Macroeconomics Paper 2

8/12/2019 Macroeconomics Paper 2

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Phuong Pham

Intermediate Macroeconomics

Paul Hancock

December 10, 2012

Class Paper 2

There are two items that stand out rom the inter!iew with Da!id Har!e" and

#ichard $o% &irst, #ose wanted an e'ample o a countr" where the kind o alternati!e

to capitalism proposed b" $ol and Har!e" is currentl" being practiced% (econd, #ose

seemed surprised to hear that Mar'ism has been or some time, and continues to be,

sub)ect to a taboo in the academ" and in the wider societ"%

(tarting the con!ersation b" talking about the image o cities, Da!id Har!e"

pointed out that while cities represent some o the best aspects o the human societ",

the" also e'hibit the worst attributes in which ine*ualit" is one o the most acute

conse*uences inherent in the capital s"stem% Citing the e'ample o Mondragon in

(pain, which was ounded in the mid+1-0s when a Catholic priest in .orthern (pain

got together a handul o workers in the wake o se!ere unemplo"ment and

go!ernment/s indierence, and now is one o the most successul enterprises in (pain,

Da!id Har!e" e'pressed his belie that wealth should be e*uall" distributed in a societ"%

$orkers should be able to collecti!el" decide what to pa" and what to do and that is a

radical alternati!e to capitalism% $o then brought up the brouhaha o $all (treet/s one

percent to highlight the startling ine*ualit" in the 3nited (tates where one percent o the

population make some 4%- million dollars a "ear, whereas it" percent o the population


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ha!e to manage to make ends meet on thirt" thousand dollars a "ear% He asserted that

such ine*ualit" is non+e'istent in a world dominated b" non+capitalist economies like

Mondragon% $o contended that i a communit" o people who work in an enterprise sit

around and collecti!el" decide how to pa" its members, the chance that some people

become millionaires and some people are unable to take care o their kids is

e'traordinaril" unlikel"%

.o longer do we ha!e con!ersations about Mar'ism in uni!ersities% It/s hard to

ha!e con!ersations in uni!ersities, not in Har!ard, not in (tanord, not in 5ale% 6

signiicant number o 6merican colleges instill the idea o capitalism into their students/

minds% Proession+wise, the consensus is that we do not mention Mar'ism and the likes

in our work% In other words, Mar'ism at large remains to be rowned upon b" the

societ"%

7n a dierent note, as reported in a $all (treet 8ournal article, current economic

polic" will lead to a recession in 2014, according to warnings rom the Congressional

9udget 7ice, and to rapid increases in the national debt% The article/s new sur!e"

showed that a !ast ma)orit" o economists belie!e the ederal go!ernment should

maintain or increase spending le!els ne't "ear : a shared opinion that stands in

contrast to steep budget cuts set to take place in 2014% In the short term, economists

recommend that go!ernment policies should not be tighten in 2014, but could be stricter

in 201; ollowing the result drawn rom the sur!e" b" the .ational 6ssociation o

9usiness


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with >e"nesian economic models in which go!ernment spending is strongl" encouraged

and iscal polic" can be a powerul le!er to mo!e the econom" because the eect o

an increase in spending or a cut in ta'es will ha!e a positi!e impact on aggregate

demand%

$ith respect to monetar" polic", the &ederal #eser!e put into eect e'pansionar"

monetar" polic" b" purchasing securities on the open market, also known as open

market operations% The mo!e stirred some contro!ers" among polic" makers, with

opinions being e!enl" split as to i at all it had a positi!e impact on the econom"%

$hile current economic policies ha!e "et to pro!e eecti!e and are putting the

econom" at a deadlock, the arguments put orth b" Da!id Har!e" and #ichard $o

seem more radical and to be in consensus with other heterodo' economists% 9asicall"

the idea is that labor/s real reward should rise as ast as real output per worker and

institutional structure o capitalism to some e'tent e'erts inluence on crisis tendencies%

$ealth should be e*uall" di!ided among the nation and labor should ha!e as much

power in deciding how much the" should work and get paid as does emplo"er%

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Macroeconomics Paper 2