Sachs buys the Green New Deal

Posted on / Comment / Opinion - Time to plan for post-Keynesian era.

I have to admit that some of what Jeffrey Sachs writes in the article linked above is at the very best confused, and shows a profound lack of understanding of what Keynes treally said.

What is clear however is that he thinks once the crisis is over (and by ignoring stimulus he gives no clue about how he thinks that will happen) the focus of the economy must be:

long-term structural transformation. External-deficit countries such as the US and UK will need to promote exports over the next few years, while all countries must promote clean energy and new transport infrastructure.

In addition:

governments and the public should insist that the rich pay more in income and wealth taxes — indeed, a lot more. The upward re-distribution of the past 25 years has made our economies into extravagant playgrounds for the super-wealthy. Politicians of both the mainstream left and right in the US and UK have fawned over those who pay their campaign bills in return for low taxation. Even playgrounds should collect tolls — when it is billionaires in the sandpit.

As he says:

We need, in sum, to reset our macroeconomic timetables. There are no short-term miracles, only the threat of more bubbles if we pursue economic illusions. To rebuild our economies, the watchword must be investment rather than stimulus.

That's all very Green New Deal.

The only problem is he prefaces is comments by saying:

First, governments should work within a medium-term budget framework of five years, and within a decade-long strategy on economic transformation. Deficit cutting should start now, not later, to achieve manageable debt-to-GDP ratios before 2015.

How he thinks any of his other objectives will be achieved against a background of depression - for that is what his plan will create - is hard to explain.

I suggest he's got a lot to learn about the real world as yet. Like a lot of economists too many of the realities seem to pass him by. Not least the fact that without stimulus there is no chance of any investment at all.