The definition of treason

Here’s a disturbing story from the Associated Press:

WASHINGTON (AP) — Republican leaders of the House and Senate are urging Federal Reserve policymakers against taking further steps to lower interest rates.

On the eve of the Fed’s two-day policy meeting, the leaders sent a letter to Fed Chairman Ben Bernanke warning that the Fed’s policies could harm an already-weak U.S. economy.

The letter, sent Monday, was signed by Senate Republican Leader Mitch McConnell of Kentucky, Senate Republican Whip Jon Kyl of Arizona, House Speaker John Boehner of Ohio, and House Majority Leader Eric Cantor of Virginia.

The letter followed criticism from several Republican presidential candidates that the Fed efforts to boost growth are raising the risk of inflation.

“The American people have reason to be skeptical of the Federal Reserve vastly increasing its role in the economy,” the lawmakers wrote.

It is rare for lawmakers to try and sway policy action at the Fed, which operates independently of Congress and the White House. It was also sent at a time when Bernanke, a Republican, has faced growing criticism from members of his own party.

Former Fed official Joseph Gagnon, senior fellow at the Peterson Institute for International Economics, called the letter “outrageous. It’s incredible.” He said it’s been several decades since such high-level politicians tried so directly to influence the Fed.

“The fact that it’s in print and signed by the leaders of the House and minority leaders of the Senate raises it up a notch,” Gagnon said.

David Jones, head of consulting firm DMJ Advisors and the author of four books on the Federal Reserve, said he cannot remember another time when members of Congress had made such a direct approach to the Fed in the week that the central bank was meeting.

I think Congressmen have the right to speak out on monetary policy.  As long as their advice is not politically motivated.  Ask yourself the following question:  Would these men be pressuring the Fed to adopt a tighter monetary policy if:

1.  Unemployment were over 9%.

2.  Inflation had averaged 1% over the past three years.

3.  George Bush were president.

Were these men criticizing monetary policy under Bush, when inflation was higher than today?  I don’t recall that happening.

Unlike Rick Perry, I don’t think it is treasonous to advocate easy money or tight money.  Treason is advocating policies that you know will hurt the country, because you hope you can derive political gain from America’s misfortune.  I’ll leave it to my readers to decide who should be charged with treason.

PS.  This was especially ironic:

The letter expressed serious concerns that the Fed’s actions could weaken the foreign exchange value of the dollar or encourage excess borrowing by consumers who are already carrying too much debt.

Does anyone recall what happened to the dollar under Bush? 

PPS:  I used to frequently bash the NYT, but even they are waking up.  Check out this excellent story by Joe Nocera.


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164 Responses to “The definition of treason”

  1. Gravatar of Morgan Warstler Morgan Warstler
    20. September 2011 at 16:58

    OMG! Can you believe it!

    AN12 comes closer and closer… you are going to need a parachute there Scotty, eventually it is about having a real voice with the new guys in power.

    What are you going to do, start every blog post in 2013 by saying, “these GOP bastards shouldn’t have waited, they should have rolled dice on another 4 years of a Marxist in office – to be politically fair.”

    None of this is about fair. It is about right.

    Once we agree taxation is theft, Obamacare is immoral, and the Federal government violates the rights of states and individuals, anything that hacks Democrats goals is valid game play.

    If they want fairer fight, then they need to stop playing for the big money.

    Look, in 2004 I HATED that gay marriage was used to nuke John Kerry… but the moral alternative was John Kerry.

    9% unemployment is Obama’s fault.

    He CHOSE not to be Bill Clinton.

    HE did this.

    There is no right to be liberal.

  2. Gravatar of MikeDC MikeDC
    20. September 2011 at 17:12

    No one should be charged with treason. Everyone, especially economists who spent time talking about “long and variable lags” and the primacy of interest rates in their texts on monetary policy should be charged with epic failure.

  3. Gravatar of Barnley Barnley
    20. September 2011 at 17:14

    This is relevant here: If some dare call it treason, was Milton Friedman a traitor?

  4. Gravatar of Old Whig Old Whig
    20. September 2011 at 17:26

    It’s quite true that the Republicans were silent during Busch years. Those that were silent were the Big Government Conservatives that are in opposition against Big Government as long as they are not in power.

    The difference now is that the Big Government Conservatives, Romney now and McCain then are not on charge anymore. The Republican party today is forced by limited government conservatives to oppose any government intervention what so ever. They believe that Keynesian stimulus makes everything worse in the long run as well as Monetarist fiscal policy. They believe in the policies advocated by FA Hayek, Calvin Coolidge and his secretary of the treasury Mellon

    Do nothing! Don’t interfere!

    This letter is in fact just that. Admonishing the FED that enough is enough.

    As a matter of fact Do Nothing policies have only been tried once during the vert bad 1921 recession. It worked a treat.

    However in my opinion when you started tinkering with the economic levers you can’t stop. My advice to the Repiblicans would in fact be to give a Carte Blance to the FED and Keyneysians, Monetrariats and quasi Monetarists to go ahead to try their worst.

    But demand that targets are set and if they fail never ever again vbe allowed to form any kind of policy. Let theirs theories once and for all be disproven or proven. Do or die!

  5. Gravatar of Scott Sumner Scott Sumner
    20. September 2011 at 17:27

    Morgan, It’s treason to intentionally hurt one’s country. But at least we agree on their motives.

    MikeDC, No one except the treasonous.

    Barnley, Yes, the GOP would definitely be accusing Friedman of treason.

  6. Gravatar of Scott Sumner Scott Sumner
    20. September 2011 at 17:30

    Old Whig, These guys didn’t just come to power–they’ve been there for a long time. They’ve had plenty of opportunity to criticize the Fed. Why now?

  7. Gravatar of John Thacker John Thacker
    20. September 2011 at 17:31

    Scott, it appears that you have a higher opinion of their understanding of economics than you do (now) of the President’s. Perhaps it’s just scarier if they also have the same silliness.

    Hard money fetish has long been something on the Right in this country. While of course partisan reluctance to criticize plays a role (just as Democrats have held their tongue about President Obama), there do seem to be a lot of Republicans blaming “the bubble” and everything else on monetary policy retrospectively being too lose during the GWB years.

  8. Gravatar of Old Whig Old Whig
    20. September 2011 at 18:00

    Scott,

    In a sense your right. In the same way the so called Anti-War left, Code Pink, et ak has been dead silent on Obama doubling down on GWBs policies

    Partisan hacks!

    That said the resistance to government intervention is new, or rather a reawakening of the Madison v Hamilton debate on the scope of government.

    It’s very unfortunate that it comes at such a perilous moment. On the other hand paradigm shifts only comes during times of turmoil. Nit during times of consensus and prosperity.

  9. Gravatar of Barnley Barnley
    20. September 2011 at 18:25

    I don’t really see this as an argument over the wisdom of government intervention. If the argument were over fiscal stimulus then yes, but when it is monetary stimulus it is more a case of given that this institution already exists what is the best policy. See for instance this Given that market monetarism exists.

  10. Gravatar of Morgan Warstler Morgan Warstler
    20. September 2011 at 18:28

    Scott, mine is the moral argument yours is the passive aggressive, mealy mouth one.

    If you KNOW your wife will take all your money when you are dead and give heroin tot he children, your obligation is to SPEND ALL THE MONEY before you die.

    This is why it is moral for GOP Presidents to spend all the money.

    Liberalism is not a legitimate moral pursuit.

    Obama HAD A CHANCE, he was allowed to be Clinton, to bat austerity clean up after Bush spent wildly, but Obama CHOSE not to be Clinton…

    It is all on him.

    My side has no obligation to allow his agenda to take root… we are not a parliamentary system, my side’s jobs is to make sure he is a one term President.

    You want to passively argue, tacitly asserting both side have morally legitimate policy goals.

    You want to act as if the haves are OBLIGATED to accept vote by mob Democracy, we are not…

    The game is STOP SOCIAL DEMOCRACY from flourishing until global capitalism can take root and deliver us from evil.

    We are playing that game.

    We won’t play theirs again.

    AT LEAST have the cojones to to recognize your flip flop nature.

    You claim to be a libertarian, a libertarian will be morally offended at Democratic policy, and hold their nose to support GOP candidates until such time as the state is in remission.

    Libertarians are not quakers, they do not get conscientious objector status from hand to hand combat to weaken the state.

    It is ugly.

    Notice, you don’t even want to discuss 3% NGDP vs. 5% NGDP – it is a legitimate question: isn’t 3% NGDP basically a ongoing commitment to hard money?

    Based on historical growth, isn’t 3% NGDP projected forwarded far less inflation than before?

  11. Gravatar of dwb dwb
    20. September 2011 at 18:33

    people acting according to their incentives. At least that I get – expect it, even. A politician acting selflessly, that is the odd animal.

    What i do not get is why the other side of the aisle is not jumping up and down like their hair was on fire. By now, these tiresome arguments are easy to refute.

    No, I do not think its treason for a politician to advocate a policy that benefits them. I believe people act according to their incentives and I count on it. That’s the American Way. To me, the treason is on the other side of the aisle, the folks who are asleep at the switch, not providing the country the useful and healthy debate, allowing the ignornace to win without so much as a teensy weensy fight.

  12. Gravatar of ChacoKevy ChacoKevy
    20. September 2011 at 19:18

    @Old Whig,
    Not sure what you are talking about when you say the Anti-war left has been “dead silent” re: Bush policies. I don’t know how we could be more vocal, and the Obama administration has used us as fodder to appeal to independents. Did you miss the whole “Professional Left” thing?
    http://thehill.com/homenews/administration/113431-white-house-unloads-on-professional-left
    As for Code Pink, this is a headline on their website right now: “President Obama has a war addiction.”

  13. Gravatar of John Papola John Papola
    20. September 2011 at 20:09

    “I think Congressmen have the right to speak out on monetary policy. As long as their advice is not politically motivated.”

    I think it may be time to freshen up your Public Choice Economics, Scott. Seriously. Plato called. He wants his hopelessly naive vision of government back.

  14. Gravatar of Mark A. Sadowski Mark A. Sadowski
    20. September 2011 at 20:15

    This just in at the Univerisyt of Delaware:

    “Dear Graduate Students

    The Dept of Economics will present a special public session on the economy Tuesday, September 27 at 7:00 pm in 140 Smith Hall. The session, “The Economy, Jobs, and Government Debt: What Should Be Done?,” will feature four economics faculty members who will examine the many short run and long run problems facing the US economy today and offer suggestions for effective public policy. The panel includes Distinguished Scholar in Residence William Poole, Chaplin Tyler Professor of Economics Laurence Seidman, and Professors Jeff Miller and Burt Abrams. There will be ample time for audience questions.

    This is a great opportunity to see how the economics you are learning applies outside the classroom. I hope you can find time in your busy schedule to attend this session.”

    I have a brand new Principles Group meeting during that time but I plan on towing them to this discussion (I’m sure it will be very educational.

    Miller is fairly conventional in his Macro views. Abrams is conservative but we agree that there is a threshold above which government consumption/expenditures/tax load is detrimental to growth. Seidman is on my dissertation committee and thinks I’m a traitor because my dissertation excessively supports the idea that consumption taxes are pro growth and taxes on capital income are antigrowth. Poole? Well Poole is the devil incarnate.

    I intend to challenge the panel to a heated discussion and especially drag Poole through the mud. It should be an entertaining spectacle for all and especially educational for my group.

  15. Gravatar of John Papola John Papola
    20. September 2011 at 20:16

    I agree with Morgan on the open question about the NGDP target. Why isn’t now the right time to adjust to slower NGDP growth (or none at all)? I don’t understand why 5% should be treated like some cosmological constant. It’s just a prior trend… and one that lead to a wave of increasingly severe booms and busts. Seems like a bad norm to me. George Selgin’s approach seems to make more sense.

  16. Gravatar of Mark A. Sadowski Mark A. Sadowski
    20. September 2011 at 20:26

    John Papola,
    Why not make it -10% per year? Or -50%?

    Shouldn’t we try to pin the goal on empirical facts related to current law? If so then Scott is right. Five percent makes the most sense currently. (Make labor markets more flexible and then we will see.)

  17. Gravatar of John John
    20. September 2011 at 20:29

    Scott,

    This is off topic, but I notice that you occasionally reference Hayek. One of the most interesting things Hayek wrote was that Keynes theory about unemployment as a lack of aggregate demand is a bad theory but seems to have a superficial empirical basis while the correct theory which is that unemployment comes from a disequilibrium between production and consumer demand is impossible to prove empirically. Therefore, according to Hayek, the worse theory of what drives unemployment won. What do you think of Hayek’s view on unemployment given that you are very much a mainstream macro AD believer?

  18. Gravatar of Morgan Warstler Morgan Warstler
    20. September 2011 at 21:10

    A 5% is pure noise, and Scott has already accepted that it will be lower.

    Some economist said 3% and Scott demurred. His posts are horribly unsearchable, so I’m not searching them.

    Karl Smith pays close attention to me, Scott should too… a single % pt. matters.

    http://modeledbehavior.com/2011/09/20/volker-on-inflation/

    —-

    1. The INTERESTING thing about 3% as a target is how it affirms”productivity gains” as growth an makes them OK no matter what.

    note I have been making this point for 18 months…

    NORMALLY, we have Marxist president who VIEWS productivity gains as a negative thing.

    Under a 3% NGDP regime, we can have BRUTALLY EFFICIENT gains for say 1% deflation in RGDP and no worries, “we’ll print 4%!”

    The genius of Scott’s plan is that it slashes the throat Obama’s Marxism and silences it forever.

    2. Karl’s got no real complaint about 2% inflation, notice 1t evaporated under 3% GNDP, because there can’t be a recession.

    But it still does the REAL thing Karl hates, it encodes KING DOLLAR into the system.

    Under 3% NGDP we get money as realistically as pure storehouse of value; AS LONG AS we keep bumbling along at 3% RGDP – no inflation!

    If we hit 4% RGDP, raise rates! No more gvt. fueled booms.

    If we only hit 2%, print money so we don’t have to hear Obamacrats whine about productivity.

  19. Gravatar of Mark A. Sadowski Mark A. Sadowski
    20. September 2011 at 21:25

    Morgan wrote:
    “If we only hit 2%, print money so we don’t have to hear Obamacrats whine about productivity.”

    I could bore you with the extensive research but I won’t. I’ll simply dumb it down Hollywood style.

    http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/2q08billi_kahn.pdf

  20. Gravatar of Morgan Warstler Morgan Warstler
    20. September 2011 at 21:57

    Mark, your assume everyone counts equally, I assume the people who built and established the system make the rules, to ensure that people like themselves are reward first.

    BUT YOU MISS MY POINT.

    I’m focused on removing the liberal excuse to not slash wages because it hurts aggregate demand.

    We hear it all the time.

    Under 3% NGDP, no worries!

    “We can have “real” deflation, unemployment can be 8.5%, AND we can be making sick cuts to the public sector rolls, ending defined benefit pensions, automating government like CRAZY…

    And it is all ok, because we keep printing money to hit that 3% NGDP.

    —-

    Look Mark, just tell me if you get my argument, then tell me why it is wrong. Don’t tell me inflation is good. I want to see if you grasp the political implications of Scott’s plan.

    Do you even recognize it is a potential universe?

    —-

    Also, PLEASE read Mark Penn…

    http://www.huffingtonpost.com/mark-penn/obama-class-warfare_b_969002.html

    Obama had a choice. remember that.

  21. Gravatar of Mark A. Sadowski Mark A. Sadowski
    20. September 2011 at 22:12

    Morgan,
    Other than class warfare (and that’s ironic, because I don’t consider you part of my class) I don’t see any plan at all.

  22. Gravatar of Liberal Roman Liberal Roman
    20. September 2011 at 22:21

    So our choice are cynical traitors or luddites…

    I think I am headed to bed early November 6th, 2012.

  23. Gravatar of Morgan Warstler Morgan Warstler
    20. September 2011 at 22:47

    Mark, don’t be afraid.. I’m not being tricky. Scott has a plan. I have a theory about what it brings to bear, I just asked if you understood my theory, and why you might think it is wrong.

    If you aim to climb the social ladder, you’ll want to try and answer direct questions.

  24. Gravatar of Mark A. Sadowski Mark A. Sadowski
    20. September 2011 at 23:15

    Morgan,
    I’m not afraid of anything. (I’ve lived too long and seen too much.)

    Regardless of what Scott thinks I also have a plan. It’s called increased NGDP. And I had that plan long before I heard of Scott.

  25. Gravatar of John John
    20. September 2011 at 23:32

    Ron Paul made money printing into treason among the Republican party. When asked if he would treat Bernanke “pretty ugly” like Perry threatened, Paul said no he would try to educate him instead. Ron Paul is behind the spreading idea that monetary policy is dumb and the Federal Reserve should be abolished and a true gold standard reestablished in its place.

    Anyone who wants to call themselves a libertarian must vote for Rob Paul in the Republican Primary. Even if you disagree with him on monetary policy, most readers here will agree with his stances on deregulation, government spending cuts, the abolition of the income tax, civil liberties, and peaceful foreign policy. I think Scott would agree that if we seriously cut regulation, taxation (simplified it as well), and spending that the economy would thrive even without expansionary monetary policy.

  26. Gravatar of Cassander Cassander
    20. September 2011 at 23:46

    There would be some grumbling on the right, but no. But then, if a Republican had proposed Obamacare, it would have been attacked as a giveaway to the insurance companies by all democrats, rather than just some of the farther left elements of the party. This is the sad reality of politics, it’s more tribal than rational.

  27. Gravatar of Lorenzo from Oz Lorenzo from Oz
    21. September 2011 at 00:03

    I think Congressmen have the right to speak out on monetary policy. As long as their advice is not politically motivated. What public statement by a member of Congress is not politically motivated?

    You are trying to get at something else: something like, “as long as their comments are not attempting to block improving economic conditions”. Which is fair enough.

  28. Gravatar of John John
    21. September 2011 at 00:59

    Lorenzo,

    That would basically amount to Scott saying that politicians have the right to speak out about monetary policy as long as they agree with his ideas. I don’t think that’s what Scott was trying to say, but I’m not sure what he was getting at there as indeed everything politicians say about policy is politically motivated.

    In this whole debate, I don’t think it’s fair to charge anyone with treason. Everyone wants to see improving economic conditions but they disagree over how to achieve that. Unfortunately, some immature types used ad hominem attacks instead of trying to win a policy debate.

  29. Gravatar of Rien Huizer Rien Huizer
    21. September 2011 at 02:20

    Scott,

    Would it not be more productive to find out why these politicians are making these comments? Would they have seen your post on Rowe’s nontraditionally sloping IS curve and concluded that high interest rates boost the economy while low interest rates harm. And you yourself regard low rates as not necessarily associated with a large enough provision by the monetary politicymakers. So they may even be inspired by you.

    Yet the tone of your article suggests that these politicians are less than enlightened. But we are finally coming to our senses, mending our ways, they might say. Encourage them. There are a few fragile minds in this contest and they should not be challenged too much, especially given the present apparent association between mental fragility and electoral potential.

  30. Gravatar of MikeDC MikeDC
    21. September 2011 at 03:46

    A very simple answer to the treason question is that the right policy in the discretion of the wrong hands may no longer be the right policy.

  31. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 04:11

    Cassander, I hate the those on the left fall into this wishy-washy argument.

    The reality is that Obama KNOWS exactly what we mean, and what we expect from him, and no matter how you try to equivocate the point…

    If Obama said, I’m going to close the EPA, the GOP would say applaud him just like they did on defense stuff.

    If Obama said, let’s end Davis-Bacon, the GOP would vote en masse for the bill.

    There are real differences, this is not tribalism, people who assert it, I think are really asserting obama has TRIED to reach across the aisle, and since that noble effort failed, there has to be some lizard brain function.

    There isn’t.

    We have put Obama in exactly the same position we put Clinton, Obama decided to FIGHT and not accept the only valid choice… read the Mark Penn piece, Obama was to end public employee unions as we know them, like Clinton ended welfare as we know it.

    Obama went for the brass ring – MORE FREE STUFF FOR DEM VOTERS.

    Its like he went all in in poker, and that’s why 2012 is so crucial.

    When Obama loses, the institutional left dies…

    The lesson will be to Dem Presidents… when the GOP hands you a maxed credit card, you get to dismantle the Big Society to pay for it, or you do not get 8 years riding on the big bird.

  32. Gravatar of Pat Pat
    21. September 2011 at 04:23

    You’re turning into a crank.

  33. Gravatar of George Selgin George Selgin
    21. September 2011 at 04:33

    Mark Sadowski writes, in answer to John Papola,”Why not make it -10% per year? Or -50%?” If I may answer for John (since he refers to my own arguments), if NGDP grows at a rate sufficient to accommodate growth in labor input, there needn’t be any general downward pressure on wages. Pointing out that 5% is higher than necessary is hardly the same as claiming that any rate, no matter how deflationary, is as good as any other. In other words, Mark, why not take a serious argument seriously?

    If, on the other hand, you wish to insist that we must worry about troubles connected to wage inflexibility even when NGDP grows fast enough to at least stabilize a general wage index–presumably because some downward wage adjustments in relatively declining labor markets will be resisted–John has every rate to pose you the question: Why not 10%, or 50%, nominal NGDP growth? For there will always be some sectors experiencing such relative decline as must make it impossible for them to accomplish, in the presence of nominal rigidities, such real wage cuts as they must undertake to avoid laying people off unless other money wages rise very considerably!

    Like you, I am a gradualist, and so I don’t believe that we should jump from a 5% norm to a 2% norm, or something like that. But I also believe in taking seriously the very real possibility that 5% may itself be an excessively high long-run rate.

    If the recent experience has taught us anything, it ought to have taught us that we must be no less concerned about avoiding booms than we are about combating busts; those “quasi monetarists” who imagine that merely insisting that policy act aggressively to sustain robust NGDP growth without allowing themselves to be troubled by the possibility of excessive growth merely undermine their own efforts by setting the stage for brand-new cycles in the future.

  34. Gravatar of marcus nunes marcus nunes
    21. September 2011 at 04:34

    But in the letter there is the advice Bernanke should heed:
    They said Fed officials should avoid further action, “particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people.”
    http://thefaintofheart.wordpress.com/2011/09/21/misleading-headline/

  35. Gravatar of dirk dirk
    21. September 2011 at 04:58

    But the GOP is merely concerned we’re going to have another bubble, and there may not just be a bubble here but also a bubble there and a bubble within the bubble and a bubble on top of the bubble and if they continue in their dissolute ways we will end up with a bubble in bubbles.

  36. Gravatar of W. Peden W. Peden
    21. September 2011 at 05:04

    George Selgin,

    I agree 100%. Historically during the era of independent central banks, the problem has been too much new money rather than too little. The unnecessary great contractions in the US (the Great Depression and the Great Recession) have been the exception, not the rule. A 5% target is positive in that it would mitigate the business cycle and keep inflation in single digits (and trending at around 2-3%) but I’ve been convinced by your arguments in favour of a lower norm.

    One thing that worries me about NGDP targeting is that NGDP might get stuck at a short-term stable but long-term destabilising trend. For example, UK NGDP was stable in the late 1980s at about 10%, but that was just the beginning of a characteristic boom & bust cycle that ended with inflation going into double digits in 1990 and a horrific crash in 1991.

    I also worry that keeping any NGDP target would entail too much instability in broad money and that the effects of such instability on the financial industry would look like the 2003-2007 period. Even if new broad money is spent on assets rather than final goods & services, it has a short-term non-neutral effect on the economy as a whole. MV = PT after all refers to all transactions and prices, rather than NGDP (which is only a proxy at most for true aggregate demand).

  37. Gravatar of Anandakos Anandakos
    21. September 2011 at 05:05

    To Warstler,

    Do you read your own posts? The brutality implicit in your Libertarian wet-dreams is stunning. And revolting.

