Image via WikipediaI endorse Arnold Kling's "macroeconomic" analysis of the current crisis. Quoting myself in a comment on Will Wilkinson's blog:
Arnold Kling's "Macro out of the mouths of children of the Austrian School" makes the most sense, in my uneducated opinion:
#1) The way out of the recession will be powered by business profits (as usual). A targeted macro solution: tax cut on the payroll tax (profits go up, and only after the profits have been locked in, employment will go up)
#2) Nobody wants leverage. Let the modern finance system built on leverage die, quickly and painfully, because drawing it out will only be more painful (like removing an adhesive bandage). Nobody wants leverage, people will only pay attention to profits (see #1)
But Mr. Kling recently wrote a really unfortunate post "Stimulus Bill or Reparations Bill?". I will quote the worst bits, because I think it is a candidate to fall into the Memory Hole by Kling deleting it (he already blocked further comments).
I think the answer is that it is a reparations bill, not a stimulus bill. People who pay income taxes tend to vote Republican. People who live off taxes tend to vote Democratic. [my emphasis] To the Democrats, the Bush tax cuts were a heinous evil, comparable to Germany's violation of Belgian neutrality in World War I. Now, they are demanding reparations, with hundreds of billions of dollars to be paid into teachers unions and other members of the coalition that won the election.
[Aside: To be perfectly honest, Libertarians are much less likely to use the Memory Hole than Leftists.]
The problem here is that there is a net flow of federal taxes out of the Blue Democratic states, and a net flow of liabilities in the form of subsidies into the Red Republican states. You can make some more subtle argument here, maybe by claiming federal taxation is mainly on the back of Republican businessmen working in Democratic states, but, make the argument. You can't just assert this crap and think people outside of right-wing shout-o-sphere will buy it.
[Edit: found some base statistics from Joseph Fried: Democrats and Republicans - Rhetoric and Reality, p. 154 (via Google Book Search)
"Does the government collect more from people in the blue states than from people in the red states? The answer is "yes," and the reason is obvious: People in blue states tend to earn more than people in red states. However, this does not mean that Democrats pay more taxes than Republicans...
... on average, Republican men paid about 70 percent ($2,900) more in federal income tax than did Democratic men, Republican women paid about 53 percent ($1,700) more than Democratic woman, and, on a gender-neutral basis, Republicans paid about 62 percent ($2,300) more."]
The bigger problem is that Reparations already has a meaning in American politics: Reparations for slavery. In that light, Kling's comments come off a very ugly.
Libertarians are cranks. They are not always cranks, but none fail to indulge in crankishness. See Denailism Blog for their "Unified theory of the crank".
Libertarians exist as a meaningful social entity because they provide intellectual cover for the worst abuses of majorities abusing minorities, corporatism, and folk paranoia. And majorities interested in abusing minorities, corporatists, and folk paranoids have considerable political power. That isn't all Libertarians do, proving intellectual cover for this crap, but they are completely ignored by their benefactors for their other work. So they can get paid (supported, published, otherwise compensated) for their politically convenient statements, and the other 95% of their writings never interferes with getting paid.
They are never punished for crankishness, they are sometimes rewarded for it, so they develop themselves into better cranks. Along with the definition of the crank from the Denailism Blog, I would add:
- ignorance of all human activities outside of their small area of personal interest (example: Kling having no idea that Reparations has a prior definition)
- Holding themselves to a very low intellectual standard at the exact moment that they should be holding themselves to a very high one, to secure influence in the broader world
- repetition of shouted talking points from their little worlds
And I am rooting for Kling. His analysis of the alleged Obama stimulus package is correct. His suggestion for the best way out of the crisis is correct. His take on the limits of macroeconomics is correct.
And he knows he has to hold his own side to a higher intellectual standard to secure influence after the market crash. Kling didn't let Fama's lame analysis pass without critism: "Boo, Eugene Fama".
Readers of this blog know that I am against the Paulson/TARP bailout thingy and against a big stimulus. Some of you may also have read that distinguished (some would say Nobel caliber) financial economist Eugene Fama has a new blog, where he wrote a post against bailouts and stimulus. I did not link to that post, because I did not think that he contributed to our economic understanding of the issue. Today, I want to go further, because it occurs to me that we should not just leave it up to ideological opponents of Fama, such as Mark Thoma or Brad DeLong, to bear the sole burden of pointing out the vapidity of Fama's analysis. [my emphasis]But, at heart, a Libertarian is a crank. That crankishness has to come out. Always at the worst time.