A 'Complete Straw Man Mischaracterization of Keynesian Views'
I'm getting tired of Jeff Sachs acting like he is the only one telling the truth about the economy, the problems are all structural we are told despite considerable evidence to the contrary, and -- surprise!!! -- his "truthtelling" somehow leads him to advocate the same pet projects he's been pushing for years.
Krugman covered this in July:
Brad DeLong is baffled by Jeff Sachs, and so am I. Sachs is opposed to fiscal stimulus; I get that. But his argument is a series of non sequiturs. Unfortunately, those same non sequiturs play a fairly significant role in policy debate.
Leave aside the complete straw man mischaracterization of Keynesian views. As far as I can tell, the Sachs-and-others argument comes down to the claim that we must not seek to remedy a shortfall in demand because the economy has long-term structural problems. What sense can this possibly make?
Consider the extended version of the “magneto trouble” metaphor I use in my recent book. Keynes argued that the Great Depression could be thought of as a failure in the car’s electrical system; so let’s think of it as a situation where your car won’t run because it has a dead battery — that is, you could get it running again with a fairly trivial and easy intervention: just buy a new battery, which costs only a tiny fraction of the expense of a new car.
In saying this I am not denying that there may be other problems with the car, perhaps even big ones. Maybe it needs new brakes, or a new transmission, and these had better be dealt with soon.
Still, what sense can it possibly make to say that therefore you shouldn’t start by replacing that dead battery?
I really don’t get it.
I think "getting it" starts with Sachs adopting a view of the world that supports the types of projects and initiatives he's been pushing for years, and the fact that standard Keynesian policy and the deficit spending that comes with it makes it much harder for those projects to be realized. [Never waste a crisis, etc.] I'll also note he is, in essence, calling for infrastructure projects which is precisely what many of us in the Keynesian camp have been calling for as well. So unless it's becasue we haven't spefically named the projects he supports, it's not even clear there's a big disagreement here.
Posted by Mark Thoma on Saturday, September 8, 2012 at 08:56 AM in Economics, Fiscal Policy |
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