While the Cat’s Away…
She who is always wrong™ may want to check on what her
September April call-ups are doing. Here’s Adam Ozimek in McArdle’s space pointing out four things just about all economists agree upon, and among them he lists the virtues of the stimulus:
Economists may differ on whether the American Recovery and Reinvestment Act was worth the cost overall, but they are in solid agreement that as of the end of 2010 it lowered the unemployment rate. Very few disagreed with or were uncertain about this. In contrast, a significant number questioned whether the recovery act was worth the cost. Importantly, in the space for comments, Stanford’s Pete Klenow emphasized what Scott Sumner and others would say is the central issue: “how much was it offset by less aggressive (than otherwise) unconventional monetary policy?” But even stimulus skeptics should keep their criticisms in perspective: economists strongly reject the idea that stimulus is to blame for our economic woes.
In addition, economists strongly agree that the bank bailouts also lowered the unemployment rate. Of course as Austen Goolsbee commented: “the fact it was necessary doesn’t mean we should be happy about it.”
McArdle, canny as she is, has been careful not to go too far into the weeds on this one.
She doesn’t seem to have said that stimulus as a concept could only fail — as some notables (cough-cough, Mitt) on her side of the aisle have done and continue to do. But she has consistently said that only a Platonic ideal of a stimulus had a hope, and that any real world attempt is a waste of time. (Bonus question for those who follow that link. Spot and name the dire distortion of the history that lies behind her carefully tweezered quote from Paul Krugman.)
BTW: here’s what Krugman actually had to say about the stimulus in 2010:
The good news from the new GDP report is that the fiscal stimulus seems to be working just about the way a sensible Keynesian approach says it should. The bad news from the new GDP report is that the fiscal stimulus seems to be working just about the way a sensible Keynesian approach says it should.
Josh Bivens at EPI has a good overview of the evidence that the stimulus is working. As he says,
“A serious look at the evidence argues that this debate should be closed: ARRA has played a starring role in pushing the economy into positive growth.”
And here’s Krugman this spring:
On the policy side, major new stimulus may not be in the cards — but there is a real divide in the US between modest stimulus proposals that have some chance of getting implemented and major austerity moves that also have some chance of being implemented. The difference between those two policy variants could be the difference between unemployment below 7 percent two years from now and unemployment back above 9 percent. So this argument has real short-term policy relevance.
So much for McArdle’s bravura, data-less claim that
…we have had two major cases that massively favored Keynesian economics [the New Deal and the Obama stimulus] but Keynesian politics failed both times.
And as for her conclusion that
…at some level, there’s no point in spending a lot of time designing policies which can’t be enacted in any conceivable democratic polity.
…well, if by “any conceivable democratic polity” you mean one in which one of two major political parties had decided to transform itself into an authoritarian cult, then yes — the GOP, using the procedural rules of the US Senate, certainly limited what was possible. It requires a heroic act of willed blindness to the elephant in the room, though, to see that outcome as an inescable, sadly necessary cost of democracy.
But just on the merits of this one guest post, I’d say that McArdle runs a serious risk if her audience gets used to even occasional economically literate commentary. Perhaps even that Amen Chorus might notice a lack of couture bedecking the empress.
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