Greg Mankiw speculates
on the best alliterative description of the stimulus package:
Instead of fiscal stimulus that is temporary, targeted, and timely, John Taylor suggests that it be permanent, pervasive, and predictable.
What the Obama administration is aiming for, it seems, is helpful, hopeful, and humongous.
Critics fear it might end up pointless, political, and pork-filled.
Update: A reader emails me that Larry Summers now calls for stimulus that is speedy, substantial, and sustained.
Other readers think it will be:
big, bloated, and borrowed.
immodest, immoral, and imbecilic.
clumsy, corrupt, and counterproductive.
expansive, extensive, and expensive.
weighty, worrisome, and wayward.
politicized, pandered, and pathetic.
socialized, silly, and sorry.
random, record-setting, and ridiculed.
ultimate utilitarian utopianism.
absolutely abjectly apocalyptic.
Last week Rahm Emanuel said
to a prestigious audience, “You never want a serious crisis to go to waste. It's an opportunity to do things you could not do before.”
And that's just the strategy that bestselling author Naomi Klein accuses right-wingers of employing. Weaving a convoluted yet superficially simple tale of world events, she claims in her book The Shock Doctrine
that right-wing ideologues and governments both use and create moments of crisis to implement their nefarious agenda.
"Some people stockpile canned goods and water in preparation for major disasters," Klein writes. "Friedmanites stockpile free-market ideas." Which is exactly what American left-liberals have been doing in anticipation of a Democratic administration coming to power at a time when the public might be frightened into accepting more government than it normally would. The Center for American Progress, for instance, run by John Podesta, who was President Bill Clinton's chief of staff and is now President-elect Obama's transition director, has just released Change for America: A Progressive Blueprint for the 44th President
The ideas in that report mesh well with the opportunities that Emanuel identified. After re-emphasizing the opportunities that crisis provides, he told his audience that the Obama administration wanted to use the opportunity to implement central planning of health care and energy, higher taxes, a federal program directed at "training the workforce," and tighter control of financial institutions and capital flows.
But Emanuel isn't the only one. As I mentioned previously
, Paul Krugman has also endorsed the "don't let a good crisis go to waste" power grab.
And now Arianna Huffington, the founder of the left-wing bulletin board HuffingtonPost, makes the same point in a public radio appearance. On KCRW's "Left, Right, and Center,"
November 21 (at about 27:20 in the podcast), she declared: "A crisis is a terrible thing to waste. And it might be this particular crisis that will make it possible for the Obama administration to do some really innovative, bold things on health care, on energy independence, on all the areas that have been neglected." (Hat tip: Thaddeus Russell.) Last year Huffington wrote a rave review
of The Shock Doctrine,
calling it "prophetic." So it seems.
So . . . Emanuel. Krugman. Huffington. They're all rallying around the theme that, well, that a left-liberal government should use this crisis to implement a more sweeping agenda than it could achieve in the absence of crisis. That's the Shock Doctrine. Where are Naomi Klein and her legion of fans to expose and denounce it?
Of course, Klein might well decry their corporatist, big government/big business plans as just another example of Friedmanite/neoconservative/Pinochetist right-wing ideology. Anything other than local worker's collectives smells like capitalism to her. So she can add the Obama administration to Milton Friedman, laissez-faire, the Bush administration, the Iraqi government, the Pinochet government, the Chinese Communist Party, and the ANC government of South Africa on the list of things that seem so many peas in a pod to her.
The San Francisco Chronicle says
that Klein "may well have revealed the master narrative of our time." The reviewer may have been more right than he knew.
whether the 2008 election is a fundamental realignment of American politics, with liberals and Democrats now in the driver's seat. But some ask, how can it be a realignment when the largest public opinion poll, the election-day exit poll, found liberals still a small minority of voters?
Twenty-two percent of those polled identified themselves as "liberal," 34 percent as "conservative," 44 percent as "moderate."
One reason, not discussed in this article, is that liberal-moderate-conservative is a crude and one-dimensional view of the political spectrum. At the very least we should recognize that holding fiscally conservative views doesn't necessarily make you a social conservative, and being a social conservative doesn't make you a free-marketer. So when you add just one more dimension to create a matrix, you can get two new categories, whom we might call "populist" (socially conservative and pro-government activism, like Lou Dobbs and Mike Huckabee
) and "libertarian" (fiscally conservative and culturally liberal).
In 2006, after another election that involved a sharp shift to the Democrats, Cato asked Zogby to poll voters
on their political views. We asked half the respondents, “Would you describe yourself as fiscally conservative and socially liberal?” We were quite surprised that fully 59 percent said yes. And when we asked the other half of the sample, “Would you describe yourself as fiscally conservative and socially liberal, also known as libertarian?” we knew the number would go down. But it only went down to 44 percent. So 44 percent of American voters are willing to label themselves as “libertarian” if it’s defined as “fiscally conservative and socially liberal.”
Which is one reason that Democrats were able to roll up a big victory with an electorate that described itself as 78 percent conservative or moderate. Pollsters should ask more creative questions to get more revealing information about just where the electorate is and just what electoral changes mean.
