"Fiscal stimulus can be great politics, at least in the short run. The beneficiaries of government largesse know who wrote them a check. The businesses and consumers who end up getting less credit, and the businesses that can’t sell them products, can only blame “the crisis,” and call up their congressmen to get their own stimulus. Roosevelt understood this, and his biggest stimulus came as political support was flagging.10 But President Obama has such widespread support, he doesn’t have to buy votes any time soon."
"My analysis is macroeconomic, and does not imply anything about the specific virtues or faults of the Obama team’s spending programs. If it’s a good idea to build roads, then build roads. (But keep in mind the many roads to nowhere, and ask why fixing Chicago's potholes must come from Arizona's taxes funneled through Washington DC.) If it’s a good idea for the government to subsidize green technology investment, then do it. (But keep in mind that the internet did not spring from industrial policy to improve the Post Office, the word processor did not come from a public-private consortium to rescue the typewriter industry, and that a huge carbon tax is much more likely to spur useful green ideas, and the only way to spur conservation.) The government should borrow to finance worthy projects, whose rate of return is greater than projects the private sector would undertake with the same money, spreading the taxes that pay for them over many years, after making sure its existing spending meets the same cost-benefit tradeoff. Just don’t call it “stimulus,” don’t claim it will solve our current credit problems, “create jobs” on net, or do anything to help the economy in the short run, and don't insist that we have to pass this monstrous bill in a day without thinking about it."
http://faculty.chicagobooth.edu/john.cochrane/research/Papers/fiscal2.htm
Actually in this context it ought to be remembered that the Internet came from the public sector. As far as all the roads to nowhere what about all the roads that lead to somewhere like the New Deal's Tennessee Valley Authority. It is rarely appreicated that the South was essentially a third world country prior to the TVA, etc. Prior to that we had no rural electrification, in general the South was not modernized.
Or how about the states of New York and New Jersey? It was the Works Progress Administration that gave us the George Washington bridge and the Port Authority.
"The work done by the organization stands as a tribute to the WPA. Almost every community in America has a park, bridge or school constructed by the agency. As of 1940, the WPA had erected 4,383 new school buildings and made repairs and additions to over 30,000 others. More than 130 hospitals were built and improvements made to another 1670 (MacMahon, Millet and Ogden 1941, pp. 4-5). Nearly 9000 miles of new storm drains and sanitary sewer lines were laid. The agency engaged in conservation work planting 24 million trees (Office of Government Reports 1939, p. 80). The WPA built or refurbished over 2500 sports stadiums around the country with a combined seating capacity of 6,000,000 (MacMahon, Millet and Ogden 1941. pp. 6-7)."
http://eh.net/encyclopedia/article/couch.works.progress.administration
The take away from this is the government has done plenty of productive things throughout US history. It is here where I think MMT really comes in usefully as they as opposed to the Monetarists, the Austrians, and even much of mainstream economics has a pivotal role for government in its basic model.
In MMT the government and the free market have a relationship, there is a mutual partnership if one frequently of creative tension. In this sense MMT may give us the signature example of a non-libertarian economic model which is very much needed.
No comments:
Post a Comment