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What would Keynes say about the snafu in Washington?
I think he would have backed Obama. But I think he would have gone further. I think what he would have said is that we need more deficit spending, not less. And everyone now would think that would be a crazy thing to say. But it is logical. Where is the private spending going to come from if the government cuts down?
How do you know when enough Keynesian stimulus is enough?
Well, I think you have to have a bit of what we would call healthy growth. Now you can argue about what healthy growth is, and the U.S. economy has been growing—not very much, but it has been growing. Whereas, in fact, the U.K. economy is completely flat. And most of the euro zone is pretty flat. And I think you have the wrong policy, and you get the wrong results.
How do you respond to Ron Paul of Texas, who in his Bloomberg View op-ed says we need austerity right now to clear the market?
First of all, there are huge political risks in doing something like that because you are creating a huge amount of resistance. And I think it is morally wrong. I just don’t buy this argument of the hair shirt, especially as the hair shirt isn’t exactly being worn by the richest in the economy.