Tuesday, February 26, 2013

from the price of inequality

joseph stiglitz, winner of a nobel prize for economics, tells us why the sequester is the opposite of what our government should be doing:

"Underlying the myth that austerity will bring confidence is often another myth - the myth that the national government's budget is like a household's budget.  Every household, sooner or later, has to live within its means.  When an economy has high unemployment, the simple rule does not apply to the national budget.  This is because an expansion of spending can actually expand production by creating jobs that will be filled by people who would otherwise be unemployed.  A single household, by spending more than its revenues, cannot change the macroeconomy.  A national government can.  And the increase in GDP can be a multiple of the amount spent by the government."

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