It’s been a while since I’ve posted anything on the economy (on purpose- aren’t we all sick of this topic already), BUT to mark the end of prorogation tomorrow, I thought I’d highlight this online squabble between two heavyweight academics (I can hear the groans from where I’m sitting).
In his post entitled “Economists, Ideology and Stimulus,” Nobel prize winning economist Paul Krugman goes after some bigtime conservative academics:
What’s been disturbing, however, is the parade of first-rate economists making totally non-serious arguments against fiscal expansion. You’ve got John Taylor arguing for permanent tax cuts as a response to temporary shocks, apparently oblivious to the logical problems…You’ve got Gary Becker apparently unaware that monetary policy has hit the zero lower bound. And you’ve got Greg Mankiw — well, I don’t know what Greg actually believes, he just seems to be approvingly linking to anyone opposed to stimulus, regardless of the quality of their argument.
Greg Mankiw doesn’t take the hit lying down and responds with the following on his own blog:
If Paul really wants to know what I believe, he can read what I have written on the subject.
Let me make one thing clear: When I link to another economist here on this blog, it is typically because I think his or her arguments are worth hearing and thinking about, not necessarily because I agree with all of them…It is true that I have linked more to those opposed. That is partly a reflection of my opinion on the issue. It is also partly to provide a counterpoint to the view disingenuously promoted by some members of the incoming administration that almost all major economists are lined up behind their stimulus plans. As Paul’s list of prominent stimulus skeptics documents well, that is simply not the case.
For those of you who don’t follow the riveting world of economic academia (most of you, I hope), Krugman has singled out some very well respected economists in the field- all whom have expressed doubts about the potential efficacy of a stimulus package. Despite my liberal tendencies, I’m going to have to agree with Mankiw on this one. Around the world, the public seems to have unequivocally decided that the a large federal stimulus is absolutely critical to spurring the economy. The debate on the stimulus has been virtually non-existent- the necessity of some sort of plan appears to be a forgone conclusion, with the ensuing debate revolving around what to fund and how much to give. If nothing else, these rare contrarian views inject a healthy dose of skepticism into the discussion. [If I learnt anything in high school English class, it was to question everything].
Now, I haven’t read enough to really understand the economic intricacies of the debate, but I’d probably be more inclined to support a federal stimulus over corporate tax cuts [if only because I can’t see all of this lost revenue trickling back into the economy]. I will though, express some concern over the importance of how this money is to be spent. With Harper’s budget to be released tomorrow, I’m curious as to where all this money is going to go. As the Economist pointed out sometime back, the last thing we need is more bridges to nowhere.