The Way Forward
George Soros shares some thoughts about how American economic policy should move forward.
I believe that there is a strong case for further stimulus. Admittedly, consumption cannot be sustained indefinitely by running up the national debt; the imbalance between consumption and investment must be corrected. But to cut government spending at a time of large-scale unemployment would be to ignore the lessons of history.
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The obvious solution is to distinguish between investments and current consumption, and increase the former while reducing the latter. But that seems politically untenable. Most Americans are convinced that government is incapable of efficiently managing investments aimed at improving the country’s physical and human capital.
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Moreover, the simple truth is that the private sector is not employing available resources. Obama has been very friendly to business, and corporations are operating very profitably. But, instead of investing, they are building up liquidity. Perhaps a Republican victory will boost their confidence, but in the meantime investment and employment require fiscal stimulus (monetary stimulus, by contrast, would be more likely to stimulate corporations to devour each other than to hire workers).
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