Republicans' economic policy is now closer to that associated with the Democrats, and vice versa.

September 13, 2002 6:40 AM

Republicans' economic policy is now closer to that associated with the Democrats, and vice versa. "Since the 1960s, the Republican and Democrat administrations have switched places on economic policy. The pattern is so well established that the generalisation can no longer be denied: the Republicans have become the party of fiscal irresponsibility, trade restriction, big government and bad microeconomics." Who'd have ever thought Bush would follow a Keynesian economic policy? Meanwhile, as the budget deficit grows, Greenspan cautions fiscal responsibility.
posted by Kneebiter (8 comments total)

The FT article is pure monetarist propaganda. Thank you, kneebiter, for including the biz/ed link, to at least pull the discussion a little closer to the center.
Keynesianism does indeed call for deficit spending in order to spur the demand side in periods of soft or slow economy. To equate all deficit spending with Keynesianism, (as the biz/ed article does) however, is just silly. Bush's problem here is that he cannot escape the realities delineated by Keynes, but he mouths a Thatcherite market fundamentalism, with the result that his economic policy as a whole is schizophrenic, unfocused, and doomed. In a serious bull market, monetarist policy can look pretty good, but it only gets away with that because of the cushion provided by the easy availability of money. Once the shit hits the fan only demand-side answers will do.
And then there's Greenspan. You want to know what fiscal austerity measures do to a soft economy? Check out Argentina.
Greenspan is right in one respect: Bush's profligacy is irresponsible as hell. If he were spending that money on programs which would increase consumer wealth, and thus reinvigorate the economy by propping up demand, it would be different. He is, however, just looting the country's wealth for short-term crony capitalism style gains, feeding the maw of the military-industrial complex at the expense of the economy as a whole. Hold on tight, folks, this could hurt a little.
posted by Nicolae Carpathia at 7:07 AM on September 13, 2002

Couldn't we just live without money?
Or maybe the problem is that we can't make our own?
posted by Fabulon7 at 7:26 AM on September 13, 2002

An interesting side point is the money multiplier effect of where the budget is spent. This article pegs it as a 4x effect in cases of infrastructure spending vs. almost no real added benefit to the economy for military spending. I've heard Ron Dellums peg this as 10-1, although I can't find a link to the research. Bush's plan with increasing defense spending, and keeping the tax cut, means additional cuts in the best type of spending to spur real growth (that is if congress is really going to respect the triggers for balancing the budget).
posted by tellmenow at 7:34 AM on September 13, 2002

Infrastructure spending is no panacea.

The Japanese have been pouring tens of billions a year of deficit spending into all kinds of infrastructure for the past dozen years with little appreciable effect, other than to line the pockets of construction companies and to create vast monuments to civil engineering.

Infrastructure spending of the sort most favored these days, i.e., massive public transportation, stadium, and airport construction, concentrates vast sums on an industry (heavy construction) employing relatively few people and creates a product which is used by comparatively few people to meaningful advantage. (The economic folly of stadiums is well known, mass transit is functional on a broad basis only in a few metropolitan areas and then only for those who work in the central cities, and airport improvements, while nice, seem to make very little economic difference in terms of airfares or delays or anything else material.)
posted by MattD at 8:13 AM on September 13, 2002

We're nitpicking here. Once the cycle completes and everything's peachy again, we'll praise whatever system is in place at that time.
posted by jragon at 8:53 AM on September 13, 2002

OBVIOUS

But seriously, I'm disgusted at the fiscal irresponsibility of our government, ESPECIALLY the Republicans. Well not all of them, mostly just Bush. "We're going to cut taxes and increase spending!"


Yeah, MBA President my ass. No wonder he ran TWO failed businesses and pissed away a decade or two.
posted by mogwai at 9:41 AM on September 13, 2002

The really stupid part of the Bush economic plan is that the bulk of the tax cuts are going to go to people that are least likely to spend the additional money. Wealthy people are less likely to spend dollars delivered to them, more likely to invest new dollars than purchase goods or services, where tax cuts benefiting the lower 4 quintiles of the population are most likely to be spent immediately.

Additional investment dollars available to business may be a good thing, but doesn't provide what could be considered any where near the immediate benefits to be gained from increases in customer purchases in what is now mainly a consumer driven economy.

In other words, businesses having more investment dollars to spend does not do the economy as much immediate good as customers having more dollars to spend on what businesses produce.
posted by dglynn at 9:50 AM on September 13, 2002

"You want to know what fiscal austerity measures do to a soft economy? Check out Argentina"

Alternatively: You want to know what fiscal irresponsibility can do to an economy? Check out Argentina.
posted by Quinn at 10:52 AM on September 13, 2002