    What are you going to do with the roughly 75 million people in the United States who wouldn’t “measure up” in your libertarian wonderland? Do you kill them or just let them starve or die of the plagues unleashed by the end of public health? The kill option is pretty much Big Government run amok so I would expect that you’d see the hypocrisy in it.

    So I assume you’re a big investor in hearse manufacturers, Service Corp and cemeteries? Because if your right wing Utopia comes to pass there will be a lot of “marginal demand” for funerals and burials.

    And finally, you self-absorbed jerk, you don’t get to decide what the people of the United States “expect from” the President. I don’t recall anything in Obama’s campaign that he intended to “end public employee unions as we know them”. That’s YOUR fantasy. He may share it secretly, but he certainly would not have won the Democratic nomination had he campaigned on such a platform.

  38. Gravatar of Dean Grubbs Dean Grubbs
    21. September 2011 at 05:31

    There is no easy way out of this mess. I wish that the word “Treason” was never used because of how it deflects politicians and the public away from our serious economic issues.

    Here are policies that I believe will restore a firm foundation which to build on. They will never get enacted because Politicians want their cushy jobs far more than being willing to sacrificially lead:

    1) Tighten Monetary Policy to destroy Inflation and re-establish that deposits come from individuals and institutions. Right now the FED easy money makes public money not wanted by Banks. This is going to hurt but will restore the spending power of the dollar.
    2) Reform ridiculous Patent Law. The kind of innovation that blasted off our quality of life is simply not possible. Somehow the hoarding of ideas that are not even products has to stop. Innovation cannot happen if inventors live in fear of being sued. Also Patent trolling is economically destructive.
    3) Find a way to make it simple for people to work and produce while remaining compliant with tax and regulations. The Pioneering that built our country is gone. A private citizen should be able to produce a good or service and easily and simply pay taxes, comply with regulations …etc… Take a look at how Almanzo and Laura Ingalls Wilder recovered from more than 1 bankruptcy.
    4) Price Stability must be the #1 goal of Monetary Policy. The aggregate spending power of a dollar must become rock solid. This will entrenched the dollar long term as the global reserve currency and make our country a preferred business partner.

  39. Gravatar of David Beckworth David Beckworth
    21. September 2011 at 05:54

    I too like George Selgin’s nominal GDP targeting. He calls it the Productivity Norm and it comes in two varieties, a labor productivity norm and a total factor productivity norm. Read more about it here: http://mises.org/books/less_than_zero_selgin.pdf

    I would, however, wait for a better time to transition to such a rule.

  40. Gravatar of John Papola John Papola
    21. September 2011 at 06:57

    It seems like any NGDP targeting regime administered by a central bank is going to be a second best solution with various knowledge and incentive problems as well as injection effects (surely it matters in some way that treasuries are bought from particular firms and not others and those firms get an implicit subsidy as a result).

    I continue to be haunted by this past decade as I hear talk of the prior trends as having merit. We had the “I won’t let it happen here” productivity-driven deflation scares from the Fed coupled with the slow labor market recovery in the early aughts which motivated the bubble-blowing and excessive NGDP growth that followed. Today seems quite similar, only more exaggerated.

    I continue to come back to William White’s 2006 paper “is price stability enough?”, which leverages George’s work and a generally Hayekian approach. Man was it prescient.

    The best point George makes in Less Than Zero is about the nature of productivity-driven deflation, from a microeconomic standpoint. Firms who generate increasing productivity are doing so purposefully. They KNOW that they are widening their profit margins in the short term (perhaps along with cutting prices or perhaps not) but that their innovations will drive down prices through competition in the longer run. There is no conflict with wages for their employees here. And when that productivity-driven increase in real output and real wages kicks in, Say’s law gets moving to open a vent of potential production and demand in new areas.

    I find the focus on price indices at the exclusion of sectoral issues to be deficient. Price levels are imprecise statistical notions at best, not natural science.

    Ultimately, I come back to a point about sticky wages. If you believe sticky wages are a problem, and if you believe that policy changes which are making them more sticky can be reversed, you SURE AS HELL better be LOUD AS HELL about improving labor market efficiency related policies every bit as much as you agitate for NGDP policies. If not, well, I can’t take your sticky wage concerns seriously. Actions speak loud…. or, well, I guess consistent words speak louder than convenient ones.

  41. Gravatar of Endrit Endrit
    21. September 2011 at 07:02

    Been reading this blog since quite a bit now. It’s a nice counterpose to Krugman on some issues, but I am happy to see that on the current issue both of these guys would agree.

    And please please please everyone, there is a saying in internet forums “Don’t feed the trolls”. Think about it before you try to reply to anything Morgan writes. I mean, after everything he’s written today, and the vision he has presented for his world, I don’t know how anyone can take him seriously anymore.

  42. Gravatar of Becky Hargrove Becky Hargrove
    21. September 2011 at 07:45

    I do not think that Ron Paul likes the way that people have taken his ideas and bludgeoned people over the head with them..and lest anyone think I don’t get him, I grew up in the Texas county he came from. I believe he wanted smaller government because he believed a smaller government could be a better government, not the scorched earth that some Republicans advocate now, just to discredit the Democrats. I am extremely saddened by the current turn of events and wish I were ready to do something about it.

  43. Gravatar of Jon Jon
    21. September 2011 at 07:46

    Scott, I think you got the interpretation of this wrong–perhaps because you got your information from the AP and not the letter itself which urges the Fed to “resist further extraordinary intervention in the US economy … Particularly without a clear articulation of the goals of such a policy”

    The letter does not specifically consol against further QE. Sounds like they are nudging the Fed toward explict inflation and growth targets.

  44. Gravatar of Jason Odegaard Jason Odegaard
    21. September 2011 at 07:47

    Scott, Paul Krugman notes your post in an update to this blog entry:

    http://krugman.blogs.nytimes.com/2011/09/21/new-developments-in-the-political-business-cycle/

    Plus he uses the term “neomonetarist”. I don’t recall there being much of a conclusion in your previous post discussing what to call your view. Is neomonetarist going to catch on? Better than quasi-monetarist?

  45. Gravatar of Article: TheMoneyIllusion » The definition of treason « squarelyrooted Article: TheMoneyIllusion » The definition of treason « squarelyrooted
    21. September 2011 at 08:05

    […] » The definition of treason http://www.themoneyillusion.com/?p=10915 Unlike Rick Perry, I don’t think it is treasonous to advocate easy money or tight money. Treason […]

  46. Gravatar of Benjamin Cole Benjamin Cole
    21. September 2011 at 08:17

    Excellent commentary by Scott Sumner.

  47. Gravatar of ssumner ssumner
    21. September 2011 at 08:28

    John Thacker, Just to be clear, I did not criticize them for having the “wrong” opinion on monetary stimulus, I criticized them for politicizing the monetary policy process in a way that hurts the country.

    Old Whig, I agree about resistence to government intervention, but that’s not what is going on here. A more expansionary monetary policy is not more interventionist, indeed stable money is arguably less interventionist. The big drop in NGDP growth was an interventionist policy.

    Barnley, I agree.

    Morgan, After 8 years of Bush your belief in the libertarian nature of the GOP is quite amazing.

    dwb, You said;

    “people acting according to their incentives.”

    Yes, traitors who sold nuclear secrets to the Soviets for cash were acting in their interests–I agree on that.

    You said;

    “No, I do not think its treason for a politician to advocate a policy that benefits them.”

    Nor do I as long as it doesn’t hurt the country.

    John Papola, Suppose the GOP was caught sabotaging factories all across America so that the economy would plunge into recession and American voters would throw the Dems out of power. Call me naive, but I don’t think that would be OK. I understand politics involves compromises–they direct money to favored special interests like farmers and teachers. But that’s different from trying to intentionally cause mass unemployment, so that voters are in such extreme distress that they vote for a new government. That’s not OK.

    Mark, I wish I could be there.

    John Papola, A huge debt crisis is the worst possible time to adjust to slower NGDP growth. The best time is when the economy is booming. Woolsey favors 3% NGDP growth, but even he says money has been way too tight since 2008. NGDP growth has only averaged a bit over 1% during the last three years.

    John I don’t know what disequilibrium between production and consumption means, so I can’t comment. I agree with Hayek that the Fed should target NGDP.

    I agree with Hayek that falls in NGDP cause high unemployment.

    Liberal Roman, I’ve bashed both parties pretty hard in the past 24 hours.

    John. I suppose that there is some dream supply side policy that would boost growth even at today’s slow NGDP grwoth. But it won’t happen (from either party.) In the real world we need faster NGDP growth.

    Libertarians should vote for Gary Johnson, not Ron Paul.

    Cassander, That’s partly true.

    Lorenzo, I know it sounds naive, but I am sincere. I also don’t think one is allowed to vote on a nuclear treaty with Russia on political grounds. You decide whether it is in the country’s best interest or not. And that’s how you vote. There is too much at stake for Congressman to be voting for bills that make nuclear war more or less likely, just to boost the chances of re-election. I believe the same about policies that would cause mass unemployment. I don’t believe that about redistribution of income among certain special interest groups.

    If the GOP favored tight money to help savers that would be one thing. But if they did, they’d also favor it when the GOP was in charge.

    John, You said;

    “In this whole debate, I don’t think it’s fair to charge anyone with treason. Everyone wants to see improving economic conditions but they disagree over how to achieve that.”

    It’s interesting that everyone insists I’m naive about politics. OK, why weren’t similr letters sent in late 2007 and early 2008 when inflation was higher and the Fed was cutting rates and Bush was President. I’d love to hear an explanation. If Perry were President today and worried about re-election would the GOP have sent that letter? I don’t think everyone wants to see improving economic conditions, and I know for a fact that some GOP leaders have said they want Obama to fail. That means they want a bad economy. Morgan’s said the same, so “everyone” doesn’t even apply to commenters at this blog.

    Rien, Why didn’t I think of that? They actually want easy money, hoping it will raise long term rates. But then why fear of a falling dollar?

    MikeDC, Then make that argument public! The GOP should say that they are trying to unemploy millions so Obama will lose so the GOP will win and this time they’ll promise to not do Bush-like policies and this time they’ll promise to shrink government and that will make the unemployed better off in the long run. Make that argument!

    George, I agree that we must be symmetrical in our arguments. In my case I’ve spent more of my life as an inflation hawk pushing for tighter money than an inflation dove pushing for easier money.

    Marcus, Yes, I wish they’d follow that advice, and adopt NGDP targeting as a way of addressing the Fed’s dual mandate.

  48. Gravatar of Bugboy Bugboy
    21. September 2011 at 08:37

    Morgan Warstler scrawed unintelligibly:

    “The game is STOP SOCIAL DEMOCRACY from flourishing until global capitalism can take root and deliver us from evil.

    We are playing that game.”

    That is one sick worldview, dude. You are but a pawn of Kings and the Church of the Middle Ages, which were given the finger by the masses with the MAGNA CARTA, when the King had the knife of labor shortage held to his throat. THAT is the game we play, fool. See you at the guillotine.

  49. Gravatar of MikeDC MikeDC
    21. September 2011 at 08:40

    @Jason,
    “Neo” is practically a curse word since it caught on with “neoconservatives”. It’s an obvious shibboleth that needs to be fought tooth and nail if MMists want to make any headway with their views amongst the broader public

  50. Gravatar of ssumner ssumner
    21. September 2011 at 08:40

    Dean, Tighter money would push us into depression.

    John Papola, You said;

    “surely it matters in some way that treasuries are bought from particular firms and not others and those firms get an implicit subsidy as a result”

    I don’t see why, they pay market prices, don’t they?

    Thanks Endrit.

    Becky, Very well put.

    Jon, I did read the letter–it’s very clear they oppose monetary stimulus. To get faster NGDP growth (say 5%) or inflation expectations (say 2%) we’d need to depreciate the dollar–but they oppose that.

    Jason, Well now I know how to get a cite from Krugman–call the GOP a bunch of traitors!

    I probably should note that Perry’s the one who debased the term to meaninglessness. I was obviously using it somewhat ironically–like if you are going to call people “traitors” it should be these guys, not Bernanke. Obviously I don’t seriously believe they should be tried as traitors in a court of law.

    But the post wasn’t a joke. I’m very serious that the letter was an outrage–Gagnon’s right about that.

    Thanks Ben.

  51. Gravatar of ssumner ssumner
    21. September 2011 at 08:41

    MikeDC, I consider myself a sort of neoliberal (albeit more right-wing than most.)

  52. Gravatar of Gramma Millie Gramma Millie
    21. September 2011 at 08:42

    This is my first time to your blog and I must say it is very enlightening.

    Does Morgan Warstler have a radio show? He seems like a mishmash of Beck, Limbaugh and Savage, only more delusional.

  53. Gravatar of Brett Kirkland Brett Kirkland
    21. September 2011 at 08:49

    haha, I agree with Gramma Millie, Morgan should have a radio show, I picture it as deep, conceptually, as Limbaugh with the energy of Cramer’s Mad Money. Having said that, I’d listen to it.

  54. Gravatar of your hero your hero
    21. September 2011 at 08:51

    Morgan — You haven’t the slightest idea what you’re talking about. That is all.

  55. Gravatar of johnleemk johnleemk
    21. September 2011 at 09:01

    Scott,

    I think even Gary Johnson has been pushing the hard money/deflationist line. He’s not anywhere as hawkish as Paul or Perry, but he wants a stronger exchange rate.

  56. Gravatar of MikeDC MikeDC
    21. September 2011 at 09:11

    Scott,
    MikeDC, Then make that argument public! The GOP should say that they are trying to unemploy millions so Obama will lose so the GOP will win and this time they’ll promise to not do Bush-like policies and this time they’ll promise to shrink government and that will make the unemployed better off in the long run. Make that argument!

    I don’t believe the GOP is trying to unemploy millions so Obama would lose. I believe, based on their letter, they believe dramatic attempts to use monetary policy would fail and make things worse.

    Yes, unemployment sucks, but the conditions to implement a change in the monetary policy regime are not there. I wrote this on my (mostly for myself) blog yesterday. I know you took noted GOP goldbug Paul Volcker to task the other day but there’s some legitimacy to his worry that

    My point is not that we are on the edge today of serious inflation, which is unlikely if the Fed remains vigilant. Rather, the danger is that if, in desperation, we turn to deliberately seeking inflation to solve real problems “” our economic imbalances, sluggish productivity, and excessive leverage “” we would soon find that a little inflation doesn’t work. Then the instinct will be to do a little more “” a seemingly temporary and “reasonable” 4 percent becomes 5, and then 6 and so on.

    .

    What’s worse than 9% unemployment? 9% unemployment, 9% inflation, angry people rioting in the streets, and doctors going on strike when Medicare isn’t “fixed” for them, and the return of the classic “retired old lady eating cat food posters”.

    Even if you assign a fairly low probability to that outcome,the badness of it has to be factored in to the expected value.

  57. Gravatar of Dick Dick
    21. September 2011 at 09:14

    Nocera’s column in the New York Times (Scott Sumner’s PPS to this blog entry)includes favorable comments on a presentation put together by Paul Kasriel, chief economist for Northern Trust. Kasriel’s title is “If Some Dare Call It Treason, Was Milton Friedman a Traitor?” At “Marginal Revolution,” Tyler Cowen also provided a link to the presentation.

    Anyway, this prompted me to look for more articles by Kasriel, and I thought this one was very interesting: “It is not Enough to Tell the Fed to Target Nominal GDP, You Have to Tell it How.”
    http://www.safehaven.com/article/22178/it-is-not-enough-to-tell-the-fed-to-target-nominal-gdp-you-have-to-tell-it-how

    I’m a recently retired librarian, with a limited understanding of economics, and no knowledge of banking whatsoever, so I’d be interested to hear others’ reactions to Kasriel’s proposed mechanism for NGDP targeting.

    Thanks

  58. Gravatar of MikeDC MikeDC
    21. September 2011 at 09:19

    I consider myself a sort of neoliberal (albeit more right-wing than most.)

    Point weapon at foot. Pull Trigger!

    Seriously, name me one thing “neo” that doesn’t set off any actual liberal to fits when engaged in discussion? Or that they don’t use as an epitaph?

  59. Gravatar of justanothereconomist justanothereconomist
    21. September 2011 at 09:30

    “GOP goldbug Paul Volcker”

    This is ironic right?

    How about “Democrat non-goldbug tight-money Paul Volcker”? He was nominated by Carter and served in the Obama administration after all. Volcker is not a Republican, for better or worse.

  60. Gravatar of johnleemk johnleemk
    21. September 2011 at 09:34

    MikeDC,

    Yes, unfortunately both neoliberal and neoconservative are used as disparaging epithets by the left. The former is also used as a disparaging epithet by the right. I’ve found from experience that both left- and right-wingers don’t have very concrete/congruent ideas about what it means to be neoliberal or neoconservative, but they don’t care.

  61. Gravatar of Dean Dean
    21. September 2011 at 09:36

    Morgan – your argument appears to be that Republicans are so right, and Democrats / Obama so wrong, that the ends justify the means. The American people must be made to vote “right” no matter how much harm is done to them to achieve that end.

    That, sir, is the very definition of treason. You are a traitor.

  62. Gravatar of Deep Time Deep Time
    21. September 2011 at 09:51

    Man, that Morgan is one twisted dude. Reminds me of an old joke:

    “There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs”.

  63. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 10:06

    Bugboy, reread the Magna Carta. It’s about property rights, not voting for free shit. Small note: it is hard to get the repressed fat from food and awestruck with 500 channels to riot. Especially in a country where the property holders own 200 MILLION guns.

    Dean,

    “Democracy” as in vote to get free shit, is new to the US since just 1913.

    Don’t convince yourself it will last.

    From 1913-1980, times were good for Dems. Then in 1980, the right began to “spend all the money” as outright strategy, and since hen we have rolled back the “free shit” tide.

    Now, Scott KNOWS MY ARGUMENT, which is why his repeated old harp of “Bush was a profligate spender” is so annoying, Scott you know my argument…

    DEMS will always be given a maxed credit card, if they make like Clinton they can buy a second term, if they make like Obama they will be denied.

    Obama had a choice. Even Mark Penn KNOWS Obama chose.

    You cannot absolve Obama of his choice.

    Democracy “vote to get free shit” is NOT A RIGHT. And after we end Obamacae, and when twenty years from now the third or fourth Dem President delivers nothing new for free…

    Dem voters will no longer believe they get anything out of voting.

    Grandm Millie & Anandakos,

    You’ll be surprised that I favor a Guaranteed Income System in the US.

    It is modeled on Paypal/ Ebay.

    Everyone without a job, who wants to work simply registers and instantly receives a Debit card and at least a couple hundred bucks every week is deposited on it by the government, rain or shine.

    Everyone is the system is also instantly put into a Ebay style auction for their labor beginning at $40 per week ($1 year hour).

    They get to keep their Guaranteed Income AND 50% their auction price… so incentives align.

    You can read about it here:

    http://biggovernment.com/mwarstler/2011/01/04/guaranteed-income-the-christian-solution-to-our-economy/

    See a sample pay schedule here:

    http://biggovernment.com/mwarstler/2011/01/31/guaranteed-income-part-ii-a-real-end-to-illegal-immigration/

  64. Gravatar of the buckaroo the buckaroo
    21. September 2011 at 10:10

    …few things are harder to put up with than the annoyance of a good example…Twain, from Pudd’nhead Wilson’s Calendar.

    I suggest the drug induced acrasia of lush bin limbaugh has spread like the manure it is. Should the radical right look up the role of Conservatives in the American Revolution, they would find their opposition to the original Boston Tea Party & the very Revolution itself. In fact, the Conservatives wanted to reimburse the East India Company for the loss…sad, sad.

    Conservatives in those days were akin to Oligarchy & Tories & opposed the idea of independence. Yet today, one would think they fired the first shot. Revising history should be left to the sentient beings, not religious zealots posing as this years flavor of yesterdays inquisitionists (aka-saviors).

    The current band of loonies do indeed wish harm on the economy & their actions are treasonous…thanks for giving voice to this situation.

  65. Gravatar of beowulf beowulf
    21. September 2011 at 10:23

    If you KNOW your wife will take all your money when you are dead and give heroin to the children, your obligation is to SPEND ALL THE MONEY before you die.
    Err, or just devise ALL THE MONEY into a spendthrift trust (with an independent trustee) for the benefit of your children.
    Beyond that, you underestimate how deeply the roots of Social Democracy have been planted. Once you’re dead, Social Security will be paying a monthly survivor pension to your wife until the kids grow up (or overdose).

    And good post Scott, it echoes something that Rick Boettger (you might have read his book The Deficit Lie) wrote last year:
    “The only thing “broken” about our government is that the minority party has basically decided on treason as a way to get votes… I choose my words carefully here when I say “treason” and “minority party.” Right now the minority are Republicans, but the Democrats tried the same thing when they were the minority, and they’ll undoubtedly try it again in their turn. Because, sadly, “treason” seems to work.”
    http://www.kwtnblue.com/2010/03/rick-boettger-minority-treason/

  66. Gravatar of Rob Rob
    21. September 2011 at 10:25

    I wrote my congressman – fire, meet fire :) – but I really think we should all just get used to it. Only 14 more months before the election they’re all shooting for.

    Actually, I wrote the congressman in my mother’s district in CA. He’s party to all this, and real estate prices in the district have been among the hardest hit in the nation. “How inflated does your home value feel?”

    They were kind of cute when they were running around dumping tea….

  67. Gravatar of Liberal Roman Liberal Roman
    21. September 2011 at 10:27

    OT: And the Fed fails to come through yet again….good bye market

  68. Gravatar of GOP to Bernanke: No new stimulus – Tech Support Forums – TechIMO.com GOP to Bernanke: No new stimulus - Tech Support Forums - TechIMO.com
    21. September 2011 at 10:32

    […] this thread is about GOP leaders trying to persuade the Fed from not acting to improve the economy. Some call that treasonous: […]

  69. Gravatar of JimP JimP
    21. September 2011 at 10:36

    Liberal Roman

    I think they did less than nothing. No communication at all. The GOP plan to smash the economy is working real well.

  70. Gravatar of Mike Sandifer Mike Sandifer
    21. September 2011 at 10:40

    This is the sort of thing that drove me back to the Democratic Party. As bad as they are in opposition to such evil, they are the only credible hope. I think I have an obligation to try to change the party for the better in my own small way.

    The American people need a simple narrative. They need a good versus evil story. Obama doesn’t seem to understand this basic fact. Any good liberal president should know that selling the rich as evil and taxing them more heavily can be an easy sell for a competent politician, especially in distressed economic times,and especially considering how many of the perceived villains are rich.

    That’s not to say I would generally favor taxing anyone more heavily at this point in the economic cycle, but if Republicans insist on making the deficit an issue, why not start a campaign to tax the wealthy? It’s called politics.

    Obama should attack the wealthy and Wall Street now with a vengeance not seen since FDR, and paint the Republicans as their stooges. Even if it’s all just rhetorical and he paints with a very broad brush, Americans need a clear enemy and any collateral damage may be well worthwhile.

    Unfortunately, it may be too late for this now, as policy’s largely been shaped and this may be seen as electioneering, but it’s worth a try.

    What I’d really like to see though is someone other than Obama become the Democratic nominee.

  71. Gravatar of beowulf beowulf
    21. September 2011 at 10:46

    And to be precise, this isn’t treason (“Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort”).
    The legal term for it is “conspiracy to defraud the United States” (and yes, the Fed is a govt agency).

