- During the 1930s Depression, the failure of some stimulus efforts were acknowledged, corrected, or ended.Overall, they were very successful.
Today, our stimulus effort was too small by half. Also, POTUS complained: “Don talk to me about shovel ready.”
1- The economics profession needs to collaborate with the Civil Engineering profession along with State/Local Governments to quickly implement shovel ready projects.
2- Economists need to work with State/Local Govenments to manage their work foces. For example, early retire an age 60+ teacher, cop, fireman with financial incentives. Replace each with two of the same, new, young employees.Cut the deal by paying down public debt (only) when unemployment is less than 6.5% through iron-clad legislation.-thanks
- Thank you for eloquently explaining the economic basics that our leaders completely ignore
- Right on! Thank you so much for this Manifesto of Good Sense. I am not an economist, but I can see that austerity is the opposite of what our country and the world needs now. Onward with common sense for Economic Sense!
- Very good idea. Every professional economist, regardless of political persuasion, should join this effort.
Max Johns Sr, PhD
- Rejecting only the comment on Greece
Dimitrios V. Lyridis
- The current US election driven proposals arguing that individual tax reductions will be more stimulative than direct government expenditures are equally false given consumer deleveraging.
- Macroeconomics has reached the status of climate science. There is broad evidence-based consensus among economists about the correct policy response, but entrenched interests put their fingers in their ears and buy their own experts.
- Its demand stupid. So shift the AD curve in the right direction. The AS curve is horizontal and its not rocket science to work out what to do.
John Gerard Curran
- Nothing is better, i think, thansome Keyness quotes:
<>(1933 Radio debate Keynes Stamp)
<> (G.T. Ch. 19 II).
- This is all good, but explanation for the excess in speculation is missing. I would simply state that such excesses in speculation occur when the opportunities for investment in real productive activity disappear, due to massive overproduction and excess capacity (determined primarily by insufficient demand, driven by insufficient wage income, which is in turn driven by inadequate ROI, a vicious cycle in this stage of financial implosion). In the future early signs of such excess speculation as a symptom of impending overproduction need to be heeded, and alternate solutions (such as the democratization of profit in the production process, and increased fair distribution of that profit to wage earners, as income) need to be engaged at that point. Thats my message to a future I don expect to be a part of, unfortunately.
- Unfortunately, also the Dutch government is totally misled by the wrong ideas
- The current path puts the burden far too heavily on the poor and middle-class and will harm all of our futures if we continue.
- Ive been calling for a NEW New Deal for a long time. Stimulus thru a jobs for all program is clearly the way to get the economy moving.
And theres decades of evidence showing austerity does not work.
Carol E. Gay
- The irish ecomony is being destroyed on me and my fellow irish by the non informed politcal elite who are totally cushioned by the effect of their ill informed decisiosn. We need to stop them.
- Adam Smith would have agreed.
- I am so glad that you put this manifesto together. People all over the world must come together, to force their elected representatives in pursuing an evidence-based economic policy, that won’t ruin the lives of a generation. Thank you.
- Let us not repeat the great errors of 1937.Greed,unchecked, brought us to this impasse. Those who claim that this this is a free market economy are complicit with the criminals who still walk free. Assets don simply disppear; the enrich those who stole them and continue to hide them.
- This is the Credit Anstalt crisis in deja vu.
Carl A. Winter
- This manifesto should be a click to turn over the page in 21st century. Excellent paper!
Apart all ideas expose, in the Portuguese case along with some good public policies that are being taken to reduce excess spending there should be three measures:
– a massive reduction on labour/corporate taxes (non Social Security) giving back the money to people and companies. Something like “Merkel check” to expand the demand would help.
– Insure the credit needs of the economy are for field via EIB or directly ECB.
– ECB role should change to guarantee and embrace a similar role of FED.
- In these, what should be enlighted times, I can but wonder how policy makers fail to see the evident truth. Especially considering the past experiences from the 1930s. This manifesto is well formulated and hopefully it will have an impact on our policy makers.
