The Difference Between Assault Weapons and Cold Medicine

Quick, Ethel, call the cops; he could be dangerous. Oh, never mind ... it was just an assault rifle ... not something suspicious like, oh, cold medicine.

Gun Control Question

Minsky on Recovery

"Pundits, politicians, and officials have proclaimed that the economy escaped the near crisis of 1974-75 as a result of the normal functioning of market processes. In truth, the braking of the downswing and the subsequent recovery were largely the result of strong fiscal measures and prompt lender-of-last-resort interventions. The fiscal measures were partly automatic because of massive entitlement (transfer payment) programs and a tax system in which receipts fell sharply when employment fell and were partly discretionary in the form of tax rebates, tax reductions, and extensions of unemployment insurance."

-- Hyman P. Minsky, from "Stabilizing an Unstable Economy"

Politics, It Shouldn't Be A Pejorative

Politics is good. I don't mean entertaining. It's outright good.

It gets a bad name. We too often say, "Oh, they're just doing that for political reasons." As if that were a obviously a bad thing. As if that meant it was just cynical, fake, pointless, and probably not earnest.

But think about it: why do many people avoid talking politics or religion with close friends and family?

The reason: because these are things about which people care deeply and passionately. These are things about which people can get into bitter arguments over what are technically small differences. People worry about losing friends and family to political arguments because political matters typically REALLY DO MATTER. We care deeply about the implications of those little differences.

To say that something is political is often to say that it is an issue about which people would care enough to fight, to take action. To do something for political reasons means nothing other than that you recognize society is complex and that for reasons of practicality you often need to work out a nuanced compromise in order to promote that about which you really care.

Emperor, Please Put On Some Clothes

The emperor is most certainly stark naked before the public he's called together to see his "new clothes".

Who is this emperor? Today's emperor is more of a committee. The power players on the committee are the current office holders from the Republican party. Who sold them the clothes and are also the committee's most trusted advisers? That would be the "Chicago" school of dubious economists and similar Very Serious People who've claimed that we should fear nothing from cutting government spending because -- with the wonderful magic loom of "not crowding out" -- every item we remove from government spending will be replaced by an equal item of resurging private spending. For example, as recorded by Menzie Chinn, there's the claim from Mr. Brian Riedl of the Heritage Foundation that,

"Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another."

That there's some invisible clothing, that is. See, if you're a Very Serious Person, you'll see the magic clothing because only those silly, unworthy folks can't see the special invisible clothing that comes from reducing crowding out. Really. You believe us, right? Because if you don't, you must be one of those silly, unworthy folks.

Enter the child in the crowd, in this case played by various credible economists with good track records for accuracy: e.g., Paul Krugman and others who read our situation right and generally accurately predicted how things would play out from each move that's been taken. These folks -- like the child in the classic story -- have been unconcerned that pointing out the emperor's factual nudity might cause them to be seen as silly, unworthy folks by the powers that be. They see that the emperor is stark naked ... and, well, he's wrinkly and it's unappealing ... they're seeing sights that they'll never be able to un-see no matter how hard they try ... so they're going to darn well point it out in the hopes that he'll cover himself up with something real instead of these fake, imaginary garments from the Very Serious People.

I'm sorry, but Ricardian Equivalence is no substitute for honest clothing. Crowding out isn't going to be a significant factor in a demand-depressed economy such as the one in which we currently live. We can not expect that private spending will step up to fill the void if we cut government spending at this point. We can only expect that to leave us naked.

Why Johnny Can't Cut Spending

Well, said, Jonathan Chait. Well said, indeed!

(The Johnny in the title "Why Johnny Can't Cut Spending" refers to Speaker Beohner, not Mr. Chait.)

From "Why Republicans Can’t Propose Spending Cuts",

"Reporters are presenting this as a kind of negotiating problem, based on each side’s desire for the other to stick its neck out first. But it actually reflects a much more fundamental problem than that. Republicans think government spending is huge, but they can’t really identify ways they want to solve that problem, because government spending is not really huge. That is to say, on top of an ideological gulf between the two parties, we have an epistemological gulf. The Republican understanding of government spending is based on hazy, abstract notions that don’t match reality and can’t be translated into a workable program."

