By N.S. Palmer, Ph.D.
The U.S. Republican Party is at it again. This time, House Minority Leader John Boehner (R-OH) and his minions are trying their best to block or sabotage government programs that would stimulate the American economy and reduce unemployment. Some conservative and libertarian economists, such as former Bush advisor Gregory Mankiw at Harvard, are doing likewise — advancing one specious argument after another to forestall anything that would help working Americans.
However, though many of the arguments advanced against the Obama plan and fiscal policy are disingenuous, they are sometimes sincere. The reason is that conservative and libertarian economists tend to focus obsessively on the long run at the expense of the short run.
Of course, Keynes gave the best reply to that kind of thinking: “In the long run, we are all dead.” During the 1930s Great Depression, FDR’s advisor Harry Hopkins said pretty much the same thing: “People don’t eat in the long run. They eat every day.”
There is reason to believe that given a proper legal and institutional framework, the economy will perform best in the long run if taxes and other government interventions are kept to a minimum. However, (a) we do not have a proper legal and institutional framework, and (b) people’s lives depend not on the long run but on a series of short runs.
The trick is to keep the economy going today while taking care that it doesn’t crash tomorrow or the next day. And that’s a trick that both the U.S. Republican Party and its house economists have proven unable to perform. Their signal achievement so far has been to run the U.S. and world economic systems into a ditch. Their current efforts could do little beyond ensuring that the ditch becomes our long-term residence.
Copyright 2009 by N.S. Palmer. May be reproduced as long as copyright notice and URL (http://www.ashesblog.com) are included.