I need to remember who the real enemy is and who at least potentially are our friends; by us I mean liberal Democratic Keynesians. While I lashed out in a recent piece about some of Sumner's fiscal ideas I also realize that right now they are besides the point. To the extent that monetary policy is currently the only game in town, though I would like some fiscal stimulus, and I don't follow Sumner necessarily on his views on fiscal stimulus he is an ally more than an adversary.
In this environment he is not the enemy nor are the "Market Monetarists"; ironically enough they may be our best hope presently. Alliances of course shift but even in principle they make much more sense than the other Right wing school-the Austrians-at least they allow for monetary stimulus. Right now the Austrians are the enemy. Is it an accident that Austrian even sounds kind of like austerity? I don't think so. No I'm not delirious... Or yes I am, I mean who isn't delirious with this economy?! I mean those like Amita Shales who think we should just watch the house burn down or those who argue that well after all, per capita consumption is up so there's no demand shortage, I mean they are delirious if they consider such an environment as this acceptable.
And there are some who don't get Occupy Wall Street or even try to demonize or ridicule them? Our entire economy and for that reason our whole society is sitting on a powder keg. And anyone who has a problem with that needs to stand up and be counted.
For Shale http://www.bloomberg.com/news/2011-11-02/goldman-idea-could-let-inflation-out-of-the-bottle-amity-shlaes.html
"Then, too, there were those just like her, like Henry Hazlitt, an editorial writer for The New York Times, and Benjamin M. Anderson, an economist with Chase National Bank, who also said people should just suck it up, that unemployment was only caused by excessive wages and greedy workers and that inflation was a cure worse than the disease, even as the price level fell 25 percent from 1929 to 1933."
"With fiscal stimulus off the table and Republicans gambling that continued economic stagnation will hurt Democrats more than them, the Federal Reserve is the only institution with the freedom of action and power to stimulate growth. But it is constrained by conservatives who charge that it is fostering inflation whenever it tries to provide monetary stimulus."
"The fact that conservatives have consistently been wrong about this for the last three years has done nothing to diminish their confidence. They are like the French Bourbons, who learned nothing and forgot nothing."
I put that last quote in just because it's a great analogy. http://economix.blogs.nytimes.com/author/bruce-bartlett/
I might be splitting hairs here, but a couple of points about the Austrians:
ReplyDelete- They actually don't support austerity. They just don't support fiscal expansion.
- For the most part, they should simply be ignored. Their methodology was eviscerated in the 15th century by Immanuel Kant, Hayek's trade cycle was dealt devastating blows by, among others, Sraffa and Kaldor, and the only reason anybody knows who Mises is is because of big money, as he was dependent on Rockefeller grants for half his life.
P.S. As a Keynesian, the reason I can't get on board with NGDP targeting is because nobody has persuaded me it isn't another backdoor bailout of the banks.
I'd be interested to hear how Kant refuted their methodology before the fact... Interesting
ReplyDeleteI think a Kenynesian right now-and always-is about fiscal expansion more than anything.
My feeling is that if we can get that the question of bailing out or not bailing out the banks is a secondary question, though I'm not sure how NGDP would do that.
Appreicate you dropping by do come again!
I should also say unlearningecon that I was just looking at Sraffa-tk for mentioning him he's great.
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