tag:blogger.com,1999:blog-2831755574880155421.post3053210210691533096..comments2023-05-01T00:33:18.258-07:00Comments on Stephen Koukoulas: Peter Costello Needs to Read the Budget PapersStephen Koukoulashttp://www.blogger.com/profile/08403788361480841035noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-2831755574880155421.post-2979250466585081342012-01-23T16:01:42.906-08:002012-01-23T16:01:42.906-08:00This is a quote from Michal Kalecki's 1943 ess...This is a quote from Michal Kalecki's 1943 essay "The Political Consequences of Full Employment" [*]:<br /><br />"Every widening of state activity is looked upon by business with suspicion, but the creation of employment by government spending has a special aspect which makes the opposition particularly intense. 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. But once 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."<br /><br />In other words, the loss of political leverage that public spending causes, weights more heavily than the benefits of economic recovery, in the business class' mind.<br /><br />Plutarch attributed this quote to Julius Caesar:<br /><br />"I assure you I had rather be the first man here [Alpine village] than the second man in Rome."<br /><br />The same principle.<br /><br />Costello is only channeling the spirit of the business class, if I may use an expression with mystical overtones.<br /><br />[*] http://www.cfeps.org/ss2006/readings/Courvisanos_c.pdfMagpiehttps://www.blogger.com/profile/07528637318288802178noreply@blogger.com