Thursday, July 22, 2010
Posted by dkuehn at 6:00 AM
We've all heard of "deficit hawks" and "deficit doves"..
Deficit hawks like to run tight ships and avoid deficits, even running surpluses if possible. Historically, we almost always run deficits because sovereign debt is a very different beast from private debt. Nevertheless, a "deficit hawk" would still like to keep those deficits to a minimum, even if he is smart enough to know governments can run deficits from now until eternity, so long as the debt is run up at a sustainable pace..
Deficit doves don't care so much about the debt and place great faith in the difference between sovereign debt and private debt. They usually think very highly of fiscal policy and macroeconomic stabilization, and don't have as many of those New Keynesian caveats and qualifications about when and where to do fiscal policy..
Lately people have been talking about "deficit chicken-hawks". Usually these are Republicans that spend like Republicans think Democrats spend. Sometimes they're disingenuous, sometimes they're just oblivious - but they aren't deficit hawks..
Now, the Post-Keynesian blog "New Economic Perspectives" has coined the term "deficit owl". Here's the deal - a bunch of solidly liberal Keynesians like Robert Reich and Joe Stiglitz drew up a petition saying we should do more fiscal stimulus as well as put renewed emphasis on dealing with the long-term debt. Three "more Keynesian than Keynes" Keynesians - Paul Davidson (Post-Keynesian grand poo-bah), Jamie Galbraith (price-control enthusiast John Kenneth Galbraith's son), and Robert Skidelsky (Keynes's biographer that sometimes forgets the title of Keynes's magnum opus) - refused to sign because of that statement about keeping down the long-term debt.
This is all pretty crazy. First, Robert Reich and Joe Stiglitz are on the left wing of Keynesianism, much less the broader American economic-political spectrum. If you're refusing to sign a petition by Reich and Stiglitz because you think it's too hawkish on the debt, it means you are way out in left field. Second, what the hell is a "deficit owl"??? The blog post is titled "Deficit Doves meet Deficit Owls", but I'm not even quite sure which is which. Is an owl "softer" than a dove? I guess it means the three dissenters are wiser? Who is who here? I could understand deficit dove, deficit hawk, and deficit chicken-hawk but now I'm just confused. Maybe "deficit ostrich" would be better, since they ignore the long-term debt?
Forget the owls - I'm coining a new term (clearly the only way to get clarity is to throw yet another fowl reference on the table). I am a deficit goose.
You see, the problem with the hawk/dove dichotomy is that it assumes a constant stance on deficits. But like a good Keynesian, I believe that when the facts change we should change our minds (what do you do?). The reasonableness of a deficit is determined by lots of things, chief among them being macroeconomic conditions. Some people question whether this "functional finance" position (essentially counter-cyclical fiscal policy) is really Keynesian - I don't think it is the heart of Keynesianism, and it definitely pre-dates it - but it's certainly consistent with Keynesianism. I'd be very surprised if Keynes wouldn't have considered himself an advocate of "functional finance", but if he wouldn't have advocated it then he should have.
Anyway, the point is what we really need are deficit geese. Deficit geese fly south for the winter and north for the summer. When their surroundings get dismal, they change their behavior to warm up their environment. When their surroundings heat up, they take action to cool things down.
P.S. - if any budding ornithologists reading this know anything about the migratory patterns of doves, hawks, chicken-hawks, or owls that contradicts this post, just keep it to yourself.
*Evan took that picture, in Michigan I believe