Tufte’s Short Post # 23: State and local government sectors are down

State and local government sectors are down. On the whole, if you take the economy apart, the only sector that was and is still hurting is state and local government. Textbooks have made clear for at least 20 years that the procyclical policies put in place at this level were a disaster waiting to happen if the downturn was severe enough. Bingo! D.C. has made this worse by collecting the taxes and then distributing the funds to lower levels: to the extent that D.C. is increasingly hobbled by entitlement spending, their ability to head off procyclical amplification of downturns by cub scouts at the state and local level is decreasing.

There’s an arthouse film called Thirty-Two Short Films About Glenn Gould. You’re getting Twenty-Six Short Posts from Dr. Tufte. :) These are on why it’s difficult to understand the current macroeconomic situation. Joe Baker is not a macroeconomist, but we all do a little bit of everything at SUU, so he has to teach principles of macroeconomics sometimes. The other day he asked for pointers about summing up for his students why we can’t quite figure out what’s wrong with the economy. I came up with 26 reasons, most of which have been discussed in class, and all of which are now required.