- At last! A brave attack on the chaotic approaches of traditional economics. Thank you, professors!
- Austerity doesn’t work and penalises the poor and powerless whilst rewarding the rich, powerful and seemingly unaccountable financial institutions at the root of this crisis. The smokescreen is not working and these current conservative policies only result in depressing the economy further whilst increasing national debt. These are decisions rooted in ideology not economics.
- Fully agree with Krugman and Layard.Austerity programme may not be the prime cause of the contraction in demand but it has clearly exacerbated the problem and at a time when the private sector is cutting back on demand will clearly prove to be self-defeating.
- I agree in all respects, but you let central banks off too easily. Perhaps they cannot fix our problems entirely by themselves, but they can do a lot more even without cooperation from fiscal authorities.
- This is straightforward economics 101 backed by a sea of empirical evidence. Arguments to the contrary come from ideologues, intellectual bigots and just plain stupid people who advise or otherwise have the ear of governments. Hoping for growth through austerity is akin to hoping water will flow up hill. Pure fiction.
- The biggest problem of those economists that support the mass austerity is that they are in love with their mathematical models (the elegance of them, the mathematical beauty, the straight answers). What they forget (as most are not mathematicians) is that the models are just sketches, the simplicity is due to our inability (or ignorance) of solving more complex ones, and the straight answers are driven from non-written suppositions. The models are useful (heck, I use them in my research), but only when people are aware of the shortcomings, and most of todays young economists just see the advantages, not the problems. PS: Mathematically is simpler to model the aggregate supply than is to model aggregate demand, so probably that is the reason why people are focusing so much on the supply side.
Pedro André Cerqueira
- An important question in my view is how to curtail the power and influence of rating agencies, that base country ratings on a political assessment, and so enforce adverse policies on nations.
- Raise the margin,limit the number of contracts.Make the financial terriorists of Wall Street live by the rules. Unfortunately government needs to create jobs in order for spending to return to the economy.I still see the tangible result of the 1930s in the buildings, bridges, and art that the work programs of 1930s produced.
Kay J. Van Houten
- This financial crisis enables me to come out of the closet as a protégé of Hy Minsky.
Charles M. Gray
- This is an important statement to make. The European economies are slowly being ground down by these austerity measures. It must be stopped now!
- This isn hard. The recession is causing $1T a year deficit because of reduced revenues and increased social payments.
Hire back the teachers, cops, and firefighters.
Kill the cap on Social Security.
Raise taxes on the rich.
Richard C. Hicks
- I might prefer an additional sentence on the need for long run fiscal responsibility, which means strengthening the budget during boom times, precisely to allow stimulus during recession (the opposite of what many politicians in the US, UK, and euroland have done over the last decade).
But of course I am with you.Jeffrey Frankels blog is at http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/
- Until the Private Debt level declines sufficiently to where people feel comfortable about spending nothing will improve. This increased Demand requires good paying jobs. It is time to build jobs, and demand that Republicans cooperate not obstruct.
- “A key priority now is to reduce unemployment, before it becomes endemic, making recovery and future deficit reduction even more difficult.”Mr. Keynes always knew this day would come:”When the rate of interest has fallen to a very low figure and has remained there sufficiently long to show that there is no further capital construction worth doing even at that low rate, then I should agree that the facts point to the necessity of drastic social changes directed towards increasing consumption. For it would be clear that we already had as great a stock of capital as we could usefully employ.” — 1934, “Is the Economic System Self-Adjusting?”
And he had a prescription for it:
“when investment demand is so far saturated that it cannot be brought up to the indicated level of savings without embarking upon wasteful and unnecessary enterprises… [i]t becomes necessary to encourage wise consumption and discourage saving,-and to absorb some part of the unwanted surplus by increased leisure, more holidays (which are a wonderfully good way of getting rid of money) and shorter hours.” — 1943 “The Long-Term Problem of Full Employment.”
