Posner makes it clear that he understands the risks the United States now faces as the crisis of private finance continues its metamorphosis into a crisis of public finance: an exploding debt relative to gross domestic product; larger risk premiums as investors prepare for higher inflation or a weaker dollar; rising interest rates; a greater share of tax revenues going for interest payments; a diminishing share of resources available for national security as opposed to Social Security. “As an economic power,” Posner concludes, “we may go the way of the British Empire.” Indeed. It seems not to have struck the judge that British decline and the rise of Keynesianism went hand in hand.
Monday, May 10, 2010
excellent review by Niall Ferguson of Richard Posner's latest book The Crisis of Capitalist Democracy that appeared in the NYT (HT Escolhas e Consequências). Ferguson summarizes the problem with Posner's arguments in this paragraph: