One Economist's POV: Why Russ Roberts Is Against the Stimulus Plan

Russ Roberts of George Mason University and Cafe Hayek explains why he's against the stimulus package currently working its way through our legislative system like a Super Rooty Tooty Fresh 'n' Fruity Breakfast eaten way late during a week-long bender:

Rather than spending money we don't have, I wish Obama would use his political capital to change the parts of our political system that are dysfunctional—our entitlement programs that are demographically bankrupt, our broken budget system, our Byzantine tax system, our financial system that is in disarray. These changes would be more likely to create the confidence and trust in the future that our economy needs to get healthy again rather than borrowing and spending. Borrowing and spending is how we got into this mess. Let's look in a different direction.

Whole thing in the Boston Globe here. Among Roberts' points is the simple notion that economists know less than they suppose (or most of us think). That's worth remembering, especially in an age where economists occupy a role similar to that of magicians in King Arthur's court.

One thing that is surprising to me about the Obama position on the stimulus/bailout/infrastructure/"we won" bill is how non-transformative or inspired it is. Here's a guy who everybody believes will bring fundamental change to America and this is the best he can come up with? Spending a ton more money doing virtually exactly the same thing we've been doing (first and foremost, blowing out the federal budget like, well, a Super Rooty Tooty Fresh 'n' Fruity Breakfast after a week-long bender)? Feh. I want the $19.99 back on the "Change Has Come" Obama Collectable Plate (as seen on TV).

Here's Roberts, back in the fall of 2008 (doesn't that seem like forever ago, when we were young and happy and carefree?) telling Reason.tv where the financial crisis came from and what you need to know about the bailout:

Comments

[Jim Anderson]

"I'll have the Rooty Tooty..."

There's no dignified way to order that breakfast.

[P Brooks]

I wish Obama would use his political capital to change the parts of our political system that are dysfunctional-our entitlement programs that are demographically bankrupt, our broken budget system, our Byzantine tax system, our financial system that is in disarray.

Didn't I see The Ascended One, or one of his minions, saying we have more important priorities than fixing the tax code?

Of course, the tax code doesn't really seem to be much of a burden for people like Geithner and Daschle, so I can understand what they're thinking.
They can just get the money from me.

[Nick]

I'm still bummed they long ago discontinued the Cinnamon Swirl Slam...and that I still have to pay taxes. Fuckers.

[cuernimus]

I think the stimulus package is better described as a bacon and ham sandwich with two pork chops in place of bread and a little sausage on a toothpick to top it all off.

Also, the Super Rooty Tooty Fresh 'n' Fruity Breakfast looks to be one of the healthier choices compared to, say, a 12 oz chicken-fried steak with 3 eggs and 3 pancakes.

[Warren]

It's all very nice of you to give us your advise Russ, but I don't think we'll be taking it. Kthxbai

[James Ard]

Nick, not everybody believed a Chicago politician was going to do anything close to fundamentally changing the system. In fact, only a delusional fool would believe such a thing.

[joe]

Among Roberts' points is the simple notion that economists know less than they suppose (or most of us think). That's worth remembering, especially in an age where economists occupy a role similar to that of magicians in King Arthur's court.

Looks like someone's gotten around to seeing which way opinions are running within the economics profession about the need for a fiscal stimulus.

[P Brooks]

"Desperate times call for desperate measures! But let's not get carried away."

*mutters "phoneybaloneyjobs" under breath*

[smacky]

There's no dignified way to order that breakfast.

When you eat at IHOP, you check your dignity at the door.

[John Thacker]

Looks like someone's gotten around to seeing which way opinions are running within the economics profession about the need for a fiscal stimulus.

So long as everyone admits the way opinions are running within the economics profession about the quality of this stimulus.

[joe]

Everyone's seen those Denny's ads, huh?

That's a pretty good hook about the 'serious breakfast' vs. the alternatives.

[just asking]

Before someone starts throwing around the name of Keynes and "economists", they might want to consider a couple of things. First, Keynes always thought government should be no more than a quarter of GNP (that includes state and local). That means that Keynes would be a small government conservative if he were alive today. Second, people throw around the word "liquidity trap" like they know what it means. Okay, maybe we are in a "liquidity trap", but that is only half of the question. The other half is how much government spending does it take to get out of it? Is the trap so big that it requires $800 billion or really $1.5 trillion if you count the bank bailout? Where is the evidence of that? Or really the evidence of anything beyond the fact that policy makers have either paniced or are just crazed opportunists looking to loot the treasure.

[Seward]

joe,

As a long time listener to Roberts' podcast I don't that this is a brand new opinion of the man. Perhaps you should familiarize yourself with his work before you comment on it.

