Posted by WARREN MOSLER on June 24th, 2012
June 23 (NYT)
To the Editor:
Re “Broken Trust Takes Time to Mend” (Economic View, June 17):
Tyler Cowen argues that the “slow cure” for our economic malaise is to allow asset prices, wealth, trust, etc. to slowly rise. He states that the textbook cure of significant “Keynesian” government stimulus spending will not quickly restore prosperity because fiscal stimulus does not “rebuild confidence.”
Unfortunately, Professor Cowen seems not to understand that if the government were to let contracts for, say, $1 trillion to private enterprise to rebuild our failing highways, bridges, and municipal water and sewage systems, and provide resources for our shrinking public and higher education systems, this would quickly restore companies’ confidence in the profit opportunities that are available if they hire workers and buy materials from other United States companies. When these newly hired workers go out and spend their wages, the confidence of United States retailers would immediately surge as these additional customers break down the doors to get at the merchandise on the shelves.
Nothing will build the confidence and trust of business and workers quicker than the continuous ringing of cash registers. Paul Davidson
Morton Grove, Ill., June 17
The writer is editor of the Journal of Post Keynesian Economics and author of “The Keynes Solution: The Path to Global Economic Prosperity” (Palgrave Macmillan, 2009).