Saturday, July 4, 2009
Bahama Pundit versus Murphy
This reporter must have attended my talk at the Nassau Institute in The Bahamas. Even though he disagrees with me, I do believe the following is the only actual objection he raises to my analysis (besides citing other economists who recommend different policies):
All in all, a pretty fair article. The only slight mistake is that he implies that I said the U.S. debt is currently 82% of GDP. I didn't say that--I said that according to the CBO, the debt/GDP ratio would double to more than 80% by 2019, under the Obama fiscal plan.
So what should we do about it? Basically nothing, Murphy says, and let the chips fall where they may, which is what the US government supposedly did in every economic slump from 1819 until the Great Depression. Unfortunately, this overlooks the fact that it is politically impossible for any modern, elected government to simply do nothing in the face of an economic downturn.
All in all, a pretty fair article. The only slight mistake is that he implies that I said the U.S. debt is currently 82% of GDP. I didn't say that--I said that according to the CBO, the debt/GDP ratio would double to more than 80% by 2019, under the Obama fiscal plan.
Comments:
The "political impossibility" of governments pursuing a hands off policy is a reasonable and realistic observation, but it is too strong. Political improbability is not the same as political impossibility. Why were governments able to pursue a (relatively) laisser faire policy before 1914 that they found 'impossible' after 1914?
Why were governments able to pursue a (relatively) laisser faire policy before 1914 that they found 'impossible' after 1914?
Because of the crazy, baby-bayoneting Germans?
(I'm kidding.)
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Because of the crazy, baby-bayoneting Germans?
(I'm kidding.)
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