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In Wake of Crisis, New Economic Thinking Emerges

Unfortunately, many liberals have not moved beyond Lyndon Johnson's thinking on the role of the government in the economy.

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There are many other ways in which we can change the rules so that less money flows to those on top, leaving more for the rest of us. Changing the rules does not require big government in the sense of large portions of GDP being collected in tax revenue.

It does require that government take an active role in the economy, but it is already taking an active role in the economy in these areas. The difference is that, currently, the conservatives have been setting these rules, while progressives have been polite enough not to pay attention. Instead, they have mostly focused their energy on matters that will have far less impact.

The economic crisis brought on by the collapse of the housing bubble offers progressives unprecedented opportunities. But we have to be prepared to actually think big, and not just think about big programs.

Dean Baker is co-director of the Center for Economic and Policy Research.

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