Marco economics is an observational science. It is difficult to construct controlled experiments. There always seems to be enough differences from situation to situation to introduce doubt. Nonetheless, sometimes unfair, or at least unsupported, conclusions can enter the conventional wisdom. The concept of a Keynesian stimulus may suffer this fate.
The Keynesian approach suggests that during a recession the government can stimulate the economy via spending to replace economic demand from private markets. An alternative approach championed by Milton Friedman suggests that monetary policy is more important than fiscal policy.
Democrats have traditionally favored a Keynesian approach, in no small part because it provides an additional excuse for the government to initiate spending programs to address Democratic priorities.
When President Barack Obama came into office, it was natural for the progressive to institute a massive, nearly trillion-dollar stimulus. So confident were Democrats in the efficacy of the stimulus that they promised that unemployment would not exceed 8%. We were warned that if no stimulus were instituted, unemployment would reach 9%. We now know that following the stimulus, unemployment blasted past 10%. Moreover, growth remains anemic and unemployment two-and-half years after the stimulus still exceeds 9%. More disappointing is that the officialunemployment value would be far higher if so many people had not given up hope of finding a job. The lack of growth and employment has reduced revenues exacerbating the deficit.
It is rhetorically convenient to declare in the face of these facts that Keynesism is dead, believe by only those immune to the evidence. I lend far more weight to the Friedman approach and would love to offer our current situation as definitive proof.
However, let me offer a slightly heretical view. While the current situation lends no support to the Keynesian idea of stimulus, the regulatory anchor on growth makes it impossible to tell whether the stimulus has indeed failed. Perhaps It is economic uncertainty that is restraining the economy irrespective of the stimulus.
Companies are uncertain because of a massive influx of regulations. Obamacare has passed, and mountains of rules based on the legislation are still being written. Companies, particularly small ones, are reluctant to hire uncertain of what Obamacare would require of them. The Dodd-Frank bill to regulate financial markets has introduced new banking regulations. Until these are finalized and better understood, there will be a backward tug restraining lending. This is not to mention the new regulatory aggressiveness of the the EPA anxious to implement policies bureaucratically that could never be passed legislatively. The EPA has more regulatory actions pending that the Department of Human Services which is responsible for implementing Obamacare.
Imagine the metaphor of the stimulus package being a foot on the accelerator of the economic car, with a chain of regulations strapped to the bumper. The stimulus accelerator may or may not work, but the regulatory chains make it impossible to diagnose whether the accelerator is functioning properly. The Keynesian approach may deserve death, but the current situation cannot be said to have inflicted the true final blow.
Thoughts on Evolution and Republican Candidates
Friday, September 2nd, 2011By all conventional standards of the time, William Jennings Bryant was a liberal. He ran for president three times as a Democrat. He opposed the gold standard for limiting credit to farms in his famous and spell binding Cross of Gold speech. He was a populist who railed eloquently against oil companies and railroads. However, most people remember Bryant as the ardent and literalistic fundamentalist Christian who argued against the teaching of evolution in public schools in the famous Scopes Monkey trial.
How can we square Bryants liberalism with a position that many now associate with Republicans? The issue lies with the unfortunate extension of the meaning of the theory of evolution far beyond its legitimate scope. Some people perverted evolution into Social Darwinism, the notion that if some people do poorly in the economy is because they are not a socially fit as the successful. If the rich are more successful, it is consistent with the scientific notion of survival of the fittest. Ever the defender of the downtrodden, Bryant unfortunately conflated his Christian concern for the poor, with the necessity to dispute what he viewed as an anti-working-class ideology. At its heart, Bryant was not really making a scientific argument, but a moral one.
The problem for Bryant was he tried to unnecessarily take sides in a science vs. religion dispute. For many there really is no such conflict. Whenever there is an apparent conflict between science and the Bible, the problem is less likely to be science or the Bible, but rather Biblical interpretation or the inappropriate application of science.
It is the thesis here that for many Americans that disputes about evolution represent an unnecessary defense against people like Richard Dawkins and Christopher Hitchens who who argue that science precludes serious religiosity. It is my suspicion that political figures sympathetic to Intelligent Design is less the result of thorough grappling with the scientific issues, an more a defensive reaction to what I call evangelical atheists.
It would be preferable to have Republican presidential candidates with more thoughtful positions on evolution. However, I prefer their faulty Biblical interpretation (from my perspective) to the Constitutional jurisprudence of Democrats who believe that the commerce clause of the Constitution that can extend to grant Congress virtually unlimited powers.
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