Tuesday, November 16, 2010

Time Horizons: Last One For A While Edition

Even FLG is getting sick of his Time Horizons theory, but he did want to point out that if you read these two pieces by Kevin Drum, that Dennis the Peasant tipped FLG off to, and notice how he thinks he's "reality-based" when in fact he's short-term biased.

Kevin writes things like:
Interest rates will remain very low for a very long time. The Fed has made this as clear as any central bank possibly could.

Yes, the Fed will keep rates low for the foreseeable future, but a very long time is pushing it unless you are short-term biased.

There is no possibility in the near future of a carbon tax.

There is no question about the federal government's long-term ability to meet its debt obligations, and even if there were this would have very little effect on short-term investment decisions by American businesses.

Over and over, Kevin acts as if people don't take the long-term into account. And if they do, then it's irrational.

The only significant real uncertainty that American businesses face right now is financial uncertainty: that is, whether there will be enough consumer demand next year to justify hiring more workers and buying more equipment today. PPACA and carbon taxes rank very far down the list.

Kevin, maybe, just maybe, people take a longer term view at things than you do. Specifically, maybe business people plan for the future when it comes to hiring and investment beyond the next five minutes or even five years.

Sometimes I think that we reality-based folks cave in to reality a little too quickly.

Kevin, what you call reality-based FLG calls focusing narrowly on the present. Over and over again. And unfortunately for you, when you define reality only was for sure exists right now and what highly likely will exists in-the-very-near-future, then you are banishing a lot of reasonable people to the land of unreal thinking.

Now, to the extent that the problems of the present overwhelm the problems of the future, perhaps your stance is more correct. But to dismiss reasonable concerns about the future as some sort of irrational or mythological thinking is asinine.

2 comments:

The Ancient said...

His "uncertainty-meme" seems to be just another version of Krugman's "confidence fairy."

Withywindle said...

Various people on the left criticized neo-cons for being optimistic about their ability to use military force to achieve foreign policy ends abroad; many of the same people are remarkably optimistic about the ability of the government to affect the economy at home. I suppose I would plump for "we are neither slaves nor masters, but have limited abilities to affect the world, by sending troops or dropping dollars out of a helicopter."

 
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