He explained his rationale in a 1945 letter to T.S. Eliot:
“The full employment policy by means of investment is only one particular application of an intellectual theorem. You can produce the result just as well by consuming more or working less. Personally I regard the investment policy as first aid. In US it almost certainly will not do the trick. Less work is the ultimate solution. How you mix up the three ingredients of a cure is a matter of taste and experience, i.e. of morals and knowledge.”
Ironically, both Professor Krugman and Professor Layard implicitly rejected Keyness intellectual theorem with their unwitting embrace of the bogus “lump-of-labor (or output) fallacy” claim, which descended from a archaic prototype of Jean-Baptiste Says “Law of Markets” (aggregate supply creates its own aggregate demand) that Keynes directly opposed.
- I agree that austerity doesn seem to have a good track record and think I favour a stimulus approach. But there seems to be such great polarisation between the austerity and stimulus camps that I wonder (as someone without a background in economics) whether either side really gives the other a fair hearing.
- It comes down to this: greed was not, will not, and will never be good. But it has its self-interested defenders, and they will maintain any argument or position, no matter how specious, in its defense. Because it is about greed, and position, and advantage. Not truth.
James David Jones
- Historically accurate, fact based economics is the only hope we have of restoring the worlds equilibrium.
L. David Prata
- Economists is a social science that needs more science. I have been surprised at what is allowed to go unchallenged in the media.
- Lets talk about stagnant and declining wages, high unemployment, reductions in benefits and economic security, not austerity.
- As a retired teacher of economics and politics, I agree entirely with this manifesto. Europe needs a single government that can apply these policies. This is a necessary but not sufficient condition for solving the problem as a single government is just as capable of applying wrong policies as right ones.
- Demand side politics should be elaborated even more with regard to monetary economics. Fiscal policy is only one part of the story. Many rational speak for a new paradigm in monetary policy.
- When the 2010s too closely resemble the 1930s…that just means that we have history to help us know better. I would additionally argue that the problems today are the result of abandoning the lessons learned after the Great Depression and World War II. v/r, Jon Frye, LeadershipJot.com
- I fully agree and time runs out!
- Thank you, Prof. Krugman and Prof. Layard! We need sound voices like yours in a time of madness and irrationality. I know what Im talking about since I come from the worlds center of economic nonsense a.k.a. Germany.Social Democrats against the Fiscal Compact
Sozialdemokraten gegen den Fiskalpakt
- I believe the true horror leading to crisis is the constantly increasing greed among leaders, especially in western countries. If social equality among citizens were established, no matter their status, unemployment would plunge.
Britt Elea Joramo
- The purpose of the economy and the government is to sustain and increase the quality of life for the citizenry. When a clear rational policy promoting the welfare of the citizenry is apparent, the government should pursue that policy. There will come a time for austerity, now is not that time.
- Hopefully this will be the beginning of a movement towards a commonsense, prudent, Keynesian approach to solving the worlds economic dilemmas. Hold the risk-taking banks accountable, show compassion for those suffering the consequences of the trend toward a deeply unjust distribution of wealth.
- I fully support a sensible, honest approach to the economic health of the planet as a whole. It is not one side against another, its all part of a densely woven fabric. The health of the overall organism is only as strong as its weakest part.
- I agree wholeheartedly with the manifesto. It has been a theory I have watched being played out over the last 20 years in consumer societies such as ours the only investment has been in the retail industry (the building of huge shopping arcades) whils this is all well and good. Where is the investment in production, to offset, in other words where is the public going to get the money to spend in these wonderful new shopping meccas.
- It is splendid that these two great minds have joined their forces for this long overdue manifesto. I just hope that there would be politicians bold enough to follow their advice. Unfortunately the Finnish Government does not belong to this group as they rather belong to the forefront of the austerians.
- This manifesto cuts through the clutter of economic arguments over the past five years and states the issues and solutions clearly and convincingly. Long overdue and very welcome.