    “18 U.S.C. § 371, creates an offense “[i]f two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose… In Hammerschmidt, Chief Justice Taft, defined “defraud” as follows:
    ‘To conspire to defraud the United States means primarily to cheat the Government out of property or money, but it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest’.”

    http://www.justice.gov/usao/eousa/foia_reading_room/usam/title9/crm00923.htm

  72. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    21. September 2011 at 10:50

    Looks like it’s, Let’s Twist Again Like We Did Last Century:

    http://seattletimes.nwsource.com/html/businesstechnology/2016267379_apusfederalreserve.html

    ‘The Federal Reserve says it will sell $400 billion of its shorter-term securities to buy longer-term holdings, its latest effort to boost a weak economy.’

  73. Gravatar of Mike Sandifer Mike Sandifer
    21. September 2011 at 10:51

    beowulf,

    The language of the ruling you cite could seem to make the opposite case, but I’m far from being a lawyer.

  74. Gravatar of JimP JimP
    21. September 2011 at 11:05

    Mike

    If the Dems do not toss Obama out and replace him with Hillary, and if Perry is the Republican candidate, I will have no-one to vote for at all.

  75. Gravatar of AlanMB AlanMB
    21. September 2011 at 11:15

    So, after years of Scott blogging how misguided the Fed is, four congressman send a letter to Bernanke stating, “”Respectfully, we submit that the board should resist further extraordinary interventions in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people.”

    And, “It is not clear that the recent round of quantitative easing undertaken by the Federal Reserve has facilitated economic growth or reduced the unemployment rate.”

    This is “the definition of treason?”

    Thi silencing of conservatives and their exclusion from the public square has now reached hilarity

  76. Gravatar of Binky the Bear Binky the Bear
    21. September 2011 at 11:16

    It is interesting how much reality has to warp to accommodate the politically tunneled out views of Warstler and Whig. The reality distortion field must work especially well wherever they are.

  77. Gravatar of Busting the Reagan Myth about Tax Cuts « 4&20 blackbirds Busting the Reagan Myth about Tax Cuts « 4&20 blackbirds
    21. September 2011 at 11:39

    […] It is clear that republicans are using economic terrorism to hold the unemployed as a hostage in order to aggregate political power in the next election, and collect the tithes of their overlords. Conservative economist and neomonetarist Scott Sumner called these sorts of political actions “treason”. […]

  78. Gravatar of Cameron Cameron
    21. September 2011 at 11:47

    The dollar rose and inflation expectations, equities and commodities fell in response to the announcement. This policy has already failed.

  79. Gravatar of Barfing Violently Barfing Violently
    21. September 2011 at 11:47

    Morgan Warstler, you’re everything that is disgusting and wrong with the country today. May your fortune be as rotten as your views.

  80. Gravatar of Republicans against the U.S. Fed « Thought du Jour Republicans against the U.S. Fed « Thought du Jour
    21. September 2011 at 11:56

    […] I’ll leave it to my readers to decide who should be charged with treason. Scott Sumner, “The definition of treason“, The Money Illusion, 20 September […]

  81. Gravatar of james in london james in london
    21. September 2011 at 12:06

    I would have thought you’d appreciate so much popular interest in monetary policy, even if you disagree with some views. Debate is always good and this debate about Fed policy is too important to leave to elite economists and bankers, especially with their track record.

  82. Gravatar of JimP JimP
    21. September 2011 at 12:08

    And for the Fed to give us the tease, through leaks to the WSJ, that they might do effective communication, and to then not do so, clearly means they they (Bernanke) have been frightened by the Congressional GOP thugs, and that therefore the default going forward will be more and more passive tightening, and that will be that.

  83. Gravatar of MikeDC MikeDC
    21. September 2011 at 12:13

    @johnleemk – I didn’t know righies used it as a pejorative too! Just more evidence to avoid it like the plague – otherwise you get it from all sides.

    @justanothereconomist – Yes! Well, more sarcastic than ironic

    @Mike Sandifer – Seriously? You’re talking crazy talk. First, as many folks have argued right here, there are plenty of non-evil or treasonous reasons the Republicans would do this. You might well disagree, but all the emoting about it evokes the worst stereotypes – irrationality, close-mindedness, willing to put party over country- I usually see Democrats hurling at Republicans.

    Second, I don’t see how a non-Obama Democratic nominee would be anything but an utter disaster for the party and the country writ large. A primary challenge would waste resources, lead to all sorts of irrational policy goals, and probably cause racial tensions to explode in all sorts of unsavory ways, and lead to either the center left moving further left or the really nutbar Green party types winning. Some sort of coordinated hand-off (E.G. Obama declines to run) would saddle his successor with defending Obama’s policies, which defeats the whole point of replacing Obama.

  84. Gravatar of johnleemk johnleemk
    21. September 2011 at 12:13

    James in London,

    As someone else has said, what’s so frustrating about this is that there’s no debate. The left just acts as if monetary policy doesn’t exist or can’t affect anything. The kooks on the right don’t have anyone to argue with when they push for disastrous and interventionist deflation. That’s no debate.

  85. Gravatar of johnleemk johnleemk
    21. September 2011 at 12:14

    JimP,

    While technically the Fed may be passive by standing pat, it’s important for us to remind people that a policy of deflation relative to the trend is active interventionism. To argue otherwise is to equivalent to saying that the government is unjustifiably intervening in the free market when it enforces legally-binding contracts.

  86. Gravatar of james in london james in london
    21. September 2011 at 12:23

    johnleemk
    What do you think this blogsite is? It’s a debate. Debates are not love-ins, they are debates.

    Anyways, what is poor about Bernanke tonight is that he is scared of both sides: scared to tell the hopeless US politicoes to sort out the deficit, and scared to follow-up on his prior beliefs about the need to target NGDP. He is proving as weak as he has always seemed.

  87. Gravatar of OGT OGT
    21. September 2011 at 12:26

    I like the term RATEX Monetarists, or, just Expectations Monetarists, which of course no one else uses. But, as far as I can tell, the central difference in the school is the belief in the ease and ability of the CB’s to shape expectations. Most other economists seem to regard the CB’s hold on expectations as tenuous and fragile, whereas Sumner and Rowe seem to see it as virtually unlimited.

    (Derisive version, of course, would be Tinkerbell Monetarists, but that would be unfair, I think, given the use of RATEX everywhere else in the field).

  88. Gravatar of JTapp JTapp
    21. September 2011 at 12:30

    I look forward to Scott’s post on FOMC decision, but want to predict what it will say:
    Fed announced it’s more pessimistic about growth but did nothing to increase the monetary base. Consequently, falling NGDP expectations mean lower expected earnings for firms, so stock prices tanked today. Lower inflation expectations drove 10 and 30 year yields to new lows via the Fisher effect. The market clearly indicated that the Fed failed yet again.

  89. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 12:39

    Dear barfing,

    What do you have against my Guaranteed Income System?

    I think you mis-understand me. I KNOW you do!

    I favor GOV2.0.

    I truly believe that a frugal government that achieves 2-5% annualized productivity gains in the delivery of government services; be it cutting checks, administering my GI plan, administering regulations – really AUTOMATING service delivery and cutting admin overhead (like public employee unions)…

    WILL BE POPULAR.

    It is a simply concept really… deliver A high quality low cost product faster, cheaper better every year…

    And people will want more of it.

    ——

    I don’t just pull this from my ass, there is a basic method to it… treat government like an Internet start-up:

    1. Constantly admit reality. Admit the REAL situation. This is tough one for you folks.

    In tech it can be just as hard.

    Most people don’t know what is TECHNICALLY possible. So they just daydream an idea up and then you have to explain to them why it won’t work. People hate this.

    Similarly, most people have little clue what America really looks like, they have no background in mass marketing, and they don’t realize, that if you build it, people will not just come.

    Now an honest appraisal of America today says there are DECIDERS, they aren’t citizens, they are likely voters and property holders.

    To really get something done, you NEED their support.

    2. Innovate within the boundaries of #1.

    Liberals hate this. They REALLY want it tO be a fair fight between the right and left.

    But it isn’t.

    And until you accept that it isn’t a fair fight, you can’t innovate within the boundaries of reality.

    ——

    Now you say that I’m forcing liberals with analysis to create programs that the Tea Party will approve of..

    And you will be correct.

    But be sure that I DO THINK your side will get MORE of what you say you want, if you find REAL partnerships with the Tea Party.

    You can have states’ rights – and turn California and NYC into a mecca of urban Utopian liberalism.

    You can get a GI system that gives EVERYONE a job, and dramatically increases the Power Purchasing Parity of the poorest and weakest neighborhoods and cities.

    I mean OVERNIGHT those in the hardest hit ghettos would have:

    1. prosperous small businesses.
    2. far higher quality of lives.

    You see 40% unemployed black male youth.

    I see whole neighborhoods getting renovated, painted and landscaped for $2 per hour while the youth earning $7+.

  90. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 12:45

    “There is no right to be liberal.”

    Arguing that a person does not have the right to hold an economic position that is different from one’s own is a total betrayal of the fundamental principles of libetarianism. It is pure, unabated fascism.

  91. Gravatar of johnleemk johnleemk
    21. September 2011 at 12:49

    James in London,

    I am talking about the politicians and the politically-interested laity, not academics and policy wonks. I don’t personally know a single left-leaning person who is interested in monetary policy, and plenty of right-leaning people who are interested. That’s not a recipe for a debate, that’s a recipe for a deflationist interventionist love-in.

  92. Gravatar of johnleemk johnleemk
    21. September 2011 at 12:49

    *right-leaning people who are interested and believe in “hard money.”

  93. Gravatar of justanothereconomist justanothereconomist
    21. September 2011 at 12:50

    “There is no right to be liberal.”

    Full employment Hawk is right. Plus, due process? You can’t deny the right to hold a belief without due process.

    I’ve been wondering- who (on the right) ruins the internet for everyone more, Morgan or Steve Sailer? It’s a tough choice, though Morgan is much more annoying.

  94. Gravatar of CA CA
    21. September 2011 at 12:51

    JTapp: I too eagerly await the good professor’s comments on today’s action. I think he needs to give up on this teaching-gig thing, and just post new material all day to keep us all happy:)

  95. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 12:54

    “Liberalism is not a legitimate moral pursuit.”

    There is an unbridgable chasm between people who believe that society should be organized on

    1. a dog-eat-dog, everybody has to swim or sink on his own, winner take all, and the devil take the hindmost basis,

    and

    2. a commpasionate, caring, we are all in this together basis.

    One result of this chasm is that people on each side tend to think the other side’s position is immoral.

    For example Moran Warstler (and note that I address him by the name he uses) thinks Liberalism is immoral, while I, Full Employment Hawk, think that his position is immoral. We are never going to agree on this.

  96. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 13:04

    “that Keynes theory about unemployment as a lack of aggregate demand is a bad theory but seems to have a superficial empirical basis while the correct theory which is that unemployment comes from a disequilibrium between production and consumer demand is impossible to prove empirically.”

    A theory that cannot be proven or disproven empirically is not a scientific theory, it is pure ideology. Economics has a long way to go to becoming a really solid science. But a first step toward achieving this goal is to treat theories that cannot be proven empirically the same way Astronomers treat Astrology.

  97. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 13:09

    “Mark, your assume everyone counts equally, I assume the people who built and established the system make the rules, to ensure that people like themselves are reward first.”

    The difference is that Mark believes is democracy. Morgan believes in Plutocracy.

  98. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 13:20

    “with the new guys in power.”

    Don’t count your chickens before they are hatched. Obama seems to have finally caught on to what the Republicans are up to.

    Obama’s biggest problem has been that he came to Washington with the fatal illusion that he could work together with the Republicans in a bipartisan manner to solve the nationss’s problems. But, of course, the Republicans had nothing of the kind in mind. From day one, their strategy has been to make him fail so that he could not implement his agenda during his term and would be defeated. It is incomprehensible to me that it took him so long to catch on. (Maybe if he had read this blog and read Morgan’s posts he would have caught on sooner.)

    But, while it is too soon to be absolutely sure, he shows strong signs that he really gets it and understands that the Republicans are an implacable enemy that needs to be neutralized if he is to be reelected.

  99. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 13:50

    Inflation Hawk, I believe in REALITY.

