Sunday, April 6, 2014

Galbraith via Syll

Galbraith sees nothing to prevent a reduction in the reliance on credit:

There is no reason to think that financial capitalization bears any close relationship to economic development. Most of the Asian countries, including Korea, Japan, and China, did very well for decades without financialization; so did continental Europe in the postwar years, and for that matter so did the United States before 1970.

By James K. Galbraith at Dissent, quoted by Lars P. Syll.

From part 2 of Galbraith's piece, something people often forget -- that conditions result from policy:

The massive equalization in the United States between 1941 and 1945 was due to mobilization conducted under strict price controls alongside confiscatory top tax rates. The purpose was to double output without creating wartime millionaires. Conversely, the purpose of supply-side economics after 1980 was (mainly) to enrich the rich. In both cases, policy largely achieved the effect intended.

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