One of my favorite podcasts is This American Life. I love the way that they tell stories. Occasionally, they invite the reporters from NPR's Planet Money blog/podcast to attempt to explain economics issues in plain English.
And in a recent episode, they did just that. The episode was called The New Boss. And they told three stories about being or having a new boss. The third story is the one that inspired me to write this post. In it, the planet money guys come in and explain the current $15 trillion wager that is taking place in our economy. Basically they describe two major schools of macro-economic thought: the Keynesians (who subscribe to the economic theories of John Maynard Keynes) and the non-Keynesians.
Remember: I'm not an economist. My thoughts on economics are probably (at best) no better than randomly correct. Or could be, at worst, systematically biased towards wrong. I think I have a slightly better understanding than average. But then again, I used to think that someday I'd be a superhero. My point: I don't know enough of what I'm talking about.
But that doesn't keep me from pretending to be an economist on this blog, and as such, I'm decidedly non-Keynesian. And the economic stimulus package is decidedly Keynesian. So we're in a period of time right now in which a fantastic experiment is taking place. As Russ Roberts puts it, after all is said and done, we're going to have learned something. And it leaves me in a funny position: I don't know what to root for.
The economic stimulus package is either going to work or fail to stimulate the economy out of this recession. And because it's a Keynesian solution, it's either going to validate or invalidate Keynes' theory. So which side to root for?
If I root for the stimulus package to succeed, that means we come out of this recession sooner. Fewer people suffer the impacts of a bad economy. And, as I've argued previously, economic impacts are frequently as deadly, if not more, than anything else that we do. Poverty kills. And for those who survive, it still causes massive suffering. Poverty is the enemy. Getting us out of a recession saves lives and alleviates human suffering. It's important.
But if I root for the stimulus package, I'm also rooting for Keynesianism. And this is also no trivial thing. Yes, it means that I have to change my ideological mindset. Fine. But it also means that there are times in which it makes sense sacrifice individual freedom to the government. It means that there's a case to be made in which the government *should* forcibly require it's citizenry to work, and have the product of that work be given to someone else. In other words, rooting for the stimulus package means championing a theory which holds that slavery is ok.
My confession: I'm hoping, just a little bit, that the stimulus package fails. But just a little bit. I'm open to being convinced otherwise. Mainly because I don't like the idea that the failure of the stimulus package will also mean an extended recession.
3 comments:
I think I hear the principle that you are "willing to be wrong" shouting in your words. I am in agreement with you. Merely throwing money at a problem doesn't ever seem like the right thing to do to me. Maybe some good results will emerge as people like us try to *make it work* in spite of our disagreements.
Maybe the challenge of understanding why the stimulus package succeeded will be worth the pain of having had our ideologies challenged.
Well, it's yet TBD whether or not the stimulus package will succeed.
One fear is that the Keynesians will say the following:
If the economy recovers: See Keynes was right. In this case I will reluctantly have to agree with them.
If the economy fails to recover: The stimulus was too small. In this case I will tend to disagree with them.
Robert Higgs, an economic historian, gave a presentation in which he presents data that does a couple of things:
1) Disputes the idea that this is the first test of Keynesian theories. In particular it suggests that WWII was the first test.
and
2) That the data from that test demonstrates it's failure.
Confirmation bias is alive and well in me.
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