    Look, BEFORE 1980, the Dem strategy to power WORKED.

    After 1980, if has not.

    The difference, the KEY and CRUCIAL difference is that Repubs stopped paying attention to debt.

    They focused on: 1) lower taxes 2) spending money on non-Democrat constituencies and the private interests (pharma, military, etc) that support them.

    These two things ensure that: 1) capitalism takes deeper root 2) dem voters get depressed 3) Dem Admins are hamstrung.

    ——

    You, and others moaning here, don’t LIKE this. But I’m no plutocrat.

    I think the 30-40M people who work hard and own stuff as a special class. How 30-40M can be a plutocracy I do not understand.

    I just look at this situation for what it is: proof that Democracy as practiced 913-1980 is not be the strongest meme.

    It is OBVIOUS to me that the right has come up with a near unbeatable gambit UNTIL the left changes its strategy.

    Stop shooting the messenger.
    Think outside the box, figure out some new policies that the progressive left and Tea Party can agree on.

    It shouldn’t be hard:

    1. they both hate wall street.
    2. they both want to see all able bodied people be forced to work.
    3. they have 50 states they live in and could spend their time tending their gardens at home.

  100. Gravatar of Liberal Roman Liberal Roman
    21. September 2011 at 13:56

    “I think the 30-40M people who work hard and own stuff as a special class .”

    Is that not the DEFINITION of fascism?

  101. Gravatar of anon anon
    21. September 2011 at 14:12

    Off-topic but entertaining: Morgan Warstler’s comment here was quoted by a NYT commenter: “This excerpt should illuminate what we’re dealing with”.

  102. Gravatar of Mike Sandifer Mike Sandifer
    21. September 2011 at 14:27

    MikeDC,

    Give me a break. Republicans have been lying about Obama and doing other evil things from the beginning, which is what they always do. Remember “death panels”? How about accusing Democrats of wanting to cut Medicare, then trying to not only cut Medicare, but turn it into a voucher system in their first House budget? How about the Republican leadership fueling the birther controversy? How about claiming to be behind veterans, and then trying to raise their healthcare costs while trying to simultaneously cut taxes for the rich? How about stoking default fears and trying to hold the country hostage without cuts to government spending that will place a little extra drag on the economy? How about the Bush years, with torture, a war fought on a false premise, etc.? How about the racism they stoke? How about trying to limit poor voting by raising ID requirements? Republicans have done terrible damage to this country and other countries and should be crushed.

    And when to comes to keeping Obama, what can you possibly be thinking? He’s toast. The economy’s awful and there’s no reason to believe it won’t get worse, largely due to the continued faltering of the Euro system. Do you think Obama will do anything to help offset that? I doubt he’ll do much, and it seems much more likely he’ll do nothing. His hands are already tied and he seems clueless anyway. We can’t afford four more lame duck years. Democrats should make it so clear to him that they won’t support him, that he bows out a la LBJ.

    To make matters worse, Obama is also evil, just to a lesser degree in many ways in my mind, and he’s adopted too many Republican positions. I’d never vote for someone like him.

    I’m not a Hilary Clinton fan, to say the least, but there don’t seem to be many names in the Democratic Party that can carry a ticket, so I think making a switch to her may be worthwhile. Still, I wouldn’t vote for her.

  103. Gravatar of Mike Sandifer Mike Sandifer
    21. September 2011 at 14:34

    I should also point out that even if you don’t think Republicans are evil, they are wrong on almost everything anyway and need to be crushed.

  104. Gravatar of The Working Man The Working Man
    21. September 2011 at 15:10

    As a proud member of the blue-collar working class, who puts in his 44-56 hour workweeks for an hourly wage determined not by my abilities, but by what my employer feels is prudent (not necessarily fair), and the husband of a dedicated teacher and union member, I wish to make just a few comments.

    – First of all, I find the GOtP economic policies reprehensible, being designed to benefit the very few who already have the most, while leaving the deteriorating middle class to fight over the few crumbs that reach our level. Pandering as they do to the very wealthy and corporate oligarchy, they demonstrate they are more than willing to sacrifice patriotism for political gain regardless of how the country suffers. Is that not a definition of treason?

    – The dismantling of public unions ~ and the unmitigated attack on unions in general ~ is just another tool the GOtP uses to appease their masters by continuing to siphon wealth away from the working class upwards to the lazy, non-working class who, with incredulous dishonesty, consider themselves “job creators”.
    A question here. If a higher marginal tax rate is a “job killer”, and lower taxes “spur job growth” (a mantra peddled by the GOtP ad nauseam), and considering taxes are at historical lows, WHERE ARE THE JOBS?

    – The exponential increase in the incomes of the top 2%, while the rest of the nation has seen their incomes stagnate and drop in the face of rising corporate profits and obscene executive compensation, companies like GE paying ZERO federal taxes, big oil and big pharma and big money raping working people in the name of “record profits”, and their jobs exported out to a few-bucks-a-day to bolster the corporate bottom line, is a growing, cancerous tumor upon this once great nation. If left unchecked, it will also be the catalyst to it’s implosion.

    If you really want to give our economy a boost, the class warfare waged on middle-class, working Americans by the very wealthy and their mangy curs in the GOtP needs to come to an end. You will never see the demand for products and services that drive our capitalist economy by strangling the working mans ability to spread the bread of a fair living around his community. I’m no economist, but doesn’t that make sense?

  105. Gravatar of Jamey Roberts Jamey Roberts
    21. September 2011 at 15:27

    Thanks Morgan for confirming what most of us already suspected about the modern right. They are not conservatives; they are radicals (not that I’m a big fan of conservatism). They believe that society needs to be burnt to the ground and rebuilt to conform to their utopian vision.

    William Buckley as quoted in The Death of Conservatism:

    “If Hubert Humphrey is elected President, the followers of Richard Nixon and Ronald Reagan are not going to start burning down their Union League clubs or their Masonic Lodges. But some of the followers of Eugene McCarthy are, as some of them have put it, disposed to burn, baby, burn. Does this mean that the unruly left has maneuvered into a position in which blackmail is effectively exerted? Vote our man–or else we shall disrupt the republic?”

    My how the times have changed. It would seem we have more to fear these days from the unruly right than the all too ruly left.

  106. Gravatar of Seth Owen Seth Owen
    21. September 2011 at 15:36

    Morgan:

    Dean,

    ” ‘Democracy’ as in vote to get free shit, is new to the US since just 1913.

    Don’t convince yourself it will last.”

    Wow. It takes some kind of reactionary to reach back to 1913 for a policy change and call it “new!” It’s not going to last!?! Gee, Morgan, 98 years and counting is a pretty good run, wouldn’t you say?

    But 1913 was some golden era to you, I suppose. Women couldn’t vote, no income tax, blacks ‘knew their place’ and couldn’t vote or ride a train with white people, gays were routinely beaten, unregulated businesses regularly poisoned customers and had workplace deaths, business cycles were boom and brutal bust, etc. Yep, it’s been all downhill from then, hasn’t it?

  107. Gravatar of MikeDC MikeDC
    21. September 2011 at 15:42

    Mike S,
    You’re just emoting about a broad range of political topics. In each of those cases, thoughtful people can have different opinions and examples can readily be found of, basically, Democrats pulling exactly the same shit.

    We all have our biases, but fundamentally surrendering your rationality to become an agent of them, rather than using it to blunt them, is not productive on a variety of fronts. In this context, it puts the lie to the idea that there’s any significant difference between partisans of one side or the other.

    Regarding Obama, let’s make it real simple. Did LBJ bowing out of the election get a W for the Dems? Nope. You would vote for Clinton because you’re a Democratic partisan. Less partisan folks are going to say something like

    “Mrs. Clinton, I understand that as the Democratic candidate for President in 2012, you are not President Obama. However, you have served him for three years as secretary of state, promoted his policies, and he has thrown his support behind your campaign.

    As President, would you continue the employment, health care, and fiscal policies of President Obama? What would you do differently, and if it is something of significant difference, why have you so steadfastly supported policies you disagreed with and felt were causing unemployment and economic hardship for so many Americans?”

    It’s really a no-win situation for a Democratic follow on candidate.

  108. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 16:02

    DeKrugman. rofl!

    Liberal Roman, uhm, no – look dude, we do not start with a supposition that a system that allows people to vote to get free stuff is the correct moral order.

    It might be, but it would need to prove it mightily. And then it would need to prove that it is sustainable.

    These are common intellectual topics, I just make them sexy.

    Matty, after Obamacare passed, said the central premise of neoliberalism had been adopted.

    I’d argue, we’re not only going to tear down Obamacare, we’re going to further unwind of neo-liberal accomplishments.

    I’d say we’re gong to get a US version of Singapore style efficiency, think of of it NEOPRORESSIVE: Only aggressively productive delivery of government services is acceptable, if you can’t do it efficiently, you don’t get to do it.

    Look, you cannot paint me as some kind of fascist, Steve Sailer (who is a despicable human being), or any other such thing.

    I just want a fully automated government… and you don’t like where that leads. It leads to no real power-base of public employees.

    It leads to a Fed run by computer.

    It leads to less technocracy, and more dynamic, open, transparent GOV2.0.

    ——

    Look, I’ve been around mouth breathing hippies for a long time.

    When you say government healthcare should be UNIVERSAL and a PUBLIC OPTION, but you also say that we’ll limit its coverage to cost effective “pretty good” care (like $4K a man a year) for the have nots, so have haves can continue to have their high priced, marginal improvements…

    LIBERALS HATE IT.

    When you say, ok let’s have a Guaranteed Income System, give everybody a check from the gvt. and auction their labor off to the private sector in $1 auctions.

    LIBERALS HATE IT.

    But these are real, simple easy compromises that serve everyone’s interests and goals.

    So spare me the hate monger stuff.

    To American’s the down home phrase, “beggars can’t be choosers” is a FACT.

    It doesn’t mean the “less fortunate” get nothing, it just means they get less. It means they have to accept that givers are in charge.

    We’re not bad people. We have to take care of everyone.

    But we have a right to INSIST everyone have a boss they take instruction from towards someone else’s vision.

    We have a right to INSIST those who can pay don’t queue in line behind those who cannot pay.

    Anyway, smile everybody. There’s almost no way America isn’t going to become more like Texas. You are going to LOVE it.

  109. Gravatar of Mike Sandifer Mike Sandifer
    21. September 2011 at 16:14

    MikeDC,

    Perhaps you’re not reading what I wrote carefully. I wrote that I wouldn’t vote for Hillary.

    And when it comes to Democrats, don’t dare compare their evils to those of Republicans. The Democrats aren’t the ones willing to continue to let tens of thousands of people die every year without health insurance. The Democrats are less willing to cut benefits for the poorest and least able to care for themselves. The Democrats didn’t threaten to destabilize the global economy if they didn’t get their way in budget negotiations, making a phony issue out of the debt ceiling and negotiating in bad faith when extending the Bush tax cuts just months before. The Democrats were at least willing to consider legislation to slow down the heating of the planet. The Democrats have done some things to try to spur growth, even if efforts have been poorly designed and insufficient. The Democrats are even open to conservative ideas on issues, while Republicans reject ideas they held just a few years ago in some cases, in the interest of selfish and hollow political gain. The Democrats have made efforts to regulate Wall Street, however misguided and perhaps counter-productive in some cases, while Republicans have opposed all, or nearly all attempts to do so. Republicans cheer people dying who don’t have health insurance, people being executed even if mentally retarded or there’s new evidence of innocence, expelling immigrants, higher taxes on the poor, and on and on…

    FDR hung the Depression around Hoover’s neck, the latter of whom was a far better person than any Republican I know of today. He did it for the country, as unfair as it may have been in some ways to Hoover. He also destroyed Congressional Republicans in his day, who just like those of today, deserved every bit of it.

    America may need domestic enemies, and it just so happens she has them. It’s up to Democrats to vanquish them.

