Hullabaloo

Friday, July 13, 2012

 
Crude and simplistic pony building

by digby

Like Atrios, I find this column by Jeffrey Sachs to pretty much be condescending gibberish about pony building. It would seem that nobody, especially Paul Krugman, is being properly serious about the economy because he's relying on musty old Keynesianism when what we need are Big New ... somethings. It goes like this:

Blah, blah, blah, we are in the age of the Anthropocene blah, blah ...we need a long-term financial outlook and new approaches to pensions and healthcare delivery blah blah blah ...well-designed public investments (eg in infrastructure) can unlock significant private investments as well blah, blah ...new economic strategies to overhaul broken systems of finance, labour markets, taxation, ecological management, budget management and investment incentives blah, blah ...long-term, structural, sensitive to inequalities of skills and education blah, blah blah...

Nothing controversial there, of course (although there's quite a bit about the debt, so not altogether true) but none of it addresses the current crisis, which is what the allegedly "crude" and simple-minded Keynesians are trying to do.

As Atrios says:

Keynesian demand management really just says there are times when things won't right themselves automatically in a timely fashion, that government should step in to boost demand. It isn't about stealing from the rich to buy Cadillacs for strapping young bucks, or just how many SUPERTRAINS should be built, it just says there are times when the government, using fiscal and/or monetary policy, can actually improve the economy by boosting demand. That this is even controversial is mindboggling.

But I think Sachs is really saying that we should throw out all those old ideas because everything's different now! Why, back in the 30s they didn't even have cell phones!

It reminds me of this old Joe Klein chestnut from a few years back:

In the Information Age, Clinton knew that the paradigm was the computer, that the government had to be more decentralized, that bureaucracies had to become more flexible, and that our social safety net had to reflect that--the fact that people had more information and have to have more choices about where they get their health care, where their money for their retirement is held, and so on.

I've never been sure what he thought he was babbling about but whatever it was, I think the problem was fixed by offering direct deposit.

This idea that because the world is different today means that we have to reinvent the wheel is daft. Yes, there are new problems to be solved. But old problems often reassert themselves and if we have the answer it's "crude and simplistic" to pretend that it won't work just because it was discovered long ago. Lord help us if all the other sciences decide to follow this route.


Update: Krugman responds. The last line is a classic.

.
digby 7/13/2012 01:30:00 PM