Core principles for fixing the economy per Galbraith (Jr) -- right or wrong?

Though I have a below-average grasp of economics, I was spellbound listening to James K. Galbraith (Jr) on Bill Moyers Journal. He laid out core principles for understanding and fixing the economy which even I could understand (I think). I've paraphrased my understanding below. Did I understand Galbraith correctly? Is he right?

A link to the transcript and other Galbraith articles can be found at http://www.pbs.org/moyers/journal/10242008/profile.html.

Where We Are:

1) James K. Galbraith Sr. predicted in 1955 that America would gradually forget, then have to painfully relearn, the lesson of 1929/30: unregulated capitalism, with unregulated markets and financial institutions, inevitably leads to economic catastrophe.

2) A strong, stable and sustainable capitalist economy is possible ONLY with government regulation and oversight.

3) It is the responsibility of government to regulate and supervise all critical economic factors (like markets, financial institutions, business, labor) so that they ultimately result in "the public good". The underlying principle is similar to government regulation of utilities "for the public good".

4) The primary responsibility of any government is to promote and protect "the public good". While not overtly stated, this clearly seems to be Galbraith's underlying presumption (When you think about it, there's no other reasonable justification for the existence of "government", is there?)

What Happens Now:

1) The federal budget deficit inevitably WILL increase. It will happen, one of two ways:
PLAN A: the federal government uses necessary funds to rescue and stabilize a healthy economy for all sectors, or,
PLAN B: we continue on our present road to a catastrophic, perhaps irreversible, depression resulting not only in mass suffering but also in collapse of the federal tax base.

2) If we implement PLAN A, then this inevitable increased deficit is NOT a significant problem. It is NOT something people should worry about. In a healthy economy, the federal government CAN carry and manage a large deficit.

3) Thanks primarily to FDR (and Kennedy and Johnson), the federal institutions necessary to implement PLAN A, while damaged, still have enough left-in-place to give the government the tools it needs.

4) PLAN A in the general sectors (Main Street): The federal government MUST rescue and stabilize hard hit sectors of the general population.

Examples include (a) keeping people in their homes -- there is no sense in having millions of families struggling for shelter amid rows of empty and decaying houses. The government will have to subsidize, buy and rewrite some of these mortgages; (b) Rescue and stabilize the retiree sector -- many of whom have irreversibly lost pension plans and 401k's -- by increasing Social Security benefits to reflect the cost of living; (c) Create jobs -- eliminate corporate incentives to outsource jobs overseas.

5) PLAN A on Wall Street: Do NOT rescue or reward parasites and predators -- eliminate them. Eliminate the climate which allows them to thrive while honest fair-players go under. Restructure regulations so that Wall Street ultimately serves "the public good".


Makes sense to me, but I'm no economist.

doing the last 40 years.