  110. Gravatar of Mike Sandifer Mike Sandifer
    21. September 2011 at 16:20

    And back to Obama, tell me how the Party benefits by having a failing politician in a worsening economy on the ticket? What the Hell is the benefit? He’s awful on substance and on the politics. Electing him again, based on what we’ve seen so far, would likely be catastrophic. We can’t go another four years without leadership.

  111. Gravatar of beowulf beowulf
    21. September 2011 at 16:57

    “[Republicans] focused on: 1) lower taxes 2) spending money on non-Democrat constituencies and the private interests (pharma, military, etc) that support them.
    These two things ensure that: 1) capitalism takes deeper root 2) dem voters get depressed 3) Dem Admins are hamstrung.”

    Morgan, this article is up your alley (the authors make similar points to yours).
    A Dictator’s Handbook for the President
    To win in 2012, Obama’s going to have to act a bit more like the tyrants he’s so proud of toppling.

    http://www.foreignpolicy.com/articles/2011/09/14/a_dictators_handbook_for_the_president?page=full

  112. Gravatar of Bob Dobbs Bob Dobbs
    21. September 2011 at 17:15

    You are equating an Op-Ed with “the NYT”? Op-Ed’s do not have the same standards of reporting that the rest of the paper does, nor the same staff. Ditto for the WSJ. Before the Murdoch era, it was a hellofa paper, as long as you skipped the Opinion section, they are 2 very different worlds. They have totally different editing standards for the 2 types of works. Please don’t sully your opinion of the NYT by thinking that they stand behind Joe Nocera and David Brooks and Paul Krugman and all the rest. Their news division has it’s problems, but the writings of the “talking heads of print” are not one of them.

  113. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 17:28

    Beowolf,

    Today DeKrugman talking about “the letter,” mentioned an old paper of his mentor that said in the old Dem glory days, there political disposition to inflate, and DeKrugman admitted that the GOP Congress had reversed that.

    My argument is no different.

    There WAS a winning strategy of buying votes 1913-1980.

    The GOP flipped it too.

    When your opponents change their strategy and start beating the bejesus out of you, you need to try things you have ever done before.

    If the Dems just became THE champions of a Balance Budget Amendment, they’d take ALL the air out of Repubs.

    From then on it is a real guns or butter fight.

    And THAT is preferable to a Dem always has a maxed credit card.

  114. Gravatar of MikeDC MikeDC
    21. September 2011 at 17:37

    Mike S,
    Democrats and Republicans are reciprocals. The whole mission you’re launching yourself on to convince yourself and anyone else to the contrary with a “narrative” simply drives the point further home. It’s cynical and so transparent it debases the constructive things you might have to say under other circumstances. Leave Planet Krugman before it’s too late.

    Regarding Obama, I see their choices as follows:
    * A) Stick with Obama, hope the Republicans shoot themselves in the foot. If he wins, they have a lot of come to Jesus meetings with him. If they can’t get him to shape up, they try to sideline him themselves.
    * B) Primary challenge moves them into Ralph Nader land, pisses off half the base and Obama loses no matter how bad the Republican is.
    * C) Forcing him out behind the scenes runs a similar risk of alienating much of their base while not giving them any real separation from Obama policy. He’s still hanging around for a year and they still own him.

    Especially if you really and truly believe all the nonsense your spouting about Republicans being manifestly evil and wrong about everything, A is the obvious path to maintaining power, because they’ll shoot themselves in the foot. B and C are you shooting yourself in your foot and giving them a clear path.

  115. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 17:43

    Morgan is right on in pointing out that the Republicans are not concerned about deficits, but intentionally create them to prevent the government from spending money on things they do not like. But they hypocritically make a big noise about how bad the deficit is in order to get the government to cut programs that benefit working people and the poor that they do not like. But if the Democrats are smart, and they are beginning to show signs that they finally are, this hypocritical strategy can be turned back on the Republicans. Now that they have gotten the public all worked up about how bad the deficit they actually do not care about is, the Democrats can make a convincing argument that since the deficit is so bad, the taxes of the rich and big business have to be increased in order to protect the United States from a bankruptcy thR it is not actually in danger of.

  116. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 18:01

    “I think the 30-40M people who work hard and own stuff as a special class. How 30-40M can be a plutocracy I do not understand.”

    Perhaps elitist is a better term for Morgan. But the real economic power is concentrated in a much smaller minority of very rich, like, for example, the Koch brothers. We are well on the road to plutocracy.

    “the 30-40M people who work hard”

    Apparently Morgan has never heard of the idle rich.

  117. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 18:04

    “What the Hell is the benefit?”

    Any candidate who successfully primary challenged Obama would go into the election without the crucial black vote. A recepie for pure disaster. The best the Democrats can do is to put Hillary up for the Vice President’s slot.

  118. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 18:10

    “”I think the 30-40M people who work hard and own stuff as a special class .”

    And there has been a class war going on between this special class on the one side and working people and the poor on the other for over 30 years. And they have been winning. This is why the quality of life for ordinary working people has been steadily deteriorating.

  119. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 18:50

    Inflation Hawk, my policies SPECIFICALLY go after the oligarchs.

    http://biggovernment.com/mwarstler/2011/08/19/tea-party-economics-distributism/

    Note Perry’s language, get the boot off the throat of SMALL BUSINESS. Reduce regulations so small businessmen will risk their capital.

    You are creating straw-men.

  120. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 18:52

    The A power:: 30-40M likely voters, who own stuff, run SMBs, etc. Think Tea Party Businessmen.

    The B power: Oligarchs

    The C power: everybody else. Dem voter base.

    YOUR PROBLEM: the C power keeps helping the B power, rather than accepting the dominance of the A power.

    That is my argument. Please try to attack me for the actual thing I am saying.

  121. Gravatar of Jamey Roberts Jamey Roberts
    21. September 2011 at 19:22

    “If the Dems just became THE champions of a Balance Budget Amendment, they’d take ALL the air out of Repubs.”

    Aside from the politics and the reactionary “Thou shall not incur debt” moralizing that’s even contrary to the basic spirit of capitalism, please explain to me how this is sound economics. It’s a recipe for lengthening and intensifying recessions.

  122. Gravatar of Mark A. Sadowski Mark A. Sadowski
    21. September 2011 at 19:41

    George Selgin.
    You wrote at 21. September 2011 at 04:33,

    “If the recent experience has taught us anything, it ought to have taught us that we must be no less concerned about avoiding booms than we are about combating busts; those “quasi monetarists” who imagine that merely insisting that policy act aggressively to sustain robust NGDP growth without allowing themselves to be troubled by the possibility of excessive growth merely undermine their own efforts by setting the stage for brand-new cycles in the future.”

    I don’t mind your Quasi-Rapster acolyte disagreeing with me but I do mind you disagreeing with me.

    1) Define “excessive growth.” (That’s one I’d really love to hear.)

    2) Recent experience confirms nothing. We had a boom in housing. So what? We’ve had booms in alot of things over the years without any harm to the economy. Moreover real housing prices deflated by a third from 2006-2008 without so much as a burp in the economy. What happened next had nothing to do with a boom-bust cycle.

    And, actually, it probably had something to do with a bust-bust cycle. (Most people totally missed the supposed “boom”. Unless you mean the “kaboom”.)

    The bottom line is that you (and John) are simply pulling numbers out of an orafice when there is hard empirical data available. 5% works. 2% or 3% does not under current circumstances. (And the evidence for that greatly trumps your evidence for a supposed “boom”.)

    Next year in Jerusalem.

  123. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 20:05

    Jamey,

    When you have a Balance Budget Amendment it:

    1. FORCES greater productivity in government.

    2. Puts ALL the “stimulus” work on Scott’s Monetary policy.. where it belongs.

    3. It teaches a lesson that states are all learning… there are NEVER, there can NEVER, there will NEVER be fat times for public employees…. again.

    This will go right over your head, but public employee (S, L, and F) compensation AFTER inflation has increased since 1998 by $500B per year.

    Does this get passed your mental stoppers?? If we kept the same number of public employees since 1998, made them more productive (like the private sector) and gave them increases in pay at CPI, this year alone we would save $500BILLION.

    $500BILLION.

    That’s half a trillion in 2011. Now when you count back the overpay for 2010-1998, and add interest, you are looking at more than $7 TRILLION.

    —–

    Look, you need to be realistic… IF under a Balance Budget Amendment old people are being thrown out in the street… taxes WILL be raised.

    IF, you have a bunch of Medicaid doctors scamming the system, everyone else’s interest is in busting them.

    Most importantly, unless war is declared, you don’t get deficit spending, so military incursions and war itself, are gong to be FAR MORE less likely.

    Look, this is SUPER CRASS but I will say it: since the money (debt) is going to be spent anyway, MANY on the right figure it is better to go defend our global interests.

    You throw out the debt assumption, and you’ll get a far less nationalistic military thinking. It won’t be mentally intentional, but it will happen.

  124. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 20:22

    As long as the Fed does not control NGDP growth, either explicitly or implicitly, an it shows no signs of being willing to do so even if it can with the instruments it is willing to use, a balanced budget amendment will destabilize the economy. When the economy goes into a recession government revenues go down. This forces the federal government to cut spending, reducing NGDP growth, just as the spending cuts by state and local governments are doing now. This makes the recession worse. When the economy is booming revenues go up, and government expenditures will be increased. This would boom the boom if the Fed did not intervene. But in this case the Fed WOULD use contractionary monetary policy. So the effect would be higher real interest rates, which have a negative effect on growth in real GDP.

  125. Gravatar of Full Employment Hawk Full Employment Hawk
    21. September 2011 at 20:29

    “Inflation Hawk”

    Morgan, as long as you will not grant me the courtesy of addressing me with the nickname I have chosen, do not expect me to reply to posts you address to me. (I have made an exception with this post.)

  126. Gravatar of Mike Sandifer Mike Sandifer
    21. September 2011 at 20:41

    MikeDC,

    What do Republicans have to do to make you think they’re worse than Democrats? Start rounding up Jews?

    This is one area Krugman’s absolutely right about and has been for years. He’s silly and crazy when he accuses Milton Friedman of being evil, but he’s right on the money with most Republican politicians.

    If it isn’t evil to try to deny people healthcare who need it desperately, what is? Is it evil to threaten to make our country voluntarily go bankrupt, though we’re probably the most solvent entity of any kind on earth? Is it evil to start a war on a false premise, leading to countless deaths and well over $1 trillion in expenditures, all unnecessarily financed through deficit spending while simultaneously giving huge tax breaks to upper income earners, and then wanting to claim we’re broke and cut benefits for poor and middle class Americans, but still seek more tax breaks for upper income earners?

    Sorry, but I can’t take you seriously. There are some people you just can’t talk to.

  127. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 20:44

    Inflation Hawk,

    When you call me, “Master of Full Employment Hawks”

    I will call you what you wish.

    OR, you can grow a nut sack and use your real god damn name and reputation.

  128. Gravatar of Morgan Warstler Morgan Warstler
    21. September 2011 at 20:49

    “What do Republicans have to do to make you think they’re worse than Democrats?”

    1. Raise taxes…. more than Democrats.
    2. Think they are smarter than their betters…. more than Democrats.
    3. Insert themselves into the business of America…. more than Democrats.
    4. Try to roust up and pay of poor people so they personally can be RICH…. more than Democrats.
    5. Pretend 99% of professors aren’t worthless self-interested pig-molesters…. more than Democrats.

    I can go on all night, do you want me to?

  129. Gravatar of Mike Sandifer Mike Sandifer
    21. September 2011 at 23:35

    Here’s the latest from Gallup on the popularity of increasing taxes on those earning at least $200k/year:

    http://www.gallup.com/poll/149567/Americans-Favor-Jobs-Plan-Proposals-Including-Taxing-Rich.aspx

    Notice that the idea isn’t even very unpopular among Republicans, if you believe this poll.

    If handled properly, this could be very good politics for the Democrats and a very fair answer to Republican demands. And of course, what are the chances these tax increases will occur? Not great.

  130. Gravatar of Ottovbvs Ottovbvs
    22. September 2011 at 04:21

    “You’re turning into a crank.”

