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Why Obama’s Economic Policies Will Fail


 I don’t want Obama’s economic policies to fail. But fail they will for two reasons. First, the successful Republican strategy of shrinking the stimulus package so that few benefits reach people struggling with income and job loss. Even if Obama had his way, a trillion dollars or more of government spending (actually borrowing) in this economy is like throwing basketballs into the Pacific Ocean. Second, as economist Hyman Minsky noted decades ago, bailouts of speculators without tightening regulatory controls becomes less successful over time. Speculators grow accustomed to government bailouts – as they have since the 1987 stock market crash – using our cash to fuel the next bubble (health care?). What’s the solution? As Minksy said, "Only an economics that is critical of capitalism can be a guide to successful policy for capitalism." For more on Minsky see http://www.thenation.com/archive/detail/34976563

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