Saturday, November 6, 2010

Maybe "No" is the Right Answer

Paul Krugman, one of many NY Times partisan Democrats masquerading as a columnist, has once more asked: "What would they have done different?" How about doing nothing?

When recessions begin, politicians look for quick fixes, sometimes called "stimulus plans." Republicans look for quick fixes; Democrats look for quick fixes. In Economics, we have a subject called "Macroeconomics," which is supposed to provide guidance to the correct macroeconomic policy. What Macroeconomics is, in truth, is a collection of random fairy tales and simplistic equations, that bear little resemblance to hard science. When you ask someone, "do you favor spending increases or tax cuts," the answer you get tells you the political party of the person doing the answering. Some science!

The cold hard truth is there is no specific government policy known to be helpful in moving the economy from recession to recovery. Doing nothing may well have been the right answer in 2008 and 2009. Sometimes, time alone heals and no amount of well-intentioned policies will help. Indeed, in Obama's case, it seems pretty clear that the legislative activity by Obama-Pelosi-Reid has inhibited the economy's ability to recover.

The economy will recover, regardless of the foolishness of the Obama regime. But, had they done nothing, we might be looking at 8 percent GDP growth (like much of the rest of the world) instead of limping along at 2 percent GDP growth. Maybe, just saying "no" is the right answer.

1 comment:

Daniel Barrow said...

after your ad hominem attack, you're equating non-action with action. that makes no sense. and i don't see where the insufferable sarah palin comes into play here. mr. burton is an economist who says he recognizes the deficiencies of the sorcery known as macroeconomics.

for central planners in washington dc and the academics that advise them to presume that they have the omniscient and omnipotent capabilities to control an economy consisting of 300 million people and billions of market exchanges every day and so many unseen and unknowable variables, with no distortions or otherwise negative consequences, seems the height of arrogance. it has little to do with ideology, and a lot to do with recognizing the complexity of a market economy and the limits of macroeconomic "science."