At The Nation economist James Galbraith argues for leaving interest rates just where they are and engaging in a large number of policy changes including reducing the scale of our military, nationalizing the large banks, “Medicare for All”, imposing controls on prices, rents, substantial spending on infrastructure, mass transit, housing, an “rebuilding cities”.
What would be the likely outcome of such a program?
I’ll start. Since the federal government would be unable to extract sufficient taxes, the federal deficit would balloon. There would be shortages of many consumer goods and a substantial increase in homelessness and unemployment.
I return to what one of my economics profs once said all those many years ago: we don’t know how to produce prosperity but we do know how to produce shortages.
Your econ prof was spot on. And I’ll again share a quip from Kevin Murphy, one of my econ profs. How could an economist like Galbraith make such recommendations?
“Easy. He’s not really an economist.”
And that particular econ prof was as progressive as any of today’s economists.
I’ve obviously lost track of him. It was 35 years ago. He wasn’t then. Very Austrian School.