Paging Naomi Klein. In her book The Shock Doctrine
, the left-wing polemicist claimed that right-wing governments — which she defined very broadly — take advantage of crises, or "shocks," to implement their dastardly policies of free trade, privatization, and tax cuts. Well, one government has now announced its intention to take advantage of an economic crisis to implement "things you could not do before." And since this government no doubt includes a lot of people who have read Naomi Klein, she may very well be able to take credit for giving them the idea.
According to the Wall Street Journal
, President-elect Obama's first and most central appointee is excited at the opportunities presented by the current economic shock:
Obama Chief of Staff Rahm Emanuel, speaking to a Wall Street Journal conclave of business leaders Tuesday, said the economic crisis facing the country is "an opportunity to do things you could not do before."
"You never want a serious crisis to go to waste," Mr. Emanuel said.
"You never want a serious crisis to go to waste." Klein's fans would be all over that if a Republican had said it. Instead, Paul Krugman praises
that very line. Maybe he's learned a few things from Naomi Klein, too.
In Crisis and Leviathan
, Robert Higgs demonstrated that government growth in the United States has not been slow and steady, year in and year out. Rather, its scope and power tend to shoot up during wars and economic crises. Occasionally, around the world, there have been instances where a crisis led to free-market reforms. Generally, though, governments seek to expand their power, and they take advantage of crises to do so. But they rarely spell their intentions out as clearly as Rahm Emanuel did.
See Klein's thesis skewered by Johan Norberg here
, and by Jonathan Chait here
Alan Greenspan, once regarded as a Maestro
, and so admired that people actually believed a New Republic
article by Stephen Glass and Jonathan Chait claiming that a Wall Street financial firm had a literal shrine to him, is now being blamed for the worst financial crisis since the Great Depression. Is that fair? Did Greenspan's Fed create the dot-com boom, the dot-com bust, the housing boom, and/or the housing bust and the ensuing financial crisis?
Two weeks ago Cato published a paper by David Henderson and Jeffrey Hummel
with the now-controversial and counterintuitive thesis that "although Greenspan's policies weren't perfect, his monetary policy was in fact tight, and his legacy is one of having overseen low and stable inflation and a striking dampening of the business cycle."
This week Cato published a paper by Lawrence H. White
with a very different perspective. White argues that after the dot-com bust, the Greenspan Fed held interest rates extremely low for several years, setting off what Cato senior fellow Steve Hanke called "the mother of all liquidity cycles and yet another massive demand bubble.”
Back in May, Gerald P. O'Driscoll Jr. had also sharply criticized the Greenspan Fed in a Cato Briefing Paper.
He wrote that the Fed had been creating asset bubbles and moral hazard by its implicit policy of intervening to keep asset prices high.
More perspectives were heard this week at Cato's Annual Monetary Conference. Video of the conference can be found here
, and the papers will eventually be published in the Cato Journal
Russell Roberts, of NPR, Cafe Hayek, and EconTalk fame, will talk about his new book The Price of Everything: A Parable of Possibility and Prosperity at a Cato Book Forum
at noon on Monday, December 1.
Earlier this fall, George Will wrote
of Roberts' book in Newsweek
Improbable as it might seem, perhaps the most important fact for a voter or politician to know is: No one can make a pencil. That truth is the essence of a novella that is, remarkably, both didactic and romantic. Even more remarkable, its author is an economist. If you read Russell Roberts's The Price of Everything: A Parable of Possibility and Prosperity, you will see the world afresh — unless you already understand Friedrich Hayek's idea of spontaneous order. Roberts sets his story in the Bay Area, where some Stanford students are indignant because a Big Box store doubled its prices after an earthquake. A student leader plans to protest Stanford's acceptance of a large gift from Big Box. The student's economics professor, Ruth, rather than attempting to dissuade him, begins leading him and his classmates to an understanding of prices, markets and the marvel of social cooperation.
See for yourself
on December 1, the Monday after Thanksgiving, with comments by reformed literature Ph.D. Nick Gillespie.
A year ago it looked like we might replace the son of a president in the White House with the wife of a president, while some Republicans grumbled that it was too bad the president's brother couldn't succeed him. I wrote then that Americans fought a rebellion to replace a monarchy with a republic
, "in which men (and later women) would be chosen to lead the republic on the basis of their own accomplishments, not their family ties." But
In a country formed in rebellion against dynastic government, some 18 members of the US Senate in 2005 had gained office at least in part through family ties, along with dozens of House members.
And the trend continues. Now Alaska, the Last Frontier, the state of rugged individualism, is going to be represented in the U.S. Senate by the daughter of a former governor and senator and the son of a former congressman. In a bit of a War of the Roses twist, Sen. Mark Begich's father won his first congressional election by defeating Sen. Lisa Murkowski's father.
Republicans desperate to forestall a filibuster-proof Senate majority must have been tempted to dig up those old Edwin Edwards bumper stickers and rush them up to Alaska:
Vote for the Crook. It's Important.
From a WSJ blog
Former Treasury Secretary Robert Rubin, speaking at the same event, also pushed fiscal stimulus while stressing the importance of signaling concerns about the deficit. “The single most important thing we can do right now is a very large fiscal stimulus married with a commitment, once the economy is healthy again, to put in place a multi-year program to get back to a sound fiscal position,” he said.