Taborrok points out that, even if Keynesian fiscal policy works, it hasn't been given a chance because Keynesian politics has always failed. Even Krugman has lamented this. Taborrok goes on to suggest we look to alternative remedies to financial crisis, such as increased flexibility (I'm not sure what this entails), unemployment insurance (to boost aggregate demand? I thought he believed Hayek, not Keynes.. ), and more effective regulation (at least he admits he's skeptical).
Krugman replies to Taborrok, arguing that increased flexibility is NOT the answer, but maybe better monetary policy. He admits, though, that his political opponents wouldn't have the stomach for that either if they can't handle stimulus spending. So he recommits himself to the political struggle rather than the intellectual struggle for compromise.
There has to be some economic policy strategy that we can all agree on. It's not Keynesian stimulus spending, it's not "quantitative easing", it's not tax-cuts for the rich, it's not unemployment insurance, and it's not "creative destruction" (sucking it up). On one side, the Austrian-inclined refuse to systematically corrupt the organic free-market process, on the other side, the Keynesian-inclined refuse to sit back and watch the unemployed struggle and suffer and do nothing.
How best to safeguard against the harms of financial crises? How about unemployment programs with the right incentive structure? That's all I've got, because I agree with both sides. We want to help people, but we don't want to prolong the survival of unhealthy and failing companies or trading practices.
No comments:
Post a Comment