James Galbraith


James K. Galbraith is author of Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe. He is an elected member
of the Accademia Nazionale dei Lincei, the Italian national academy. 

Recent Articles

What is Reform? The Strange Case of Greece and Europe

Why creditors' demands would only prolong Greece's crisis. 

AP Photo/Yorgos Karahalis
On our way back from Berlin on Tuesday, Greek Finance Minister Yanis Varoufakis remarked to me that current usage of the word “reform” has its origins in the middle period of the Soviet Union, notably under Khrushchev, when modernizing academics sought to introduce elements of decentralization and market process into a sclerotic planning system. In those years when the American struggle was for rights and some young Europeans still dreamed of revolution, “reform” was not much used in the West. Today, in an odd twist of convergence, it has become the watchword of the ruling class. The word, reform, has now become central to the tug of war between Greece and its creditors. New debt relief might be possible—but only if the Greeks agree to “reforms.” But what reforms and to what end? The press has generally tossed around the word, reform, in the Greek context, as if there were broad agreement on its meaning. The specific reforms demanded by Greece...

When Should We Retire? Two Views

With so much focus on the deficit, many assume entitlement programs should be cut. But there is a progressive argument for raising the retirement age, and one for lowering it.

Commission on Fiscal Responsibility and Reform co-chairmen Erskine Bowles, left, and Alan Simpson (AP Photo/Harry Hamburg)
Early Retirement as a Fix for Unemployment By James K. Galbraith Debate over the future of Social Security and Medicare usually takes place in a timeless cocoon, insulated from other programs and economic forces, an economic neverland in which the Great Crisis either did not happen or has safely passed without lasting effect. This is explicit in the forecasts of the Congressional Budget Office, which habitually foresee full employment returning within five years, whatever the starting point. The CBO approach is like that of a doctor with only one patient: On observing that the patient has always recovered in the past, the doctor infers that the patient must, therefore, be immortal. In the real world, we have suffered an economic calamity, and whether we recover from it fully or at all depends on the steps we take -- or fail to take -- right now. Social Security and Medicare can be part of that solution -- but not by cutting them to reduce the deficit. Rather, we should expand their...

On the Economics of Deficits

Most of the federal deficit is caused by the recession itself. To cure the slump, fix the financial system.

What caused the deficits and rising public debt? The answer comes in two parts: present deficits and projected future deficits. The first point to appreciate is that current deficits and rising debt levels were caused primarily by the financial crisis. The financial crisis, the fall in asset values (especially housing), and withdrawal of bank lending to businesses and households have meant a sharp decline in economic activity. This decline has led to a sharp drop in tax revenues and an increase in unemployment insurance and the like. According to a new International Monetary Fund staff analysis, fully half of the large increase in budget deficits in major economies around the world is due to collapsing tax revenues. Less than 10 percent is due to increased discretionary public expenditure, such as stimulus packages. This point is important because it shows that the claim that deficits have resulted from "overspending" is false. This is the case both in the United States and abroad...

How Much Will It Cost and Will It Come Soon Enough?

Could the current bailout bill have been better? Yes. But there are still a few fixes Congress should consider.

There is no question that the current bailout bill represents an enormous improvement over the original Treasury proposal. Unlike the original proposal, this bill protects the public interest with requirements for disclosure and audit, for reporting to Congress both on procedures and results, and with protections against arbitrage, conflict of interest, and fraud, with provisions requiring the secretary of the treasury to try to minimize foreclosures, to acquire warrants, and with limitations on executive compensation, especially golden parachutes. In several respects, the language could still be improved. For instance, the "unjust enrichment" provision limiting the price Treasury pays for any troubled asset to the price at which it was acquired has two potential problems. First, it might be construed as permitting Treasury to pay up to the original purchase price of a security, in which case an investor who stocked up on bad securities would pay no price for foolish or mistaken...

Why Populists Need to Re-think Trade

Progressives prioritize a trade agenda that would not actually achieve the objectives they have in mind. It's time they adopted a reality-based approach.

The 2006 election opened up American politics, for the first time in decades. It has presented progressives with the opportunity, and the obligation, to define themselves on the big issues. Of these, trade is clearly one of the most potent; alongside the war, it is one of the few questions plainly capable of turning elections in the battleground states. In a Washington Post essay published late last year, on the eve of the Democrats' ascension to the majority, Senators Byron Dorgan and Sherrod Brown articulated a trade policy that typifies the consensus view of the party's labor-liberal wing. They criticize "free trade," call for strong labor and environmental standards in future trade agreements, and argue for aggressive policies to open foreign markets to American goods. Their critique reflects a genuine anger, and the concerns their piece embodies deserve to be met. Their program is populist, nationalist, muscular, and in tune with the mood of the Democratic base. But it is not...