Supply Side Liberals: a Contradiction in Terms?

     I tend to think so. I like Miles Kimball, and think he's a nice guy personally-most Internet econ bloggers are. Sumner is the exception-even he's often a nice guy, just not to me, and not when you say anything 'mind numbingly stupid'-ie, Keynesian.

     http://www.themoneyillusion.com/?p=12472

     When I had the link to the post that showed that Sumner's goal is actually to create a RBC world Tom and others felt this wasn't what he was saying. I wonder if Tom can give me a good argument that this post doesn't prove Scott hates Keynesianism-I know, I'm taking him out of context, he doesn't hate Keynesianism as such just it's 'talk.'

     Tom was also wondering what a supply side liberal is and my response wasn't too flattering: I concluded that a 'supply side liberal' is just someone who tries to make himself more sympathetic by calling himself a 'liberal.'  Here was Tom's response to this:

     Actually I don't have a strong feeling about it since I'm not really too clear on what is meant by "supply-side" other than I associate that with the Reagan admin, trickle down econ, etc. I was more trying to feel out the level of self contradiction that you feel is contained in that description.

  What does "supply sider" mean to you?

     http://diaryofarepublicanhater.blogspot.com/2014/02/assuming-we-can-should-we-try-to-end.html?showComment=1393003641981#c8832137156011611068

     I think I actually gave about as good an answer to this question as I've ever done-often I can be just a little bit polemical-in case you haven't noticed. Maybe this is why I like Krugman-he too is always criticized for just calling someone an idiot without explaining why exactly. The trouble is that someone like Krugman knows his stuff so well that it gets boring having to explain everything in the detail required for those who don't know the stuff at all. Often I don't give so much detail either-I can be rather 'terse.' So here is what supply sider means to me:

    "Someone who believes that only the supply side matters in terms of the economy's performance. A Supply Sider in the pejorative sense means someone who doesn't think the demand side matters."

    "In theory you could think both matter. Sumner for instance-and this is certainly not unique to him but is the believe of mainstream macro-ie, Neoclassical Macro as a hole-thinks that demand matters for the short term but that for the long term-'trend output growth'-the supply side is how you could possibly raise this trend."

   "When I use it pejoratively I have in mind someone who tells us that the problem in the economy isn't demand-so no stimulus will help, just supply side-'structural reforms' which usually mean things like cutting taxes for the rich-corporate, the capital gains rate, the top marginal rate, etc.-as well as deregulation, cracking down on unions-to make firms more 'competitive' in the global economy-and cutting government spending-ie, fiscal austerity."
   
     The trick is to be clear that when I and other liberals use the term SSer in a pejorative sense it doesn't mean just someone who thinks the supply side matters at all. It means someone who basically denies the demand side exists at all, or most importantly offers up SS remedies to a DS problem.

     The Reaganites were just a really egregious example of this-though I give a lot of respect to a SS theorist like Jude Wanniski who was pretty shrewd. He didn't deny demand side effects but argued that they're less important than supply side effects and that in fact the real difference is that SSers see both but Keynesians deny the SS. 

       In many ways I see SSers as related to Pre Keynesian Macro-of course there was no Macro before Keynes just Micro. So I see SSers as those who want to re-enshrine Micro on top or the pyramid it has rightly been supplanted from. 

     Now to me, none of these policies I mentioned under 'supply side' policies-busting unions, a low minimum wage, etc-are what most liberals are about.

   So what makes Miles a liberal? He calls himself one. Ok, technically he claims to care about the poor-but he thinks they can eat electronic money and lines of credit through the Federal Reserve. I'm just a little skeptical of this.On the question of Miles' idea of all electronic money as a panacea for the Zero Bound and also an end of inflation we had an interesting discussion-mostly about the idea of ending inflation. I really wanted to know even if we grant that doing this would end inflation, why would we want to do this? I have real reservations about this. What Tom says here confirms for me my reservations. 

     "Imagine what your instinct would tell you if the government announced that you had ten days to turn in all your cash because we were going fully electronic, and then within a year the government announced a new 0% inflation target and at the same time your bank announced that you'd be "earning" -2% on your deposit... and not only that, but every other bank had a similar rate: there was no escape!"

      http://diaryofarepublicanhater.blogspot.com/2014/02/assuming-we-can-should-we-try-to-end.html

     In reality, inflation wouldn't so much end as a cost of living as it would no longer be called inflation but instead a negative deposit rate. 

    P.S. Yes, Sumner's right I'm not economist as I think my own personal intuitions and instincts are relevant in an economic discussion. Just because a theory or model totally contradicts what I know from experience or my understanding of human nature I should ignore this-who are you going to believe Tony Yates and Stephen Williamson or your lying eyes?

   http://diaryofarepublicanhater.blogspot.com/2013/12/tony-yates-inside-mind-of-your-average.html

   http://diaryofarepublicanhater.blogspot.com/2014/01/how-you-know-when-youre-reading.html

   http://diaryofarepublicanhater.blogspot.com/2013/12/economics-intuition-and-praising-with.html