Murilo Jambeiro de Oliveira
Brazil, November 18, 2024.
Exactly 1 year ago, I explained that Joe Biden was proposing a Green New Deal, which had as a backdrop a huge deficit. Below is today’s comment from Elon Musk about it, and the translation of my post from a year ago:
Myth – Episode 2
By Murilo in Brazil Talks, Preaching Tag Green New Deal
Murilo Oliveira
Brazil, November 17, 2023.
Stephanie Kelton, author of “The Deficit Myth: Monetary Theory and the Birth of the Economy” has been singled out as one of the ideologues of “Bidenomics”. I’ll include her brief TED talk below. But what is worth mentioning is perhaps that Keynesianism, or the “Green New Deal,” is gaining notoriety among experts today, something I hadn’t seen in the previous decades, much less in developing countries.
In general terms, Biden currently has the lowest unemployment rate in many years, around 3.5%, while at the same time questioning a spending cap, a very strong speech in Brazil in recent years, the fight against the fiscal deficit. Where, as John Maynard Keynes already suggested, investing in infrastructure as a fundamental driver of economic activity comes to the aid of the economy as a whole. Clearly, the “turning point” of the consensus in favor of Keynes seems to me to have happened with the pandemic. Despite the high interest rates.
The US government is investing almost twice the Brazilian GDP, US$ 3.5 trillion, in the renewal of its industrial base, preparing it for the reduction of carbon emissions, and better coverage of social policies that increase purchasing power and strengthen the middle class. At the same time, it is reducing dependence on China with Mexico becoming its largest trading partner.
Despite all this data, the consensus still does not exist in a strong way in the market, with the downgrade of the United States’ rating by the Fitch rating agency, and an apparent apathy regarding Biden’s popularity among the American population in general, which does not realize this. The popularity of the Biden government has not increased at the same time as it realizes this. The so-called “Bidenomics” is still not an electoral success, despite already resorting to the very Brazilian expedient of placing plaques on ongoing construction sites to affirm its authorship.
In other words, what I want to point out here is that at this point in time, Keynesianism is no longer spoken of with as much embarrassment as before, even without full market consensus or great electoral popularity, the myth of the fiscal deficit is undergoing a major turning point for the first time. Precisely at the moment when the spending cap, for example, and the whole corollary of fiscal responsibility, is being propagated in Brazil as an almost religious truth. The understanding that some social spending, especially infrastructure spending, should not be flattened under a rigid cap, but has a multiplier effect and creates jobs, is beginning to be practiced in much of the world without much shame.
@CoexistenceLaw
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