Economists and Politicians

February 10th, 2009

Well, we’re in an economic crisis.  That much we know.  So what do we do about it?  I guess we should listen to the economists, right? 

Paul Krugman, liberal economist, thinks the humongous bill in Congress is the way to go.  In his view, “The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.”    

Martin Feldstein, conservative economist, disagrees.  In his view, “The problem with the current stimulus plan is not that it is too big but that it delivers too little extra employment and income for such a large fiscal deficit.”

What worries me more than disagreement among economists is the political line-up:  Almost all Democrats think the current bill is the way to go, and we should listen to them because this mess is the Republicans’ fault.  Almost all Republicans think it’s definitely not the way to go, and we should listen to them because this mess is…well, you know.

Since there are more Democrats in Congress than Republicans, and since the president is a Democrat, looks like they’ll get their way.  In response to Republican objections, President Obama says, in effect: We won the election, so sit down and shut up.  When the liberals line up on one side of an issue and the conservatives line up on the opposite side, the rest of us better watch out.  So much for bipartisanship and change we can believe in. 

Charles Krauthammer says the bill is a “legislative abomination.”  He goes on,

It’s not just pages and pages of special-interest tax breaks, giveaways and protections, one of which would set off a ruinous Smoot-Hawley trade war. It’s not just the waste, such as the $88.6 million for new construction for Milwaukee Public Schools, which, reports the Milwaukee Journal Sentinel, have shrinking enrollment, 15 vacant schools and, quite logically, no plans for new construction.

It’s the essential fraud of rushing through a bill in which the normal rules (committee hearings, finding revenue to pay for the programs) are suspended on the grounds that a national emergency requires an immediate job-creating stimulus — and then throwing into it hundreds of billions that have nothing to do with stimulus, that Congress’s own budget office says won’t be spent until 2011 and beyond, and that are little more than the back-scratching, special-interest, lobby-driven parochialism that Obama came to Washington to abolish. He said. …

The Age of Obama begins with perhaps the greatest frenzy of old-politics influence peddling ever seen in Washington. By the time the stimulus bill reached the Senate, reports the Wall Street Journal, pharmaceutical and high-tech companies were lobbying furiously for a new plan to repatriate overseas profits that would yield major tax savings. California wine growers and Florida citrus producers were fighting to change a single phrase in one provision. Substituting “planted” for “ready to market” would mean a windfall garnered from a new “bonus depreciation” incentive.

Krauthammer is usually identified as a conservative, which does little justice to his education and resume.  For that reason, liberals refuse to listen to him and guffaw when he’s used as a source.  But what if he’s right?

Who knows…maybe World War III will save us from Obama’s ill-conceived economic policies like World War II saved us from Hoover’s and Roosevelt’s.

Or maybe Obama will save us from those silly Republicans who still believe in low taxes and free-market economics.  That’s my preferred solution because the idea of World War III is pretty scarey.

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11 Responses to “Economists and Politicians”

  1. Jan |

    World War II essentially saw the US government take over all major manufacturing, hire 16 million people to be soldiers, and set severe limits on gasoline usage, car models and every other aspect of economic life in this country. I don’t know why we need a war to set some sensible priorities on what’s spent to provide needed goods and services. I doubt that WWIII would leave much left but radioactive rubble for the survivors to squabble over.

  2. Brian Bagent |

    Jan, the word “need” is as disgusting of a dirty, four-letter word as the “f-bomb.” “Need” should only rarely, and probably never, be used as a criterion for ANYTHING that the government does.

    “Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.” William Pitt

    Once the criteria become “need,” the most needful people will always be those willing to use the most force. Thus it has always been throughout recorded history. Stalin’s Russia “needed” the produce of the Ukrainians during the early 30s, and consequently starved to death millions of Ukrainians.

  3. Tom |

    Well, my reference to World War III was intended to be ironic. I think most scholars now agree that FDR didn’t end the depression. It took the massive economic and popular war mobilization of the country to do that. Roosevelt was more of an economic conservative than not, especially in regard to deficit spending, and one result was that we didn’t get out of double-digit unemployment until WWII.

    Most will agree that the government needs to do something now to help resolve this economic crisis. The debate, of course, is over what, how, how much, to whom, etc. There’s nothing like the popular consensus that the war brought, and that’s what made recovery possible.

    And maybe we’re already in WWIII but haven’t acknowledged it yet. World domination by Germany, Italy, and Japan was a threat easily understood and worth fighting against. A new worldwide caliphate is a far less realistic threat, but the wild-eyed, primitive terrorists who yearn for it don’t know that. How does the rest of the world effectively mobilize to resist under those conditions?

  4. Jan |

    Brian, the “need” I was referring to was public needs, such as housing, food, transportation. Maybe what we need is a common language, an agreement on what we’re talking about, so that the popular consensus that Tom refers to can be arrived at.

  5. Carla Axtman |

    Not to belabor a point made better by others, but the U.S. has just lived through eight years of conservative economic theory, put into practice.

    I should think that for most Americans, conservative economists have lost whatever credibility they once had.

  6. Tom |

    Carla, far as I’m concerned, no economist or business leader has much credibility at this point.

  7. Carla Axtman |

    Why, Tom? It seems to me like economists who’ve consistently argued against Greenspan’s work are very credible right now.

  8. Tom |

    Carla, maybe there are some economists who have been mostly right for the last 15 years. But that’s the past, and the science/art of economics being what it is, some of that was luck. Reading the views of various economists on the current crisis and the absolutely huge stimulus bill that’s just been passed, you have to wonder if they’re all talking about the same thing. Maybe some number of them are right, but we’ll have to wait a few years to find out which ones.

  9. Brian |

    Jan, this republic exists to protect the minority from the majority. The smallest minority in the world is the individual, and those needful things you speak of are always at the expense of the most productive people in the country. If theft (the use of force or coercion to obtain what doesn’t belong to someone) is immoral at the individual level, it cannot suddenly become moral at the level of the mob. At that point, it is simply about unbridled power.

    Carla, the last 8 years may have been “conservative economics,” but they were anything but free market economics. Try reading von Mises or Friedman. And while you’re at it, you can toss the discredited Keynes and Marx in the garbage can.

  10. Tom |

    Brian, democratic government is effectively the expression of our social contract, which means that it’s the instrument by which we provide for mutual defense and allocation of scarce values. Among those is the human instinct to help those in greatest need, in the terms Jan defined. There’s a vast middle ground between survival of the fittest, which means no one gives anyone anything, and the folly of complete collectivization. Government will always provide for at least the minimal needs of those in greatest need, and that will be done through taxes, with the consent of the majority. I don’t see anything wrong with that.

  11. Pdon |

    Economic viability should be defined in terms wherein all people are able to live fruitful lives.

    Any society with a single person unemployed who wants to work has a failing economy.

    En-masse ideologies are wrong, to percieve the world in terms of GDP or the HDI is to ignore the experiential existence we endure, and to ignore a dedication towards creating a world that works for all people. The divisions between liberalism and keynes/marx (etc) is the division between that which does not recognise people, and that which does.

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