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LARS P. SYLL 
I guess I’m so heterodox that I don’t accept GDP as a measure of the value of anything. I do not think public policy should be concerned with increasing GDP.
GDP, for me, is an implicit acceptance of the efficient market hypothesis. Only consumption of privately produced goods counts. Prices are assumed to be efficient measures of true value. I do not make those assumptions, so I don’t agree with Reich’s analysis. (Even if I did, I question his arguments; from his graph, it appears that tax cuts or increases have no real effect on GDP.)
In my view, deficits don’t matter. Money is limited only by the willingness of the private financial sector to expand their balance sheets; in crises, the Fed has proven it can supply liquidity on demand to the private sector until they stop panicking and start meeting their own demand for money in the usual way. In my view, instead of worrying about the National Debt, Reich should be arguing that we can create money for social programs, such as a basic income (which Reich supports), on the Fed’s balance sheet at no taxpayer cost. We can handle inflation through indexation of all incomes to price rises, thus guaranteeing that real income purchasing power does not decrease.
Comment by Robert Mitchell— 17 Dec, 2017 #