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Saturday, July 17, 2010

"Political Aspects of Full Employment"

Via email, everything old is new again. This is from 1943:

Political Aspects of Full Employment, by Political Quarterly, 1943: ... Section IV ... 3. ...In the slump, either under the pressure of the masses, or even without it, public investment financed by borrowing will be undertaken to prevent large-scale unemployment. But if attempts are made to apply this method in order to maintain the high level of employment reached in the subsequent boom, strong opposition by business leaders is likely to be encountered. ...
In this situation a powerful alliance is likely to be formed between big business and rentier interests, and they would probably find more than one economist to declare that the situation was manifestly unsound. The pressure of all these forces, and in particular of big business—as a rule influential in government departments—would most probably induce the government to return to the orthodox policy of cutting down the budget deficit. A slump would follow...
This pattern of a political business cycle is not entirely conjectural; something very similar happened in the USA in 1937-8. The breakdown of the boom in the second half of 1937 was actually due to the drastic reduction of the budget deficit. ... [full text]

    Posted by on Saturday, July 17, 2010 at 01:08 AM in Budget Deficit, Economics, Fiscal Policy | Permalink  Comments (16)


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