"Restoring clarity and predictability are essential for igniting hiring and investment. Yet in so many areas, from tax rates to energy policy to labor regulation to trade, the Obama administration has only added to the lack of clarity and the uncertainty. The most dramatic illustration came midsummer, when the absence of presidential leadership brought the country to the precipice of default. Uncertainty is the enemy of growth, investment, and hiring."I think this calls for a revisiting of Kalecki's "Political Aspects of Full Employment." Every time I re-read this piece, I am re-inforced in my idea that it is a work of great profundity. What is more, it is written in an accessible, popular style, which even further increases its value.
In particular, I think this passage is of the utmost importance for interpreting the Romney "plan":
"Under a laissez-faire system the level of employment depends to a great extent on the so-called state of confidence. If this deteriorates, private investment declines, which results in a fall of output and employment (both directly and through the secondary effect of the fall in incomes upon consumption and investment). This gives the capitalists a powerful indirect control over government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis."However:
"[O]nce the government learns the trick of increasing employment by its own purchases, this powerful controlling device loses its effectiveness. Hence budget deficits necessary to carry out government intervention must be regarded as perilous. The social function of the doctrine of 'sound finance' is to make the level of employment dependent on the state of confidence."That just about says it, don't it?
(This is only one of the brilliant passages in the piece. Really, I recommend reading it.)
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