This is exactly the problem! We have one major party that has some idea -- if an imperfect grasp -- of what's going on struggling to reach agreement with the other major party ... the one that not only has no idea what's going on but fundamentally opposes the whole idea of what's really going on at an ideological level. We're dealing with a faith-based community of Republicans who insist that we really need to cut spending. But it's just because they believe in cutting spending for its own sake. There is no logical grounds for dramatically cutting spending supported by cold, hard fact. There is only a doctrine claiming that cutting spending is always the right thing in all circumstances. That's incorrect. And it's a harmful error ... a potentially disastrous error.

Even Those Facing The "Cliff" Not Necessarily Facing Its Meaning

Krugman on what the "fiscal cliff" means to the Very Serious People in "Heritage, Chicago, and the Fiscal Cliff":

"So if you think the fiscal cliff matters, you also, whether you know it or not, believe that a whole school of macroeconomics responded to the greatest economic crisis since the Great Depression with ludicrous conceptual errors, of a kind nobody has had a right to make since 1936 at the latest."

What's the nature of the problem in the "fiscal cliff"? Spending cuts while the economy is weak hurt the economy. One would think that a hard reality to swallow for the folks buying the Chicago notion that public spending cuts will somehow mystically always be replaced by an equal amount of increased private investment no matter what the state of the economy.

The Austerity Crusade Fails Again; If Only They'd Listen To Keynes

It shouldn't have needed yet another proof, but here it is: as John Cassidy puts it, "an official confirmation from the United Kingdom that austerity policies don’t work."

Anybody who works from a knowledge of economic history already knew that. But the high priests of Supply-side were sure. All they needed to do was to be sufficiently faithful to their doctrine. It didn't work. And nobody who even came close to understanding Keynes was surprised by anything other than the deficit-hawks continued belief that balancing the budget will somehow cure all the ails us. Cure it because ... um ... underpants? Surely that's it. The balancing of the budget would cause the confidence fairy's underpants to fit better and she would come dancing along to rain blessings upon us for so dutifully cutting to balance our budgets.

After all, it surely all comes back to underpants, at least when we're dealing with the faith-based economics of Supply-siders (the Trickle-down-istas). For anyone who's seen South Park's "underpants gnomes" and their business plan:

1. Collect underpants
2. ?
3. Profit!

It's the very same with deficit-hawks:

1. Balance the budget
2. ?
3. Profit!

It really does require a pure leap of faith to jump off that cliff. Sadly, there are sharp, pointy rocks below and there really is no confidence fairy waiting around to boost folks back onto solid ground after they slash budgets during a downturn. So march off to the austerity crusade boys. And don't forget to inflict lots of suffering on your economy because that's the only way to scare the evil spirits out of it. Right? We just have to believe hard enough and the confidence fairy will appear. Never mind those rocks. We're not plummeting towards them, they're just growing bigger. That's all.

But no, that's not all. Austerity fails. At least from where we are. Austerity will be harmful so long as we're demand-constrained rather than supply-constrained. And we're clearly demand-constrained rather than supply-constrained. So anyone who was paying attention should have known not to cut spending. But the Supply-side faithful would have nothing of it. Listen? Pay attention to history? Heck no!

Can we please stop with the misguided, ill-timed budget-cutting when our economy isn't roaring along? Pretty please? Austerity fails. Supply-side fails. Trickle-down doesn't trickle down. We can only safely cut when we're already doing well ... preferably when we're overheated. We're not suffering from overabundance. If we bleed our economy of government spending, all that'll do is make the patient more sick. Enough with the "harsh medicine" already. It'll only hurt.

Obstructionism and Topping a Pile with a Ribbon

Krugman on the GOP plans to stand in the way of what needs to be done with every ounce of their misguided capacity:

"And one thing to think about: if the next two years are, as they seem likely to be, one long Republican tantrum, the 2014 election is not going to be a normal midterm. It will instead be a referendum on GOP obstructionism, which may attract a lot more attention — and much higher turnout — than normal."

He may be right. And if so, let's hope the electorate sees through the cheap tricks the Republicans will surely continue to apply, just as they have in recent years. It may be too early to be particularly confident that GOP dirty tricks won't pull them through the next election.