Wednesday, May 26, 2010

Another Example in the Growing List of Time Horizons and Politics

Harold Meyerson:
Of all the gaps between elite and mass opinion in America today, perhaps the greatest is this: The elites don't really believe we're still in recession. Or maybe, they just don't care.

How else to explain the continual harping on the deficit by editorialists, centrist think tanks and the like when the nation is still enmeshed in the most serious economic downturn since the 1930s? How else to understand the growing opposition to the jobs bills Congress is set to vote on this week, particularly when nobody has identified any future engine of American economic growth save countercyclical public investment?

If you'll allow me to present a stylized version of this debate. The short-term concern is jobs. The long-term concern is the deficit. For Harold Meyerson, who as far as I can tell is legitimately a socialist, the short-term weighs so heavily that any focus on the longer term is unfathomable.

In my opinion, reasonable people can disagree about how much to value the short-term versus the long-term. So, while Meyerson's focus on the short-term is radical, it isn't prima facie idiotic.

What is idiotic is the last sentence. Meyerson seems to see no hope of future economic growth without countercyclical government spending. First, the logic internal to this statement is fucking incomprehensible. If there's nothing to drive economic growth besides government spending, then where the fuck is the business cycle, which notably includes periods of growth, going to come from? Just to be 100% clear, what his statement is saying is this incoherent point -- there's no hope for growth, or at least nobody has identified where growth will come from, so the government needs to spend when there's no growth, but there's no hope of growth, so the government will just have to spend and spend. Spend and spend until when? Nobody knows. This makes no sense either logically or economically. Second, if your only plan is to have the government spend money to create jobs until whenever, but you have no idea when or why non-government stimulated economic growth will kick in, then people are right to worry about the deficit. Meyerson's plan is, quite simply, to keep running up the deficit until something happens. What, when? Where's the economic growth to pay off the debt that has been run up going to come from? Who knows? Certainly not him because he couldn't put together an economic plan if his life depended on it. In fairness, I guess spending more and more money forever is an economic plan, but it's not really a good one.

Again, there's a balance between the short and long run. Long-term concerns about the deficit need to be weighed against short-term concerns regarding people being out of work. I get that. I think most of us get that. What bugs me so much about Meyerson is his concerns about the short-term are so great that he thinks worrying about the long-term is some sort of moral failing. Moreover, we had more than one stimulus. The most recent of which, according to the White House's numbers, cost $224,857.14 per job saved. Does Meyerson really think that's the best way to create jobs? And even if we assume it's the only way to create jobs, then does that make it a good idea?


George Pal said...

So it’s come to this as a good idea: the government pays several times retail (with money it hasn’t got) for jobs to allay the concerns/fears of the poll taking public.

We are doomed. Somebody please put someone with at least an understanding of 'what are the odds' in charge - an inveterate gambler will do.

BTW, the best line re Harold Meyerson (so far):

“Washington Post labor columnist Harold Meyerson, who is to economics what Roman Polanski is to the age of consent... “ - Matt Welch,

The Ancient said...

I think Harold learned everything he knows about economics from Bob Kuttner.

And Kuttner is an economic illiterate.


h/t Mankiw

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