Over at Scott Sumner’s blog, there is a rundown of the literary fisticuffs between Clive Crook, Brad DeLong and Paul Krugman in a little three-way political spat (or rather, two-way with DeLong and Krugman ganging up on Crook).
I don’t know who drew first blood, but Crook does make some good points about Krugman being at least half political hack. Through all of it, however, the main points of contention on neither side are based in reality. By and large, neither Democrats nor Republicans give a fleck about average Joe; and I wish we could stop arguing that they do. They are the political kin to corporate brands; they care about being on top, and they care about people whose money is greener than everyone else’s.
Extracting away the political wrangling, I have a hard time finding validity in the arguments of either side because the main point that is mysteriously absent is that when the central bank is targeting inflation, the price level, or NGDP, fiscal stimulus does almost nothing. Cutting taxes (fiscal stimulus) does not help. The government spending future generations into oblivion also does not help.
About the only thing the political system can do to hasten recovery at this point in time is to reform the Full Employment and Balanced Growth Act to slam the lid shut and hammer about 10,000 nails in the coffin of the horrendous travesty of inflation targeting, then bury inflation-targeting’s corpse several miles underground, incased in cement – never to see the light of day again.
I might rethink my position regarding Democrats or Republicans depending on whichever party manages to pull this off. But as long as one party is nearly as obsessed with inflation as is Jeffrey Lacker, and the other is obsessed with sticking to the rich after they pile all kinds of favors and corporate welfare on them, my opinion that both parties are the bane of the universe will stand.
I don’t care who does it. It just needs to be done. Nothing else will do.