Wednesday, August 10, 2011

Counter Cyclical is Counnter Intuitive

It’s becoming increasingly clear that the problem with being counter-cyclical is that it is counter-intuitive. It meets with fierce popular resistance even though it doesn’t call for any painful measures because it just feels wrong. How can the remedy for a bubble brought on by easy credit be easier credit? How can the remedy for running up too much debt be running up more debt. And it families are having to cut back and make sacrifices, shouldn’t government be doing the same thing? Arguing that the rules that apply to families don’t apply to government just generates resentment – no fair, why doesn’t government have to play by the same rules we do? And stimulus spending invariably distributes benefits unevenly, which increases the resentment.

There are a lot of fine bumper sticker anti-Keynesian slogan – Government should balance its budget, just like families; if we have to make sacrifices, so should government, you can’t spend your way to prosperity, and, of course, you’re mortgaging our children’s future.

The responses to these slogans are all too vague and abstract to offer any emotional satisfaction. One response is to talk about just what would have to be cut, which is never very popular. But the response is always, too bad, we can’t afford it. We need a snappy comeback. So what intuitively appealing, emotionally satisfying, bumper sticker slogans are there in favor of Keynes.

Here are mine:

I won’t promise services in good times and take them away just when they are needed.

When half the raft is losing air, the other half has to inflate to keep it afloat.

As the private sector stands up, government can stand down.

Unemployment is not cured by layoffs.

Government spending = teachers and Social Security

You can’t shrink your way to prosperity.

(I think the one about not curing unemployment with layoffs works. Not so sure about the others).

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