I was born in the 1960's at the beginning of Generation X, but I really remember the 1970's. I remember the first wave of couduroy, Three's Company, Bruce Jenner (not Brody, his worthless spawn), and of course astrology. Growing up a young lad I often watched television shows in which smooth talking dudes opened conversations with foxy ladies by asking them "Hey baby, what's your sign?"
Astrology, as the internet's font of complete wisdom notes, is mere superstition. The idea that the stars can actually influence our lives has been discredited and now merely takes up space in a newspaper that could probably be better spent on advertising. Instead people just use the impossibly vague "predictions" of astrology to confirm what you already think about the world. I now feel very much the same way about economics these days. Allow me to explain.
Economics is a social science, which purports to be able to accurately predict what political and social institutional arrangements will best produce economic growth and prosperity. It does this using assumptions about human behavior (we all have goals and pursue them) and the way that certain institutions (i.e. central banks, tariff laws, the government generally etc.) will help or hurt economic growth.
Here's the problem - they can't agree on ANYTHING. Let's begin at the top. You'd expect that any discipline that has a Nobel Prize awarded to its "top" researchers every year would provide some guidance about what to do during, oh I don't know, a major economic crisis. Well, here is a Nobel Prize winner saying that Obama's stimulus isn't very good. But wait, here's another Nobel Prize winner saying that the stimulus is great, and Obama should make it even bigger.
Ok, you might say, so suppose we go down a notch and look at prominent economists who might not have so much professional prestige tied up in a particular position or research agenda. Surely, they agree on this stimulus, bank bailout bill thingee? No, they don't - at all. These guys, think the stimulus is a bad idea, and they are prominent. This guy, thinks it's a great idea, and he's also prominent.
You might say, ok, the real problem is that politicians are involved, and all of this conflict is just about politics. Well, here you'd be partially right because the Dems are saying that just about any economist of merit supports the stimulus. The folks at Cato, a libertarian group, say no, look, we have a list of 200 economists who oppose the plan.
But that's not enough, in my view to overcome the fundamental problem here - a conflict of normative public policy questions. V.I. Lenin, who for younger readers might be a bit of a mystery, was the first "president" or "leader" of the Soviet Union. Much as Soviet style communism has been discredited, this passage from "The Crisis of Power" is really interesting. Russia in 1917 had a conservative political power base with socialists and communists in opposition. He notes that during a crisis there are basically three choices - the status quo, a blended compromise between the capitalists and their opponents, or a revolution. We know which alternative Russia chose.
While I doubt we are facing a crisis of the same magnitude, Lenin's analysis is about world views, not a scientifically agreed upon consensus of what WILL happen. Instead we are seeing shouting matches about what SHOULD be. That's why this stimulus bill includes the seeds of health care reform and expanding unemployment insurance. That's not stimulative - at all. Those policies represent departures from the years of Reagan and Bush where the supposition was that government didn't play as big a role in people's lives.
So in many ways asking economists about the stimulative impact of this bill misses the point. Democrats and Republicans should come out and simply say what they mean - this is not about a scientifically agreed upon view of economic theory that will help us out of this mess. There simply isn't one, agreed upon view among economists about how to solve this problem.
It's a proposed change, or maybe a revolution, in the role that government will play and it's based on a normative view of the way the world should be. Whether you agree with it or not, the Democrats seem to be promoting a wide expansion in state power, not some scientifically based stimulus. And in many ways it's a return to the 70's when government was bigger.
So we seem to be reliving some bad 1970's movie in which some right-wing Austrian economists wearing Corduroy like this swinging dude are competing with a bunch of hip, polyester wearing John Ritter type Keynesian economists for the attention and affection of the public and politicians. If we have to re-live the 70's, I just hope to God that we can avoid disco, Watergate, and another oil crisis this time around.