Keynes and the Swedes

Yglesias nicely summarizes a Post article about economic lessons from Sweden’s economic recovery:

The ‘lessons’ basically all just amount to bog [sic– I think] standard orthodox Keynesianism. Sweden’s right-wing government (which of course is wildly socialistic by American standards) went in to the recession with the budget in good shape, rather than the Bush approach of tax cut-induced structural deficits and expensive wars. Then when the recession hit, Sweden has massive automatic fiscal stabilizers, and tacked on some discretionary stimulus in the form of tax cuts and infrastructure projects…

Note that there’s no miracle here. It’s not like Sweden has shot forward into some bold new era of unknown prosperity. They were plugging along before the crisis, the crisis caused output and employment to plummet, but then what all the expansionary policy did was allow for a period of rapid growth so that Sweden can catch back up to the trend.

Meanwhile, the Republican party has convinced ourselves– despite virtually all evidence to the contrary– that we can cut ourselves (both spending and government regulation) back to robust growth.

About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

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