In economic-policy circles, a debate rages around what medicine might cure the ailing economy. The topic doesn’t draw much attention in environmental media, but I would argue that the direction of economic policy is at least as important as the hopelessly vexed question of energy policy.
Before I ggt to the green implications, let’s look at how the economic-policy debate is playing out.
On one side, you’ve got the champions of fiscal austerity. They look at the national budget deficit — puffed up by war spending, the Bush tax cuts, the bank bailouts, and the ’09-’10 stimulus — and find the specter of inflation lurking just around the corner (even though inflation currently hovers at perilously low levels). They insist that the only way to treat to our economic ills is to slash the deficit. But raising taxes is taboo, as is cutting military expenditures. The answer is draconian cuts to social spending. The logic goes like this: you slash funds devoted to, say, education; the deficit falls a little; and, somehow, consumers and businesses gain confidence and a brisk economic recovery blooms.