“For a Keynesian, it’s always 1933. But it may very well be 1973, instead: the doorstep of staglation.” http://bit.ly/9oM2Tv. #PANIC Biggest issue with just-tweeted NRO piece: what does “proceed with caution” mean? Inaction is a form of action. Can’t let caution equal paralysis. Either author’s economic analysis is right, or it’s not. But to say it’s more “cautious” than a Keynesian approach is meaningless poppycock. What we need is not “caution,” but correctness. We should vigorously pursue the correct policy. But what *is* the correct policy? That’s the question. Let me be clear: I’m not saying author is wrong. I dunno. I just know the Keynes-Hayek debate is central, and can’t be avoided via a vague philosophy of “caution.” RT @politicalmath How do you proceed with no confident way to determine “correct” policy? | I have no idea. This is why I hate (and love) economics. RT @politicalmath: @brendanloy I’m not an economist, but I find “stagflation” concerns to be a bit paranoid. But we should still probably #PANIC RT @dmataconis: @politicalmath @brendanloy No matter what the news, we must never forget to #PANIC RT @politicalmath: @dmataconis @brendanloy I confidently predict the end of the world at an unspecified, unprovable time in the future. RT @dmataconis: @politicalmath @brendanloy #PANIC !!!!!!!!
wow! That was unexpected……..
Got the link from AMLTrojan. Thought it was a good, cogent, intellectually honest critique of Obama’s policies — though, as the follow-up tweets make clear, I take issue with the notion that non-Keynesian policies are somehow more inherently “cautious” than Keynesian ones, as that seems to me an attempt to establish some sort of neutral intellectual high ground, separate and apart from the debate over whether Keynesianism is right or wrong (or, perhaps I should say, applicable or inapplicable to the present situation). The best approach is the correct one, not the most “cautious” one. If the Keynesians are right, a “cautious” approach isn’t cautious at all, but in fact is incredibly risky and potentially disastrous. The fact that it’s difficult to determine (or establish consensus on) which approach is “correct” is no excuse to fall back on a philosophy of “caution,” since inaction is a form of action, so there’s really so such thing as a neutrally “cautious” approach.
But anyway, as for the underlying question of whether the Keynesians’ ideas apply to this situation, I’ve always been pretty agnostic. I was inclined to go along with the stimulus because it seemed to be pretty widely supported by mainstream thought, and a lot of the arguments against it seemed intellectually dishonest. But I’m very open to intellectually honest anti-Keynesian arguments, like this one.
I think that at least parts of the Keynesian plan worked in the 1930s. The problem is, the thickets of regulations that have accumulated in the three-quarters of a century since act as lead weights. What we have today makes the New Deal look like a paragon of efficiency.
In the 1930s, government, working with private contractors, said, “We’re going to build a road here,” and they built a road there. They said, “We’re going to build a dam here,” and they built a dam there. This worked through the beginning of the interstate highway system, and then the ’60s happened.
Whoever coined the phrase “shovel-ready projects” never heard of the phrase “environmental impact statement.”
The New Deal-era Congress didn’t have to worry about Social Security, Medicare, and Medicaid overwhelming the budget. There weren’t rules about contracting to minority- or women-owned businesses. Could we set up something like the CCC or WPA today without Democratic demands that the workers be unionized first? (See: Transportation Security Administration.)
The New Deal did some great things. It just seems like what we take for granted from it, especially in the area of infrastructure, is not what Congress wants to go after. They’d rather stick their nose into things that breed “uncertainty” into the private sector.