Gun Control and Bad Equilibrium

      Scottt Sumner was complaining again about the failure of the Fed to target stable NGDP growth of around 5%. He sees history as a kind of pendulum between tight money and accomodationist monetary policy.

     "During and after WWI the world’s central banks went on an orgy of money printing, leading to a hyperexpansion of NGDP in many economies. This so discredited expansionary monetary policy that the hard money types were put in charge. After 8 years of stable NGDP growth we went overboard the other way, as NGDP fell in half between 1929 and 1933. Now the hard money types were completely discredited. So we started seeing fast growth in NGDP. Except for a few sweet spots like 1953-63, the growth was mostly too fast, culminating in the Great Inflation of 1966-81. This so discredited the doves that the hard money types were again put in charge. Now we had a long sweet spot lasting from 1985 to 2007. Then the inevitable happened. Hard money types always worry more about too much inflation than too little, and so when they screwed up they did so in the only way they know how–falling NGDP."

     "And that’s where we are today. Ironically the hard money types are currently worried about inflation, even though it could only come about if they screw up so badly that people turn to the inflation-mongers out of desperation. During the sweet spot of 1985-2007 there was almost no pressure on the Fed from the left, as NGDP growth was just over 5% and fairly stable. And there was almost no pressure from the right either, because inflation was fairly low and stable."

    "It would be nice if we had central bankers that understood the dangers of both too much NGDP growth and too little. Perhaps that’s simply beyond the ability of the human mind. It would be an amazing feat, on par with walking and chewing gum at the same time. So far the Australian central bank seems to be about the only major one that has mastered this subtle art."

    http://www.themoneyillusion.com/?p=15484

    If history is any guide though, walking and chewing gun at the same time doesn't happen too often. Take gun control. What I've never been able to understand is why the NRA can't bring itself to in any way compromise or moderate it's position. It seems to think it's all or nothing. It refused to hear of even the most commonsense safeguards like waiting periods. assault weapon bans, it even fights tooth and nail over so-called "cop killer bullets."

    Why the scorched earth policy? The slippery slope. The slippery slope argument assumes there are only two equilibrium positions in U.S. society. Either we have total laissez faire on gun control or we become like Sweden or Japan-where there are very few gun owners, though to be sure, the crime rates are much lower.

    There's no middle ground is the assumption of slippery slope and "zero tolerance" policies.

    The same premise applies to so many questions. Take student loan debt. The Wall Street Journal wrote an OP-ED today attacking the President for a plan he will release to the Senate that would allow those with private student loans to be able to declare bankruptcy.

     The piece fulminated the President, evoking the spectre of the 70s-this is the decade for conservatives where everything important happened, apparently. There's nothing to learn from any other decade like the 30s for instance.

    In the 70s it was so easy to get out of student loans that the industry was really strained. The WSJ is incredulous anyone would want to go back there. What this ignores is that we have come full circle. If things were too tough for the student lenders then, they are too tough on the borrowers today. Now students get out of school and after often not being able to find the kind of jobs they went to college for, are now saddled with six figure debt.

    Even if they do find work they spend the rest of their life servicing the student lenders. So are these the only two equilibrium points for student loans? The time when no one paid the student lenders back to now when no one ever gets free of the student loan burden?