From: Allin Cottrell (cottrell@wfu.edu)
Date: Thu Jun 12 2003 - 19:22:32 EDT
On Thu, 12 Jun 2003, Rakesh Bhandari wrote: > >I'm not making a general argument for the effectiveness of > >Keynesianism. I'm making the more specific point that a high level of > >government deficit spending can be expected to lower unemployment. > >Whether the reduced unemployment is sustainable is a broader > >social-political issue. > > > >The average unemployment rate in the U.S. from 1960:01 to 1969:12 was > >4.78 percent, not so different from that at the end of the Reagan > >deficit-spending episode. > > > >Allin. > > Yet the lowest unemployment fell to was 5%--and what was the average > during these huge deficit years...6%, right?--despite massive props > to effective demand: enormous unsustainable deficits which were > higher even on an inflation-adjusted, full employment basis than the > two previous decades; exports as stimulated by a steep competitive > devaluation (that is, unemployment was exported).... What's a "steep competitive devaluation"? How is the U.S. supposed to have engineered such a thing? The dollar fell substantially against the pound, mark and franc over the first half (roughly) of the 1980s, but then rose over the second half, as U.S. unemployment fell. Allin.
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