commissioner.org
| Source | Tom Walker - Sandwichman |
| Date | 08/12/14/22:26 |
| Jim Devine asked, "what's wrong with the 'stimulus package'?"
I BEGIN BY rejecting your premise, Jim, that it "involves Keynesian fiscal stimulus... [and] creates jobs and income through the multiplier effect" First, it's not "Keynesian" and, second, it doesn't "create jobs". Of course that reverses the order of importance of the two aspects. And, frankly, if it worked, I wouldn't care if it was Keynesian or not. It just won't work. What's wrong with the program, then, is, one, IT WON"T WORK, two, its inevitable FAILURE will be used to lend ideological support to the subsequent draconian "restraint" package and, three, it is yet another instance of TRICKLE-DOWN economics. But why won't it work? Because fiscal policy doesn't operate in a vacuum. With the exception of four years at the end of the Clinton administration, the U.S. government has been running substantial budget deficits for 30 years. The U.S. economy has evolved all sorts of levers to maximize the rent-enhancing rake-off from this activity and minimize the job-creating by-product. Every dollar expropriated by "management fees" is one less dollar in wages. The "job creation" in an economic stimulus package is implicit, not explicit. Although some job creation from a multi-hundred billion dollar spending program is unavoidable, it has become the prevailing management conventional wisdom to minimize employment outcomes whereever possible. Sure, you could bring in rules, in conjunction with a spending program, that seek to maximize employment outcomes. But you could also do that directly, without any new spending program being necessary. Now this isn't to say that there are not things that the federal government should be spending money on, such as universal health care. Only that they don't have to be funded by deficit spending as a "stimulus package". They could be funded by higher taxes on the wealthy, for example. If they are being marketed as "stimulus" then odds are that's because the rich will be given a pass on tax increases. So you were saying you're for continuing the Bush tax give-aways to the rich, Jim? Trickle-down by any other means would stink as much. What amazes me is that the same people who so distrust the Clinton-slant of the incoming Obama personnel seem pretty sanguine about the emerging stimulus package consensus yet dismissive or hostile to an anti-growth, environmental sustainability argument. I call this the "growthodoxy". It seems to me that the seismic fault line lies between economic growth and environmental sustainability. This is not to say that ALL economic growth is environmentally bad, just that aggregate growth in rich countries, TODAY, is net bad (ecological foot prints and path dependency and all that). Progressive policy has to pick and choose among growth elements and oppose growth for growth's sake. The argument between "fiscal conservatives" and so-called Keynesians is simply what is the best way to achieve growth. When the good cop so-called Keynesian strategy fails the fiscal conservatives will be there with the bad cop supply-side panacea of corporate and capital gains tax cuts. Coming back to Keynes, we most certainly have arrived at (or far beyond) the point where "wise consumption" and working less would be his policy prescription. I hesitate to mention this because in the past you, Jim, used this observation as a launching pad for a display of erudition about Alvin Hansen's stagnationism, Keynes's lack of prescience about military Keynesianism and the views of the old New Keynesians of the 60s about wages, hours and employment. Well, I don't care about that shit because my argument is not based on whether or not Keynes was right. The stimulus package crap, though, is based on textbook models that are neither faithful to Keynes nor coherent in their own right. It is doctrine that has evolved into dogma. |
Copyright (c) 1998, Joongpil Cho