My theme is that even in the face of the Greek situation, some economists continue to argue that deficits don't matter. Here is the introduction:
As the Greek welfare state collapses, citizens there have been rioting over cutbacks in social spending necessitated by mounting government debt. The rioters apparently fail to recognize that whenever a government routinely promises to spend more money than it has, then eventually it will be unable to fulfill those promises. Many Americans worry that we will soon be facing similar troubles at either the state (e.g., California) or national levels.(Read the full text of "Beware Dr. Galbraith's Snake Oil".)
Yet some renowned economists, such as Professor James Galbraith of the University of Texas, are trying to convince us that the U.S. government should ignore our massive federal budget deficit and instead spend even more. Galbraith argues that calls for fiscal responsibility are "misguided" and that greater deficit spending will create greater prosperity.
Galbraith's proposals are dangerous because they are based on the notion that you can get something for nothing. Unless we want to see a Greek-style collapse here in America, we must reject those ideas as economic "snake oil" and instead demand an end to our government’s fiscally irresponsible deficit spending.
James Galbraith is no street corner crank. Instead, he has a BA from Harvard and a Ph.D. from Yale, both in economics. He is a professor of economics at the University of Texas, Austin, and son of famous Keynesian economist John Kenneth Galbraith. Because of his impressive academic and intellectual pedigree, many Washington politicians and pundits take his ideas seriously. Hence, so must we...
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