Will Wilkinson has a brilliant post on Paul Krugman, and by extension, everyone else who is ordering Barack Obama to man up and ram through perfect policies:
The deeper problem, I think, is that the textbook theory doesn't have any politics in it. In macroeconomics textbooks, government is a benevolent central planner beyond politics. It is assumed, for simplicity's sake, that governments can act in perfect compliance with theory. It is also assumed that theory is settled before coming to a policy problem, that motivated disagreement over theory is not an essential element of democratic policymaking. But of course, there is politics, which trashes hope of either consensus on or compliance with theory. And that's how we ended up with the legislative monstrosity actually under consideration in Congress. As Harvard's Robert Barro puts it:
This is probably the worst bill that has been put forward since the 1930s. I don't know what to say. I mean it's wasting a tremendous amount of money. It has some simplistic theory that I don't think will work, so I don't think the expenditure stuff is going to have the intended effect. I don't think it will expand the economy. And the tax cutting isn't really geared toward incentives. It's not really geared to lowering tax rates; it's more along the lines of throwing money at people. On both sides I think it's garbage. So in terms of balance between the two it doesn't really matter that much.
The economists can duke it out over the possibility of successful fiscal stimulus. But is there any reason based in up-to-date economic theory to believe that this trillion dollar deficit-spending bill is not, as Barro says, garbage?
Krugman is plumping for it anyway. Hard. So what can one say about Krugman? That he is a creature of extraordinary double consciousness. Perhaps more than any economist of his caliber, Krugman understands that policy is largely determined by the outcome of the public opinion shoutfest. Yet this recognition seems to have no effect on Krugman's ideas. Rather than bring inside his models disagreement over economic theory and the lack of political incentive to faithfully apply them, which would lead him to radically revise his prescriptions, Krugman leaves his textbook theory untouched and simply tries to win the shoutfest. Krugman's often unbearable stridency seems to reflect an attempt to overcome the problems of democratic disagreement and incentive compatibility through sheer force of will-as if the deep reality of politics is no match for the rhetorical gifts and gold-plated reputation of Paul Freaking Krugman. It is as if his own imagined ability to singehandedly overwhelm the opposition is part of Krugman's implicit model of how a politics-free macoeconomic theory can be made politically relevant in a time of perceived crisis, which is to say, a time of rank political opportunism.
One can see this attitude reflected in Krugman's advice to Obama, who he says "made a big mistake" by failing to mercilessly bully his opponents into submission:
It's time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation's future at risk.
As Krugman sees it, the big problem here is Obama, who lacks Krugman's intransigent will to mercilessly crush any who would dare keep cartoon Keynesianism from coming to life.
As Ross Douthat notes, the stimulus bill we ended up with is the worst of both worlds:
In this world, centrist Senators exist to take politics as usual - whether it's tax cuts in Republican eras, or spending splurges in Democratic ones - and make it ever so slightly more fiscally responsible. So if the GOP wants, say, $500 billion in tax cuts, the country clearly needs $400 billion in tax cuts - but not a penny more! And if the Democrats want $900 billion in stimulus, then the best possible policy outcome must be ... $800 billion in stimulus! To read this Arlen Specter op-ed, justifying both the stimulus package and the cuts the "gang of moderates" have attempted to impose, is to encounter a mind incapable of thinking about policy in any terms save these: Take what the party in power wants, subtract as much money as you can without infuriating them, vote yes, and declare victory.
. . .
There's a case to be made for a stimulus that's radically different than the one we have now; there's a case to be made for a stimulus that's like the one we have now, but a great deal smaller and more targeted; and there's a case to be made for a stimulus that's absolutely gargantuan. But thanks to the centrists, we're getting the cheapskate version of the gargantuan version: They've done absolutely nothing to widen the terms of debate about what should go into the bill, and they've shaved off just enough money to reduce its effectiveness if Paul Krugman is right - but not nearly enough to make it fiscally prudent if the stimulus skeptics are right.This means that if the damn thing doesn't work, we won't even know whom to blame. But it wouldn't be crazy to start by blaming the centrists.
My liberal friends pay lip service to the fact that bills have to be negotiated through the political process. And they're certainly willing to trim their suggestions to things that are politically possible, rather than, say proposing that we ban the automobile. But this knowledge rarely penetrates as far as acknowledging that the political process sometimes means that we will get a bill that is worse than simply doing nothing, even if there is some theoretical bill out there in the ether that would be simply smokin'.
It reminds me of an apocraphyl story about an ad guy who meets a producer in a bar, and demands that said producer hire him as a writer, on the grounds that even he can write better than that drivel.
"Anyone can write better than that drivel," sighs the producer. "Can you write a script that's better than that drivel after everyone from the extras to the wife of the studio head have all put their two cents in?"
Rather than focusing on crafting policy prescriptions that will best survive the sausage grinder, Democrats and Republicans alike spend a lot of time fantasizing about what life would be like if the other party disagreed, or stopped being a different party. The problem is not that the bill can't win enough support--it's that intransigent [Democrats/Republicans] are refusing to rubberstamp the president's initiatives.
But if the Republican Party disappeared, the Democrats would be no closer to their goals, because the Republican Party represents real interests that would continue to exist, and would elect other people who would also oppose the bill. And at the point when you're fantasizing about the mass disappearance of a large number of voters, I'd suggest that your political philosophy needs a rethink. And if the stimulus package were really as 100% guaranteed to make America better off as its proponents claim, you can bet that sensible Republicans would be falling all over themselves to get on board.
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