The Democrats’ Line in the Sand
Until the Bush administration, American presidents’ economic advisers since World War II have been advocates of aiming for budget surpluses except in times of weak demand and possible depression. With Republicans apparently abandoning fiscal discipline, a more hawkish fiscal stance may no longer be possible in future Democratic administrations.
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BERKELEY – Ever since the 1928 work of Frank Ramsey, economists have accepted the utilitarian argument that a good economy is one in which returns on investment are not too great a multiple – less than three – of the rate of per capita economic growth. An economy in which profits from investment are high relative to the growth rate is an economy that is under-saving and under-investing.