Two thoughts on the way we talk about economic policy

1. File this post by Niklas Blanchard under my "the dangers of libertarian social engineering" file. The argument is essentially that for all the talk of "uncertainty" out of the right and the libertarians, a Ron Paul/Tea Party would introduce vastly more uncertainty than anything Obama would ever consider doing. As Jonathan points out, of course, even if they're elected it doesn't mean anything will happen. But it still makes all this "uncertainty" talk look a little silly.


2. Megan McArdle has a good article in this month's Atlantic on Bill Gross and the "bond vigilante" phenomenon in general. I actually came out of it thinking more highly of Gross than I did before. I think he seemed less reasonable to me the way I heard him promoted by some of his fans. After reading this, he strikes me more as a Carmen Reinhart than a Peter Schiff. Most of the article was great, but this line at the end bothered me:

"This is exactly the problem, really. Our national conversation about deficits is about politics—about ideology—not math. It’s a proxy war in our eternal battle over how much to tax and spend. Republicans care about deficits when spending is on the table, but as soon as they get a chance to pass some tax cuts, they forget they ever cared. Meanwhile, Democrats, who were outraged—outraged!—when the deficit averaged less than 3 percent of GDP under George W. Bush, are now silent about deficits that are running three times as high, and that are projected to stay above Bush’s even after Obama has left office. Very few true deficit hawks are left in America—only deficit vultures."

This sort of thinking pervades the way we talk about things in this society, and it's frustrating. Paul Krugman has called it the "opinions differ on the shape of the Earth" approach. This equivalence between the GOP and the Democrats on this point is absurd. Democrats rallied behind running surpluses when Clinton was in office, they continued to demand it under Bush, and they started talking about running large deficits when the crisis started, before Obama was even elected. And yes now some (very few of course, but some) want to continue to run deficits until we're out of the woods. There is a widely understood and widely accepted economic theory behind the idea of embracing these counter-cyclical deficits, but instead of talking about that, McArdle attributes the difference to politics.

In contrast, there is no viable economic theory at all that advocates pro-cyclical deficits. None. And yet McArdle acts like these two responses are political and it all comes down to politics. This is what bothers me about our culture. If I say "I'm not a partisan - I consider myself an independent, but I think the Democrats are more reasonable and the Republicans are considerably more driven by ideology", then that reasonable inference of mine is discounted and itself considered partisan. You can't be "non-partisan" in this country unless you overlook the failures of one party and ignore that good points of another party. Here's another particularly bad analysis that falls into the same trap that McArdle does.