The debate is over!

"Progressive" pundits join the President in declaring the ACA debate over and done. Of course others disagree. But, hey, with the numbers on the proponents' side, shouldn't the naysayers step aside and give them their due? Although fuzzy would be an understatement of the numbers when you consider the challenges to the data.


Now---changing subjects---let's consider another great political debate that has been brewing large over the past 6 or so years (although it's a forever debate): Whether the "progressive" notion that government intervention, in an effort to boost consumption, is the way you rescue an economy from the throes of recession. Well, unlike with the ACA, progressives can't seem to produce even fuzzy numbers that support their economists' original projections/expectations in terms of what the record uptake in fiscal and monetary "stimulus" has produced over these years since the end of the last recession.

So then, can we free-market, limited government, advocates---we naysayers---declare an end to the great debate? Can we point to the numbers and say "see, growing the size of government, its debt and all, doesn't grow the economy. It, in fact, stifles it." Well, we can, but will it satisfy the Keynesian? Will it inspire a whole new consensus that says getting government out of the way and letting the market correct the imbalances (address, then dress, the economy's wounds), and allocate resources to their best use is the correct policy? Not hardly. Any more than the ACA's opponents are even close to ceding their position. In fact, the record slow recovery only emboldens the growers of government and their apologists.  Here's Paul Krugman:

So next time someone goes on about how we had this huge stimulus that failed, you can tell him that the “huge” stimulus — in response to the worst financial crisis in three generations — peaked at a whopping 1.6 percent of GDP, and was effectively gone in a bit over two years.

Okay, so maybe we should have doubled the stimulus (the addition to the national debt) to 3.2 percent of GDP (actually, he's referring to potential GDP). Had we, and had that not worked either, do you suppose Krugman would have offered up a chart showing that government borrowed and spent a paltry 3.2%? I do. Double that---borrow a few more trillion---triple it even, and perhaps it would've "worked". Of course, had it not produced, or coincided with, the numbers its facilitators projected, Krugman would yet bemoan Washington's insufficient stimulus spending.

As Don Boudreaux analogized:

It’s as if a person who is bleeding to death because of a gunshot wound in his stomach is brought to a physician. The physician correctly realizes that the patient is losing massive amounts of blood and, also, correctly understands that such blood loss is dangerous to the patient’s health.

So the physician prescribes massive infusions of blood, period. If the patient doesn’t recover, the physician orders that the volume of blood-infusions be increased. If the patient dies, the physician will forever blame himself for not increasing the volume of blood-infusions even further.

If the patient does recover, the blood-infusions will be praised for saving the patient.

 

 

Bipartisan renunciation of fiscal discipline...

The work of economist John Maynard Keynes inspires both ridicule and respect. Ridicule, generally, from those who consider themselves "conservative", and respect, generally, from those who call themselves "progressive". As you may have gathered I am no fan (to say the least) of Keynesianism. And, frankly, I find closet Keynesians (those who tout free markets then lobby for intervention) to be a despicable bunch. Therefore, I must say that in this regard it's the (pardon me) "conservative" politician (and pundit) who irks me to no end. At least "progressive" politicians (and pundits)---save for the fact that they call themselves "progressive"---are, generally, true to their platform.

I know that many of you are committed Republicans. And while you may not appreciate this message, it's critical that you get it (although I suspect that many of you already do). At its core---when it comes to economics---there is very little that distinguishes your party from its opponent. In his book The Great Deformation (a fascinating exposé, although not entirely without [in my strong opinion] disputable assertions) David Stockman makes the point beautifully. Here he perfectly nails a fundamental problem with Keynesianism:

Indeed, suffocation of the free market in totally mobilized political struggle is the ultimate evil of the Keynesian predicate. It causes every tick of the unemployment rate and every tenth of the GDP report to trigger waves of political praise, blame, and maneuver. The resulting nonstop partisan sound bites about how “our” plans would make the outcomes better and how “their” policies have made them worse continuously reinforce the presumption in favor of more state action to bolster the economy.

And here he nails today's "conservative" politician:

The GOP renunciation of fiscal discipline is thus Keynesian, not fact based. In order to compete with the Democrats it has gone into the state-sponsored growth business. Republicans now effectively concede that prosperity cannot be left to the comings and goings of producers, consumers, and investors on the free market; it must be constantly dialed up through the machinery of the IRS. So Washington has become thoroughly bipartisan in its relentless pursuit of schemes for the state to fix the private economy—a modus operandi which guarantees the bankruptcy of the former and the failure of the latter.

In that last sentence I think Stockman is being a bit too generous on behalf of the politician and a bit too dire with regard to the future. I'd say it this way: "Washington has virtually forever been managed by actors in pursuit of schemes to fix elections by taking whatever measures they deem necessary to goose the private economy --- a modus operandi which risks bankruptcy of the former, although I'd never count out the latter."