Left, Right, Keynesian and role of government in economy

Comments on Janet Albrechtsen “Beware socialist snake-oil vendors”, 30/09/2009, http://blogs.theaustralian.news.com.au/janetalbrechtsen/index.php/theaustralian/comments/beware_socialist_snake_oil_vendors/

While there is a danger that some of the Left people may swing too much to the left in the wake of the crisis, there should be a proper role for government in the economy. That role may vary by conditions of the economy, though. So, some of the swing to the left is justified although one should guard against an excessive swing.

The argument in the article that “the danger of replicating neo-Keynesian spending policies of the early 70s is we may end up with the disastrous stagflation - economic stagnation, high unemployment and inflation - that defined the middle to late 70s” has some merits. But it may miss a serious point, that is, the economic problems in the 1970s was caused in the first place by supply side shocks, that is, the first oil shock and the ensuing stagflation reflected the inadequacy of macroeconomic policies of demand side management, such as the Keynesian.

This time the cause of the problem may or may not be the same as at that time, that is, from supply side

Having said that, I think it is important to analyse the cause and nature of the current economic problems and adopt or develop the most suitable policies not necessarily confined to existing policy tools.

Only in that way we can restore world economic growth and efficiency as quickly as possible without repeating past mistakes.

The debate of the Left versus the Right is interesting but sometimes unhelpful. Extremism on either the Left or the Right is generally not the best for the world.

We need vision, common sense and pragmatism.