This paper reconstructs the Keynesian income – expenditure (IE) model to include distinctions between government purchases of private sector output, government production, and government job guarantee program (JGP) employment. Analytically, including those distinctions transforms the model from a single sector model into a multi-sector model. It also surfaces the logic behind the automatic stabilizer property of JGP employment. The model is then extended to include Kaleckian income distribution effects which contribute to explaining why expenditure multipliers vary by type of fiscal expenditure. The Kaleckian version generates a new balanced budget multiplier driven by changed composition of government spending. It also illuminates some macroeconomic implications of privatization of government produced services.
Archive for June, 2021
The Macroeconomics of Government Spending: Distinguishing Between Government Purchases, Government Production, and Job Guarantee Programs
Monday, June 14th, 2021Proto-fascism unleashed: how the Republican Party sold its soul and now threatens democracy
Friday, June 4th, 2021This essay argues that some forty years ago the Republican Party struck a Faustian bargain whereby it traded political integrity and decency for tax cuts and a corporate dominated economy. Now, the Republican party is reaping the consequences of that bargain in the form of its capture by Donald Trump and his followers. However, it also means we are all threatened as the party has unleashed and legitimized proto-fascist tendencies that risk destroying tolerance and democracy, and replacing them with intolerance and authoritarianism. The U.S. is now fighting a war for its soul. At issue are two core questions. One, will the U.S. remain committed to true democracy? Two, will the U.S. aspire to having a decent society with shared prosperity? The one upside of Trump and his purging of the old guard Republican Party is that he compels welcome clarification of those questions, which can no longer be evaded by the Democratic Party and the chattering class.