IMF Survey: Laissez-Faire States are Keynesian Now: How Refreshing!
December 30, 2008
FISCAL STIMULUS PACKAGES
Dear IMF Survey:
The impact of the current financial crisis can indeed be limited by concerted, broad-based rescue plans as discussed by Olivier Blanchard and Carlo Cottarelli ("IMF Spells Out Need for Global Fiscal Stimulus," December 29, 2008). As has largely been noted, the crisis originated in the United States but spread fast to affect the whole world.
U.S. economic orthodoxy had previously shunned government intervention and glorified laissez-faire. It is now refreshing and edifying that the United States, the United Kingdom, and other developed economies have welcomed the Keynesian proposition of government involvement in business. This will help revive their battered, nearly collapsed economies.
It is also timely to apply demand-side economics in addressing the current crisis, which has become virulent ("IMF Urges Stimulus as Global Growth Marked Down Sharply," November 6, 2008).
We will have a swift turnaround when the IMF rallies its members to pursue a coordinated approach to implementing pragmatic rescue plans. No country should be allowed to be a joy-rider in this dangerous economic period. Any country hesitant to embrace a joint strategy may see its economy fall off a cliff if it insists on acting alone.