- I have signed because the manifesto is reasonable, but I do have a question for the orthodox economists who signed below. Where do you think governments around the world got the idea the private sector spending is good and public spending is bad? Do you not see the connection between neoliberal ideaology and the ideology of neoclassical economics?
- Excellent. Three additional points: (a) monetary policy is ineffective not only because interest rates are low, but because the banks who helped create the mess have taken fright and so, despite being flooded with cash by governments, they are not lending; (b) in a debt driven recession and with fiscal policy so tight their is a genuine shortage of good lending private sector lending opportunities because the parts of the private sector that need to borrow have no income stream to borrow against; (c) the combination of (a)and (b) means that a more expansionary fiscal policy would also increase the effectiveness of existing monetary policy.Andrew Graham
- As a German taxpayer, it is distressing to see the dogmatism and lack of debate on economic issues among Germanys leaders. Politicians failure to admit to the citizens the degree to which Germany has profited from the euro is leading to an increasingly populistic tone that is divorced from economic reality.
Jonathan Schroer, CFA
- Disincentivise competitions in all industries related to:
Transport on rail
Issue of creditAll of above directly controlled by governmentIncentive to private enterprise with string attached:
More power to unions
Total transparency on governments
Re-writing of intercontinental defence cooperations (eg. NATO)
- I think Governments should plan and build for the “LONG TERM” good of their people. Individuals and small to medium sized businesses should normally act in a “short term” manner, but large global corporations must also follow a long term plan if they want to keep and grow their global customer base.
- Paul Krugman was correct in predicting the housing bubble long before it happened. He predicted that Pres. Obamas stimulus package would turn out to be too small, and he was right about that, too. His views are usually prescient, and his manifesto deserves everyones support.
- This is a moral issue. Lives are being destroyed, sacrificed to political ideology. At a time when the world and our nation face true serious problems, we are facing an unnecessary, artificially made disaster.
Joseph H. Hendrickson, Ph.D.
- Excellent summary, but would add green fiscal policy: investment in energy saving and renewables is labour intensive, offers double dividend of reduced unemployment and emissions, much more effective than QE.
- Even if not an economist I fully agree with the manifesto. The analogies with the Roosvelts mistake in 1937 are evident!
- The folly of the current austerity obsession must be exposed and stopped. Europe is not only sowing the seeds of terrible future social and political unrest it is watering and fertilizing the seeds. Deep rooted anger is bubbling beneath the surface across the EU and if the lessons of history are not learned and implemented we will all pay an awful price. This manifesto is most welcome. There is an alternative, there is a Plan B. Convincing and educating the general population that this is in fact the case is the only way to force politicians to change track.
- I quite agree with your views on the causes of the present crisis. A more expansionary fiscal policy is clearly needed if we want to get out of european crisis
- Problems cannot even be defined, let alone solved without evidence based analyses. This Manifesto is a step in the right direction. Now, decision makers in Europe and the US need to apply it.
Andrew J. Esposito
- Please add your economic (sense) proposals tohttp://www.facebook.com/ThoughtfulSolutionsToTheGlobalFinancialCrisis
- During the 1930s, Keynesian economic policies failed only to the extent that they were severely underfunded-at least until WW II, a massive conflict triggered, in part, by global economic collapse. In the nuclear age, that is a path that we dare not follow again. Less dramatically, the cost of lost productivity caused by the current “recession,” (after five years of my own unemployment, I would call it a “depression”)cannot be recovered. However, we should not risk losing any more of that productivity by forcing ever more people out of the shrinking boat that our economy has become–and then holding them at bay with the oars. I, myself, am at the wrong end of those oars. The cost to my children and me has been incalculable–and to the businesses that we would have used had I a steady, sufficient income, health care, etc. No less a Republican than Abraham Lincoln stated that “Government should do for the People what the People cannot do for themselves.” We cannot hire ourselves. Therefore, as Winston Churchill said, “Give us the tools…” to repair this staggering economy. We WILL rise to the occasion.
