David Beckworth has a great post today about how the GOP could turn the Keynesian-like economic arguments of the left against them.
Here’s David explaining the spin:
One of the most remarkable developments of the past few years has been how the U.S. economy has steadily grown–albeit slower than needed–despite a tightening of fiscal policy. This tightening has been happening since 2010, but kicked into higher gear in 2013. Many observers predicted this fiscal tightening would be disastrous. For example, some claimed the sequester in 2013 would cause anywhere from 500,000 to 700,000 jobs to be lost in 2013. And yet, as noted by Michael Darda, this has not happened because the Fed has successfully offset it…
He seems flabbergasted that they aren’t biting, describing the real situation at hand:
Instead of running with it, however, the GOP and its thought leaders instead have fretted for five years over an inflation threat that has not materialized and now worry over asset bubbles that one has to strain to see amidst a depressed economy… Instead of seeing how the Fed has offset fiscal austerity and therefore could stave off more if further budget cuts were made, George Will instead [sic] focuses on unfounded fears of loose monetary policy. This is why folks like Jim Pethokoukis are pulling their hair out.
I am one of those people who has pulled their hair out, a sort of political baldness from which recovery is rare. I digress.
I think the key to this dilemma is not why are they not doing what they should be doing and think of the possibilities of why they are doing what they’re doing. It isn’t a recent development. It didn’t start in 2008, but is rather the rehashing of an old fight from 1932. On YouTube there is a video made in 1953 of GW Bush’s grandfather, Prescott Bush a Senator from Maine during a very public debate with Eisenhower, going on about the virtues and demise of the gold standard. Then fast forward to the dot.com bust, the Enron fiasco, and Sarbanes-Oxley – a period of time when Republicans ran most of government and nominated Ben Bernanke, Mr. Hardcore, explicit-inflation-targeting extraordinaire, to the BoG and then to the Chairman’s post. Come to think of it, membership in the exclusive hardcore explicit inflation targeting priesthood appears to have been a requirement for the job, as Mishkin followed Bernanke to the Fed, knowing much better, but did it anyway.
It wreaks of arrogant paternalism, and deep-seated mistrust and fear of markets and economic freedom. It’s conservatism on steroids. The fear of what other people are doing is a common thesis whether it be with their money or their bodies behind closed doors. It’s the stuff prohibition, child labor laws, and the war on drugs was made of.
It doesn’t matter if what they say makes no sense philosophically and reality proves their adversaries wrong (how many more nails does the coffin of Keynesianism need?). The framing of the popular arguments, the common narrative of the financial crisis, fits their ideas about other people and the value of freedom in any form. These are the people who say “Free Markets? My Ass!” even though the current crop of troubles prove that heavy government involvement in the economy is equally risky and probably more damaging and in a longer lasting fashion on the way down than much less (refer to Marcus Nunes’ post on 1907).
If you doubt me, just read some Caroline
Blum Baum (you can find her stuff on Bloomberg.com). They really are very scared and very much in doubt.
As for Morgan Warsler’s comment on the Beckworth post:
David, c’mon man just say it the right way….
NGDPLT REWARDS THE PRIVATE SECTOR WITH LOW RATES FOR FIRING PUBLIC EMPLOYEES.
If we want the conservatives to wake up, we gotta put the meat in the window.
All I have to say is, “Dude! The damned meat has been put in the window…” on a near constant basis since 2009 and I can still see the ignorance on full display all over the comments sections wherever it is presented. I don’t know how many more ways people like Krugman and DeLong can be proven wrong before they “get it.” They hold the key to solving this monetary disaster and are too stupid and stuck in their ways to figure it out.
But then, it all comes down to you to figure out that maybe they are just what they are, statists from the right and find no reason to doubt what they hear in the common narrative about their fellow countrymen.
I had no idea who Kevin Warsh was until today, but he needs to be added to the BIS-like list of Fed governors nominated during the 2000’s reign of Republicans. This guy is worse than Bernanke and Mishkin ever were combined.