For The Record: On The Economy

For the record, I agree with every single point David Frum makes here against Republicans in general:

On the most urgent economic issue of the day – recovery from the Great Recession – the Republican consensus is seriously wrong.

It is wrong in its call for monetary tightening.

It is wrong to demand immediate debt reduction rather than wait until after the economy recovers.

It is wrong to deny that “we have a revenue problem.”

It is wrong in worrying too much about (non-existent) inflation and disregarding the (very real) threat of a second slump into recession and deflation.

It is wrong to blame government regulation and (as yet unimposed) tax increases for the severity of the recession.

It is wrong to oppose job-creating infrastructure programs.

It is wrong to hesitate to provide unemployment insurance, food stamps, and other forms of income maintenance to the unemployed.

It is wrong to fetishize the exchange value of the dollar against other currencies.

It is wrong to believe that cuts in marginal tax rates will suffice to generate job growth in today’s circumstance.

It is wrong to blame minor and marginal government policies like the Community Reinvestment Act for the financial crisis while ignoring the much more important role of government inaction to police overall levels of leverage within the financial system.

It is wrong to dismiss the Euro crisis as something remote from American concerns.

It is wrong to resist US cooperation with European authorities in organizing a work-out of the debt problems of the Eurozone countries.

It is wrong above all in its dangerous combination of apocalyptic pessimism about the long-term future of the country with aloof indifference to unemployment.

With that said, I also agree with every single point he makes here.

19 Responses to “For The Record: On The Economy”

  • As best I can tell, Republican voters fall into three groups:

    1) The ones who don’t realize how crazy their candidates sound.
    2) The ones who recognize the insanity, but who are deep-down single-issue voters (e.g. anti-abortion, pro-defense, anti-union, anti-Mexican) and will vote Republican anyway.
    3) The ones who are desperately trying to find a “least crazy” option.

    Frum is #3.

  • I’m curious as to your own position on monetary policy. Do you support the QE1, QE2, and the future helicopter drops?

  • LaurenceB,

    I’m probably a bit of #2 (vouchers) and #3.

    Darf Ferrara,

    I do believe that the primary solution to our financial woes should be monetary based. My views are very similar to Scott Sumners. So to answer your question, mostly, yes.

  • I am sympathetic to Sumners’ arguments, but I’m of the opinion that if there is not an explicit NGDP target, as well as a futures market for NGDP, then the money expansion becomes a payoff to Wall Street. I’m sure that there would be other kinks that would have to get ironed out as well, but his ideas sound a lot better than most of the others that I’ve heard. My preference would be for a free banking system. George Selgin and Laurence White have written on free banking pretty extensively. I think that Selgin also supports Sumners NGDP targeting as a less than perfect solution.

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