Christopher D. Kneisel
- The same fallacies are appearing over and over again in Flemish public debate: 1. “A debt crisis has never been resolved by creating more debt”; 2. The crisis was caused by irresponsible spending and borrowing; 3. People will anticipate future tax raises, thus fiscal stimulus is uneffective.Any arguments and/or empirical evidence to the contrary are ignored by what Krugman rightly dubs our “Very Serious People”. There is no alternative to suffering.
- Congrats on this well reasoned and sensible approach.As an Irish man I despair on a daily basis at our governments inability to make a case for the maltreatment for Ireland which is borne, not out of a sense of duty on their part, but due to a complete lack of understanding of the issues and no doubt some degree of stockholm syndrome.I wrote a piece on this, which is slightly out of date now, last February and circulated to a number of our politicians in the hope some of it would stick.
- Its about time for a petition!
The US has about 20 million people unemployed or under-employed, all due to stupidity or arrogance. Economists have a duty to stand up and point this out.
- There should be more involvement of private creditors in resolving the crisis. The institutions and people who lent money should take more responsiblity.
There are 3 main factors which challenge the ideas of this common sense manifesto.
1. The global concentration of interests of the financial sector. They have the Institute of International Finance which represents their interests.
2. The ageing population. The average voter is about 50 years old in the US. They average voter is more concerned with maintaing the value of their pension and investments than stimulating growth.
3. The financial sector is the number one contributor to political parties.
- Its time to stop the banks and corporations from buying there way into and out of the rules as they see fit. It is destroying America!
- While I am not a trained economist, I am an active and successful investor. I closely follow current economic news and analysis from divergent viewpoints. This Manifesto is remarkably concise and cogent. More fundamentally, it is based on evidence that is difficult to refute. Excellent work!
- I am happy to sign up to this. Its a battle I joined several years ago!
- Retooling and renewing our infrastructure–including our educational infrastructure-is the first requirement. Then accelerate the switch to cleaner, renewable energies! This will also produce jobs like we REALLY need!!!
Brian S. Meadows
- I am one mind with Paul Krugman in Economics and Politics. I hope he continues his fearless crusade to expose the charlatans and the evils that they do.
- Lets hope we come to our senses soon. I would love to see some mention of true-cost accounting in the manifesto. Grappling with the unintended consequences of economic activity such as climate change are essential for any rational approach to long term economic (and existential) security. Some case for a green-conversion economy should be part of any expansionary economic proposal.
- I hope the manifesto will help the politicians and corporate sector realize that the principles of prudent household management should not be generalised to entire economies in times of unemployment. If the major economies all try to move forward by following the manifesto, there is a Keynesian free lunch available for them.
Peter E. Earl
- paul krugman has been right all along.long live econ 101!
- finally !
- Honest straight forward media coverage is the key to making change.
- Growth, not austerity, is the key. It takes a wise man to learn from his mistakes, a fool repeats an error, expecting a different outcome.
- Increasing government spending worldwide will help to power the worlds economies out of this depression.As always, the spending should be budgeted wisely. While there are always subsidies that should be cut, there are also opportunities for very productive infrastructure investments.
- I am not an economist, but I can read. Perhaps perhaps,in addition to greed and the quest for power, deficits in literacy and critical thinking are the underlying problem. Ill try to help…good luck.William T. Brune
- This is a good sound policy for short term economic recovery. In the long term I believe some radical restructuring of financial foundations are required.
Simon Milner Barry
- I hope someone is listening.
- It shows that supply side is a complete failure
James Dodson Jr
- It is time for the ECB + Germany to act decisively before it is too late for Euro. European leaders have to act responsible for the whole of Europe and not only for their country men/voters.
- A sentence noting that many or most austerity-champions are simply using the crisis to advance an ideological anti-public provision agenda, rather than deploying any sound economic theory or history, might help.
- I chair this organisation which has members in 13 European countries. I am a retired teacher of economics and politics who has been presenting exactly the same arguments as in this article.
I wish be active in presenting conferences on these lines.