Williamson quotes Sachs approvingly:
"Though Jeff Sachs is a Keynesian, he views himself as a particular kind of Keynesian, and he has taken issue recently with Keynesians he calls "crude Keynesians." Sachs recently wrote this post, which I found interesting. It's pretty bold, actually, and I agree with most of it. The gist of Sachs's piece is in line with some arguments I have made here. For example read this.
"Here are some of the juicy parts of Sachs's post. He says that there are four elements of crude Keynesianism, and that all of those positions are "misguided":
(1) The belief that multipliers on tax cuts and transfers are stable, predictable and large;
(2) The belief that America's employment and growth problems are overwhelmingly cyclical, not structural, and therefore remediable by short-term aggregate demand management;
(3) The belief that a growing debt burden is a minor nuisance as long as the economy is in recession;
(4) The belief that for practical purposes, the most urgent need is to raise aggregate demand rather than to focus on the quality and type of public spending.
"Sachs characterizes the problems of the U.S. economy as structural, and not the result of some sort of "aggregate demand deficiency."
What are some of the structural problems? These include large-scale offshoring of jobs, large-scale automation of jobs, decline in demand for low-skilled workers, skill mismatches, broken infrastructure, and rising global energy and food prices. These require various kinds of targeted public investment spending, not simply aggregate demand.
"I especially like this one:
The US economic emergency in late 2008 and early 2009 wasn't really an aggregate demand crisis but a financial crisis."That should be pretty obvious, but many people don't seem to get it.
"Predictably, the usual cast of characters is calling Sachs an idiot. Someone should take him out to lunch and give him a pat on the back."
http://newmonetarism.blogspot.com/2013/03/jeffrey-sachs-and-keynesian-economics.html
Yes, the usual cast of characters: one of this cast, of course, is Sumner who criticizes Sachs claim that the the crisis wasn't an aggregate demand crisis but a financial crisis. In a way it might be welcome for someone to contradict Sumner on this. However, I can't help but wonder if the reason SW likes Sachs so much is because he recently criticized Krugman. That's the particular character in "this cast" SW is usually thinking about.
To be sure I find some of these structural problems Sachs lists as kind of interesting. Of course, Stiglitz suggested things like offshoring, large scale automation. of jobs etc and he was certainly called an idiot. Did SW take him out to lunch?
In a way though SW is a Pavlovian dog about Krugman he might be giving aid and comfort to the camp that Sumner, et. al. have dubbed "Luddites." Is he an anti-Krugman Luddite? Mind you I while I think there may be something to at least some of these structural issues, I don't buy that there is no demand management problem and that we're near any "natural rate of unemployment"
UPDATE: I see that E.L. Beck who I wrote about earlier has wrote a post that also looks at the question of longer structural problems as the cause of Japan's long stagnation and suggests these same problems may be at work here.
http://the-small-r.com/2013/02/28/the-vanishing-middle-class/
UPDATE: I see that E.L. Beck who I wrote about earlier has wrote a post that also looks at the question of longer structural problems as the cause of Japan's long stagnation and suggests these same problems may be at work here.
http://the-small-r.com/2013/02/28/the-vanishing-middle-class/
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