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Today’s Challenges Go Beyond Keynes

The US and Europe have taken separate paths in tackling the global economic crisis: The US delayed tax hikes and engaged in monetary expansion , with low interest rates and stimulus programs to fund temporary jobs and maintain spending while Europe undertook austerity measures combining tax increases and program cuts. For the US, recession has not returned but neither have jobs. Economist Jeffrey Sachs blames Europe’s sluggish growth on its banking crisis and also offers reasons for the US to rethink Keynesian tactics: Most funds from temporary tax cuts and transfer payments in the US were saved not spent; the zero-interest policy carries risks including inappropriate investments that could lead to bubbles; lasting structural changes in the economy are a bigger threat than a depression. US spending has not contributed to sensible infrastructure investment or future planning. Trillions were wasted and Sachs argues for strategic spending “that responds to the new challenges posed by globalisation, climate change and information technology.” – YaleGlobal

Today’s Challenges Go Beyond Keynes

Funds from US zero-interest policy, monetary expansion have been largely wasted, not responding to challenges posed by globalization or need for new energies
Jeffrey Sachs
The Financial Times, 19 December 2012
Click here for the article in The Financial Times.

The writer is director of the Earth Institute at Columbia University.

Source:The Financial Times
Rights:Copyright The Financial Times Limited 2012.