James Galbraith

James K. Galbraith is the Lloyd M. Bentsen Jr. Chair in government-business relations at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin, a senior scholar of the Levy Economics Institute, and chair of the Board of Economists for Peace and Security. His most recent book is Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe.

Recent Articles

Life After Tight Money

The conservative experiment with tight money has failed. Popular monetary prescriptions—low interest rates and a more accountable Federal Reserve—are steps in the right direction. But they must go hand in hand with structural reforms to get the economy back on track.

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The Surrender of Economic Policy

As long as the big choices in macroeconomic policy are off the table, other efforts to raise living standards will not make much difference.

T here is a common ground on economic policy that now stretches, with differences only of degree, from the radical right to Bill Clinton. Across the spectrum, all declare that the main job of government is to help markets work well. On the supply side, government can help, up to a point, by providing education, training, infrastructure, and scientific research--all public goods that markets undervalue. But when it comes to macroeconomic policy, government should do nothing except pursue budget balance, and leave the Federal Reserve alone. To accept a balanced budget and the unchallenged monetary judgment of the Federal Reserve is, by definition, to remove macroeconomics from the political sphere. Thus, the remaining differences between Clinton and the Congress are over details. Should we head for budget balance in seven years, eight, or ten? Should we cut (or impose) this or that environmental regulation? Do Head Start, the AmeriCorps, and technology subsidies justify their cost? And...

The New Dialectic

Modern economic life crosses national boundaries to form a web of intricate association that retards aggressive and regressive nationalism. Trade, investment, enterprise, technology, communications, and travel are today relentlessly transnational. Yet this same globalism undermines the capacity of the nation-state to stabilize its economy. From this paradox comes the first of the dialectics of our time. On the one hand, there is the broad impulse toward closer economic and political association. This is evident in the European Union, the new North American Free Trade Agreement, and a very preliminary economic alliance between the Pacific Asian countries and Australia. Countering this trend are the lingering social and economic responsibilities of the modern state. The provision of medical care, education, housing, and such -- and therewith the budget, taxation, macroeconomic policy and maintenance of employment levels -- are now the duty of individual governments. Thus the dialectic...

Incurable Optimists:

In the status hierarchy of my profession, the Wall Street economist holds a strangely prominent role. Typically, though not always, he lacks academic standing, analytical achievement, or significant publication. Research is foreign to him; independent thought unknown. His job is mainly to get his name into the papers. At this he works exceptionally hard. And the financial pages, which in their turn exist mainly to celebrate the great financial houses, oblige. Hence the Wall Street economist has the luxury of seeing his thoughts in print, without the burden of actually, well, of actually thinking. This tribe, a year ago, was predicting up to three percent growth for 2001. They now concede that, yes, sorry to say, the economy has slowed. But, one reads, "no one saw this recession coming." And so, of course, none can blame the Wall Street economist for failing to warn of the trouble we are in. Moreover, these roosters crow in joyful chorus today. Recovery, everyone agrees, is on the...

Test the Limit

Two components of economic growth—productivity and the supply of labor—are growing faster than conventional economists acknowledge. The danger is that lowered expectations could become self-fulfilling. See " Why We Can Go Faster ," by Barry Bluestone and Bennett Harrison I t has been amusing to watch the natural rate of unemployment come down. Two years ago, the community of respectable economists held—though with exceptions including Robert Eisner of Northwestern, Ray Fair at Yale, Harvard's James Medoff, and myself—that 6 percent unemployment was as low as the economy could go without triggering inflation. This meant, in turn, that sustainable economic growth could proceed only at the long-term rate of labor force growth plus the average rate of improvement of the productivity of labor in the recent past, for a growth speed limit of, at the highest, 2.5 percent. Any at tempt to push gross domestic product (GDP) growth any higher would be inflationary, or so we were constantly told...