Wednesday, January 27, 2010

Unromantic Keynesian

Here's a very interesting video clip with Nouriel Roubini discussing the current economic dilemma. He's largely on target (although of course I'm skeptical of spending stimulus). Roubini was one of the very earliest to warn of the credit bubble and debt crisis; much of his analysis is compatible with Austrian business cycle theory, although he claims Keynesian theoretical roots, and does advocate short run aggregate demand management. But he does not romanticize government spending the way ideologues like Paul Krugman do.

What's particularly interesting about this clip is that Roubini answers two questions, good ones, from listeners who are clearly skeptical of government solutions. What's wrong with Roubini's response to the first one?

(Hint: "Laissez faire" doesn't mean "privatize the profits, socialize the losses." It means "privatize the profits AND the losses." Roubini is using the Bush-Bernanke-Paulson definition.)

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