“You don’t have to be an orthodox Keynesian to understand that as long as the private sector is deleveraging the public sector has to borrow and spend in order to keep the economy moving forward.” (Robert B. Reich. "The Necessity of Obamanomics," The Wall Street Journal, 5 February 2010, p. A17)
Well. If it’s that simple, why doesn’t the “public sector” borrow, say, 20 trillion dollars and just forget about the stingy “private sector” altogether? Twenty trillions of dollars would buy a whole bunch of economic activity. That way we would not have to worry about the deleveraged private sector skimping on its end of the economic balance of power.
For some crazy reason we do not do that.
But here’s a flash for Professor Reich: The “public sector” always spends the wealth of the “private sector.” Always. There is no wealth that belongs to the public sector, per se. All of it, always and everywhere, belongs to the “private sector.” What we pretend is the “public sector” is nothing more than the laws, institutions, and controlling forces that deprive the “private sector” of its rightful property, by its own consent, until such time as that is no longer practicable (viz., today). Then - as in the past - the people will rise up to sever the relationship between a rapacious “public sector” and themselves. Look for it. That time is coming. See Virginia, New Jersey and Massachusetts for recent pertinent examples
The deleveraging Mr. Reich speaks about in his essay - a deleveraging that resulted from the collapse of housing evaluations - really means that the private sector (in other words, you and me) has less liquidity with which to spend on discretionary items. How is it possible to take wealth (i.e., taxes) that the private sector does not have because of the collapse of values and spend it to keep the economy moving forward? Ah, by borrowing those funds from our future earnings, or more properly, by borrowing the funds that belong to our children and grandchildren or China. But it’s all coming from the private sector. All of it.
Why is it so difficult for Keynesians to see that?
Some wag has said: “You can pull on your boots as hard as you want. But you’re not going to lift yourself off the ground.”
Well. If it’s that simple, why doesn’t the “public sector” borrow, say, 20 trillion dollars and just forget about the stingy “private sector” altogether? Twenty trillions of dollars would buy a whole bunch of economic activity. That way we would not have to worry about the deleveraged private sector skimping on its end of the economic balance of power.
For some crazy reason we do not do that.
But here’s a flash for Professor Reich: The “public sector” always spends the wealth of the “private sector.” Always. There is no wealth that belongs to the public sector, per se. All of it, always and everywhere, belongs to the “private sector.” What we pretend is the “public sector” is nothing more than the laws, institutions, and controlling forces that deprive the “private sector” of its rightful property, by its own consent, until such time as that is no longer practicable (viz., today). Then - as in the past - the people will rise up to sever the relationship between a rapacious “public sector” and themselves. Look for it. That time is coming. See Virginia, New Jersey and Massachusetts for recent pertinent examples
The deleveraging Mr. Reich speaks about in his essay - a deleveraging that resulted from the collapse of housing evaluations - really means that the private sector (in other words, you and me) has less liquidity with which to spend on discretionary items. How is it possible to take wealth (i.e., taxes) that the private sector does not have because of the collapse of values and spend it to keep the economy moving forward? Ah, by borrowing those funds from our future earnings, or more properly, by borrowing the funds that belong to our children and grandchildren or China. But it’s all coming from the private sector. All of it.
Why is it so difficult for Keynesians to see that?
Some wag has said: “You can pull on your boots as hard as you want. But you’re not going to lift yourself off the ground.”
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