[Seward]

just asking,

It is closer to three trillion I believe. After all, the Fed has spent a lot of money that was not part of any "stimulus," etc. package.

[jsh]

Your ultimate pork meal, from the Obamassiah's home town of Chicago. I give you The Three Little Pigs Sandwich

[Joshua Holmes]

That's worth remembering, especially in an age where economists occupy a role similar to that of magicians in King Arthur's court.

Oh please, we're far more advanced than that. Those fools were trying to turn lead into gold. With our modern technology, we can now make money out of nothing.

[Pro Libertate]

[E]conomists know less than they suppose (or most of us think).

I know an economist that frequents these very boards who thinks that macroeconomics is largely hooey.

[joe]

Seward,

The quote I provided was from Gillespie.

Do try to keep up. I know it's hard for you.

[joe]

That means that Keynes would be a small government conservative if he were alive today.

Or it means he would change his opinion about government based on the changes that have taken place in the world over the past 70 years. Unlike a certain political faction I could name.

One or the other.

[grylliade]

Oh please, we're far more advanced than that. Those fools were trying to turn lead into gold. With our modern technology, we can now make money out of nothing.

And get chicks for free!

[Paul]

"Or it means he would change his opinion about government based on the changes that have taken place in the world over the past 70 years. Unlike a certain political faction I could name."

Or it could also mean you think Keynes is something that you use to start a car. Considering your other posts on here that is probably a pretty good bet.

Regardless, Keynes never believed in the power of government spending alone to create wealth. It was called "pump priming" not "pump replacement". Keynes once left a meeting of Roosevelt aids saying after listening to his name used to justify one spending program after another "everyone in the room was a Keynesian but me."

[Seward]

joe,

The quote you mention paraphrases Roberts' statement; and Gillespie's point is based on what Roberts wrote.

So, who is the "someone" you mention above? It is reasonable to assume that the "someone" is Roberts, since you know, the blog post is about Roberts' article and because of the content of the statement you quoted.

I think I am keeping up just fine.

[joe]

In a situation where you're confused, Seward, a polite person might ask a question.

So, who is the "someone" you mention above?

Wow. It's really this hard for you?

I think I am keeping up just fine. Good for YOU, buddy!

[Seward]

Paul,

Well, to be fair to joe, there is no real reason to view Keynes' word as the final thought on anything. The guy was clearly wrong in a number of areas; for example, I don't see many folks defending Keynes the eugenicist, and his idea about marginal labor productivity directly conflicts with Okun's Law.

[Seward]

joe,

...Seward, a polite person might ask a question.

I maintain that it was a reasonable assumption. You haven't suggested why I'm wrong with regards to that. Will I be seeing one?

Anyway, even if we take that "someone" to be Gillespie, I'm not quite sure why your response was warranted there either.

As for politeness, was your statement about Gillespie - now that we've determined who the "someone" is - polite?

[Paul]

Seward,

Keynes was anything but perfect. His economic positions, however, are often FUBARed by people intent on looting the treasury. Keynes would never has supported an abomination like the current stimulus bill and the bill should in no way be called "Keynesian". It should be called what it is "The National Economic Desparation and Future Generation Debt Aquisition and Plundering Act of 2009".

[R C Dean]

Or it means he would change his opinion about government based on the changes that have taken place in the world over the past 70 years. Unlike a certain political faction I could name.

Remind me again who is proposing New Deal 2: This Time, Its Personal?

[Seward]

Paul,

Well, I think people tend to forget that "The General Theory..." wasn't even published until 1936; so there is the fact that a lot of people tend to read what that text says back into the first four years of the New Deal plus the last two years or so of the Hoover administration.

Then again, how many have actually ever read the thing? Like Ricardo's work, it isn't exactly easy reading. Whatever you think of his ideas, Adam Smith could turn a phrase.

It is also the case that in personal correspondence with FDR that Keynes keeps on begging FDR to stop attacking those business people, etc. who oppose his administration. It takes WWII for that to stop happening. FDR had turned radical probably in part in 1935 and 1936 to quell efforts to his left to undermine his administration.

[joe]

Remind me again who is proposing New Deal 2: This Time, Its Personal?

Nobody.

The central planning agencies like the NRA and the massive public employment programs like the CCC are nowhere to be found in any of the stimulus proposals.

[Mike Laursen]

Here's a guy who everybody believes will bring fundamental change to America and this is the best he can come up with?

Anything like this, especially if it doesn't work, Obama gets to chalk up under the "I had to do it because I inherited a mess" category.

[P]

The central planning agencies like the NRA and the massive public employment programs like the CCC are nowhere to be found in any of the stimulus proposals.

Not yet, anyway. Just wait.