Friday, July 09, 2010

The Liberal Economic Mind

RealClearPolitics - David Brooks' Neo-Hooverite Plea

The study of the liberal mind is one of my guilty pleasures. They are avid writers, often extremely emotional and direct in their prose, somehow, apparently certain that no bumble headed conservative could be peeking in the open windows of their minds -- one almost feels voyeuristic.
The New York Times columnist Paul Krugman has sounded the alarm on this in several recent columns - just as he warned that the initial Obama stimulus, while historically high, was inadequate to fully reverse the downturn that was the legacy of the Bush administration. Then as now, Krugman was pointed, not polite, in his criticism. And while the administration probably couldn't have passed a larger stimulus in 2009, it is today hard to deny
that the Nobel laureate accurately diagnosed the situation.
"It is today hard to deny"?  If the medieval barber calls for 2 quarts of blood to be let, but a mere two pints is let and the patient does not recover, does it become "hard to deny" that the barber was correct? To the liberal mind, yes. The fact that jobs and economic growth can be generated by government spending is MUCH more an article of faith to the liberal than a biblical young earth to a fundamentalist (derided later in the article). The fundamentalist is willing to allow a power and a universe to have power and majesty beyond the fundamentalist, the liberal is not -- HIS views MUST be correct.
The fact that Krugman can be prickly and Brooks is congenial can't be confused with the question of who is correct on the economic merits. Krugman clearly has that honor. Yet the Brooks position is on the verge of carrying the day, both across the Atlantic and in the midterms-wary policy debates in Congress. Last year's G-20 conference, led by Obama and then-British Prime Minister Gordon Brown, settled on a strategy of higher spending to spur demand and growth, to be followed by a fiscal tightening once the recovery was secure. This year's G-20, with a new Tory prime minister from Britain and German Chancellor Angela Merkel preaching Teutonic fiscal stringency, reversed field with a call to roll back spending.
Remember when the Europeans were totally right, along with BO, Shrum, the MSM and left that Iraq was a "lost cause"? How intelligent they were then, yet how stupid they are now that they deign to disagree with the holy economic writ of BO, Krugman and Bob. The entire world has been stupid for ages, for all that was ever required for economic success is the massive injection of huge sums of borrowed or printed money -- hopefully in concert with massive taxes on the most productive. Liberals have known this obvious truth forever, only complete fools can fail to see it.
First, Brooks denigrates "Demand Siders" for having too much trust in their models, which could "risk national insolvency." Never mind that the markets - with historically low yields on U.S. bonds - are telling us that American debt remains the safest investment in the world.
So, do we believe in markets or don't we? The stock market was over $14K ... until it wasn't. Then it was at like $6,500 ... then $11K. Guess what? ALL of those were a RELATIVE assessment of current and future values AT THAT POINT. What "historically low yeilds" means is that AT THE MOMENT, there isn't a better choice -- then there is, the markets will take those yields to historic highs just as quick.
For the medium and the longer term, as The Washington Post's Ezra Klein points out, simply letting the Bush tax cuts expire on schedule - instead of renewing them, as the supposed fiscal hawks in the GOP demand - would reduce the federal deficit by $4 trillion over 10 years. But the same voices that oppose spending now to restore the economy will oppose asking for any sacrifice from those at the top, even in good times.
Only if you assume (as CBO does) that tax policy has no effect on the economy. That would mean that the people that pay the most in taxes are least affected by monetary incentives. Unsurprisingly, that turns out to not be the case which is why the CBO always vastly overestimates the "take" on a tax increase as well as the "cost" of a tax decrease.
The only answer that's coherent and convincing is to stimulate demand long enough and vigorously enough to restore business and consumer confidence, and move the nation back to full employment. But that won't work, Brooks opines, citing a New York Times-CBS poll showing that only 6 percent of Americans believe that the stimulus succeeded in actually creating jobs. He grudgingly allows that "maybe" this is wrong. Maybe? According to the Congressional Budget Office, as of the first quarter of this year, there were 2.8 million people at work because of the stimulus, economic growth was 4.5 percent higher than it otherwise would have been, and unemployment was 1.5 percent lower. Without that package, the country would have faced a longer, deeper recession - and perhaps a depression.
"The only answer that's coherent and convincing"? Usually, the "only answer" ... isn't. BO clearly stated that WITHOUT the stimulus, unemployment would go over 8% ... it went over 10% WITH it. When Bush made predictions that didn't come true, he wasn't just wrong, he was LYING -- but one thing was sure, the MSM would NEVER let us forget that his predictions were wrong. Actually, GOOD! They need to be exactly the same with BO. REMEMBER -- he was WRONG with his predictions about $800 Billion. Perhaps it would be wiser to question his pronouncements than to claim they are the ONLY answer that is "coherent and convincing". To you maybe, but then you are a closed minded liberal, more entrenched in your ideology than any young earth creationist.

No comments:

Post a Comment