A reason that I am not too perturbed by the big 3 fiscal policy moves of the last year is that I think they are overrated.
Do note that most of the people who are telling you these fiscal policy moves are going to save the day are ... the people who voted for them or signed them.
Also note that they usually just talk about how great the spending is.
The thing is (and students who had me for principles know this) there's this thing called Ricardian equivalence. On the surface it's the idea that there is no evidence that financing government spending with taxes or borrowing is more harmful one way or the other. But more importantly, it gets at some core Keynesian ideas that the multiplier for spending is larger than that for taxes (possibly), or that the multiplier for borrowing is even smaller, so that deficit spending can be beneficial on net.
The appropriate metaphor for this is that the government is telling us that if we take money out of one pocket (taxes) and put it in a different pocket (spending) that you can be richer. This seems implausible. The Keynesian argument is that the we don't mind them taking the money out of the first pocket as much as we like it when they return it to the second pocket. Maybe.
What I draw from this is that we should think of fiscal policy as being neutral until we see otherwise. To me this means that we should not be very happy when one party spends, or too scared when the other one worries about the costs. If you're a really serious Republican, or a really serious Democrat because of the economics ... stop.
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