    Turning?

  131. Gravatar of MikeDC MikeDC
    22. September 2011 at 04:31

    As Scott recently said, a poll question can be formulated to get most any answer you want.

    Sorry, but I can’t take you seriously. There are some people you just can’t talk to.

    How facile. So, in order to take someone seriously, they must repudiate and call evil the views of half the country. Gotcha.

    Again, the irony in this discussion (aside from the fact that I’m trying to hold a civil conversation with someone who simultaneously claims civility and continuously hurls invective) is that it simply underscores how clueless even well-intentioned, educated people are, how they overestimate the value of their intelligence and views, and how this leads to bad rhetoric, further bad ideas, and bad governance.

    Political dysfunction is endogenous. You think you’re so smart, but I guarantee you there’s an equally smart republican somewhere thinking the same stupid shit you are. And you feed off each other.

    Successful majoritarian government requires trust and compromise between the parties. Yelling and screaming about how the other side is evil, must be crushed, and is wrong about everything destroys that ability.

    If you truly believe it, then you’re no Democrat (or democrat). You want the sort of one-party regime that’s worked out so well for Detroit and Venezuela.

    Worse, it makes democratic government harder in two obvious respects. First, people on your side who listen to you believe compromise is impossible and harden their views. Second, people on their side believe compromise is impossible and harden their views.

    In that sense, the survey you cite makes perfect sense. Every Republicans I know will privately concede that some tax increases are probably necessary going forward.

    Likewise, every Democrat I know will privately concede that social security and the government dominated education and health care systems are so preposterously screwed up and (much more with health and education than SS) that they can’t possibly fulfill their “promises” of care to anyone.

    Yet, your public pronouncements on the issue are all about hatred, evil, and the complete wrongness of views that you probably hold privately.

    It’s just not serious to hold a conversation with someone who thinks, for instance, that Greg Mankiw or Ben Bernanke is evil, wrong about everything and must be crushed. To a Republican, if there’s no compromise to be had, what’s left but to harden your own position? Which, of course, leads you, Mike Sandifer, to harden your own position.

    All of which, of course, makes effective government that much harder.

    Ludicrously and insultingly implying the Republicans might “Round up the Jews” for instance, tells me that there’s little likelihood you could be reasoned with, but there’s some likelihood you’d be in favor of “rounding up all the Republicans”, which would be pretty evil too, you know.

  132. Gravatar of Polaris Polaris
    22. September 2011 at 05:08

    Mr. Warstler is delusional, has a poor understanding of economics and the limitations of different branches of the US government, and a creepy love of upper case words.

  133. Gravatar of Russ Anderson Russ Anderson
    22. September 2011 at 05:25

    Excellent post, Scott. I’m not sure what bothers me most about the Republicans letter: the short term damage caused by continued tight money or the long term damage caused by convincing millions of people that easing not an appropriate response to tight money (ie that Milton Friedman was wrong).

    This is a case where Great Depression monetary history is not just being forgotten, it is actively being unlearned. That, I fear, will continue to cause damage in subsequent economic downturns. It’s worse than “treason”.

  134. Gravatar of Morgan Warstler Morgan Warstler
    22. September 2011 at 06:28

    “In that sense, the survey you cite makes perfect sense. Every Republicans I know will privately concede that some tax increases are probably necessary going forward.”

    You need to get out more.

    EVERY Republican I now thinks the tax code must be flattened, so there are no loopholes.

    They’d want to see this change bring in very little new immediate revenue…. so the new flatter rate would achieve $Todays_revenue.

    They’d EXPECT this change will grow the economy and thus revenues will increase.

    So, to be honest, I’d say Repubs don’t mind more revenue as long as it come from growth.

  135. Gravatar of Mike Sandifer Mike Sandifer
    22. September 2011 at 08:56

    MikeDC,

    Well, depending on the other side to lose the game almost never works. If that is really what you think the best Democratic strategy is, then you may be as out of touch as many Democrats. Frankly, it’s a cowardly, loser mentality and one that voters are unlikely to reward.

    Americans want a strong and competent President and Obama certainly isn’t that. I have no reason to believe Hilary will be better, except maybe that she’d be more cynical with Republicans. But, there have to be huge changes right now. A good beginning is going to Obama and tell him he’s finished. Then, have Hilary(or someone else credible) enter the race for the nomination. I’m not even necessarily opposed to Democrats being open about their failures and their efforts to get things right.

  136. Gravatar of Njorl Njorl
    22. September 2011 at 09:05

    ChacoKevy,
    Do you expect people to believe their own lying eyes in the face of the eternal sacred truth of “both sides do it”?

  137. Gravatar of Rob in CT Rob in CT
    22. September 2011 at 09:09

    It’s nice to see someone who’s at least honest about their beliefs, motivations and goals:

    DEMS will always be given a maxed credit card, if they make like Clinton they can buy a second term, if they make like Obama they will be denied.

    Democracy “vote to get free shit” is NOT A RIGHT. And after we end Obamacae, and when twenty years from now the third or fourth Dem President delivers nothing new for free…

    Dem voters will no longer believe they get anything out of voting.

    I think the 30-40M people who work hard and own stuff as a special class

    But we have a right to INSIST everyone have a boss they take instruction from towards someone else’s vision.

    Keep talking, Morgan. I hope lots of people see it. I hope that hardcore right-wingers in general shout this over and over. Keep talking. PLEASE.

    It’s probably the only thing that will save us from people who think like you. Most of them are smart enough to keep their mouths shut except to mouth platitudes about so-called conservatism (while pursuing the radical utopian garbage you’re pushing).

  138. Gravatar of MikeDC MikeDC
    22. September 2011 at 09:29

    Mike S,
    Politicans are cowards and losers. Relative to the other options for winning the election, that’s clearly the best.

    Put yourself in the position of the best, and most well-meaning Democratic politico you can imagine.

    Now try to sell your credibility to the African American section of your base, that’s utterly pissed you just deposed the first African American president.

    Now try to sell ability to pass center-left and market oriented proposals to the far left section of your base, that’s utterly pissed and convinced Obama was already too much of a centrist.

    Now go up to Wall street, and try to convince those guys that your demagoguery is “just foolin'” and they should support you the same way they largely supported Obama in 2008.

    It ain’t gonna happen. Not a chance. In hell.

    At the end of the day, the cowardly strategy that almost never works is still preferable to the bold strategy that never works. The bottom line is the Democrats screwed up bigtime with their chance in power, and just like the Republicans, they will probably lose because of it no matter what their strategy. Still, they’re rational to maximize their chances.

  139. Gravatar of Full Employment Hawk Full Employment Hawk
    22. September 2011 at 12:43

    “When you call me, “Master of Full Employment Hawks” I will call you what you wish.”

    That is your decision. Just don’t waste any time addressing messages to me because I will ignore them.

  140. Gravatar of Morgan Warstler Morgan Warstler
    22. September 2011 at 14:15

    Rob in CT,

    Again, there is no reason to get mad at me, just reconfigure your strategy.

    The left DOESN’T CARE if everyone is forced to have a boss, right?

    That’s an easy one to give up to get Guaranteed Income.

    And if you get universal health care for the poor, who cares if the top 80% get to have better care, since they after all are PAYING for theirs?

    These are small things to give up.

    I’m telling you the TRUTH, so you can start to win again, with my winning neo-progressive policies.

    I’m your new leftist leader.

  141. Gravatar of Scott Sumner Scott Sumner
    22. September 2011 at 16:52

    Not much time, I’ll skip most comments (but I read them all):

    Johnleemk, Regarding Johnson, what if I said “But unemployment would seem so bad if we could smoke dope?” (Please don’t quote me, that’s a joke.)

    MikeDC, But stable NGDP growth is better than what we have even if it doesn’t create one job.

    AlanMB, The Fed’s been too tight.

    Mike, Yes, and non-smokers want to tax smokers (who tend to be poor.) Shall we do that?

    James in London, I said I’d appreciate their HONEST opinion, didn’t I?

  142. Gravatar of Jeff Biss Jeff Biss
    22. September 2011 at 17:37

    Sorry Morgan, but to claim that Obama is a “Marxist” only indicates that you don’t have a clue about what you’re talking about.

    The situation we find ourselves in is due to the failed conservative free market, free trade, and trickle-down economic theories being implemented as policy.

    The fundamental problem can be traced to the fact that most economists are not scientists nor do they treat economics as a science, as a subset of anthropology, sociology, or psychology. They are more ideologues or religionists that promote a preferred dogma about human behavior because it supports a preferred philosophy. So, being a fundamentally Calvinist nation, we have a predisposition to accept only that which supports Calvinism as valid and anything that questions or refutes it as invalid, which is why you call Obama a “Marxist”.

    Taxation is not theft, it is the cost of living in the social group as humans are social animals and have obligations to support the community.

    Obamacare is not immoral but evidence that the wealthy control the health care system for their benefit to the point that even the Democrats can’t bring themselves to wrest control from them.

    The Federal government violates the rights of states and individuals only to the point that the powerful, the wealthy, are allowed by the ignorant and ideological electorate to do so.

    Wake up.

  143. Gravatar of Morgan Warstler Morgan Warstler
    22. September 2011 at 18:38

    If you can’t discern meaning from the phrase Obama is a Marxist, you haven’t been reading this blog.

    Look, lots of conservatives think Obama hasn’t released his transcripts because its chock full of marx.edu coursework.

    And it obviously informs his views about productivity – he thinks it is a jobs killer, like marx.

    And dude, I say taxation is theft, so that we KNOW what crimes we are committing. We are using force to TAKE earnings and property from people for our own causes.

    And this country did a lot less of it before 1913.

    It should kinda hurt people mentally to live off other people. it can happen, but it should kinda hurt.

    Think of it as Kantian definition. It is absolutely theft, so now that we know it, when you make arguments for robbing people, they have to be GREAT arguments.

    Meaning the moral hurdle for taxation is hard to leap, not something an idiot can step over blithely.

    ONE MORE TIME: for the uninsured, I favor a Universal public option single payer system for health care (like real governent salaried doctors and everything!) but it WILL BE the CHEAPEST car on the new car lot.

    It’s the $!4K KIA, the $100 phone, or the $4 per lb. cheese, while those who pay get whatever they normally would get.

    In real terms that means $4K per man per year. We run the VA on about $5.5-6K per man per year.

    So stop plastering me with generic right wing strawmen. I’m tricky, step it up.

  144. Gravatar of Mike Sandifer Mike Sandifer
    22. September 2011 at 20:02

    Scott,

    You replied:

    “Mike, Yes, and non-smokers want to tax smokers (who tend to be poor.) Shall we do that?”

    Yes, I would support doing it if it could be used as a weapon to bash Republicans. Again, it’s not that I think it’s a good idea to raise taxes right now and it wouldn’t be fair to put an undue tax burden on smokers. But, this isn’t about fairness. It’s about trying to save the country from evil lunatics.

    If the Republicans weren’t insisting on holding the solvency of the US hostage to get more tax cuts top earners while cutting benefits for the poor and middle, I wouldn’t favor this approach. But, if Republicans want a class war, we should give them one.

  145. Gravatar of Mike Sandifer Mike Sandifer
    22. September 2011 at 20:08

    And again, it’s unlikely new taxes on the rich could get through Congress anyway. The point is to basically use the issue as suppressive fire.

  146. Gravatar of HarPe HarPe
    23. September 2011 at 00:31

    3% NGDP at the same time as you massively cut government could actually be inflationary, if you’d be hit be a recession at the same time. They do happen, you know. A 3% growth in NGDP at the same time as a 10% loss in RGDP (say a combined slashing of gov’t and layoffs in the private sector). This would leave NGDP at 103% of last year and RGDP at 90% of last year. This is a big gap between demand and supply, and would likely lead to higher inflation than we’ve seen for a long time.

    Also, how do you increase NGDP? NGDP is measured in spending. If you reduce gov’t spending, how will you get private spending to rocket to avoid deflation? You can’t force people to spend and the best incentive to spend is inflation, which likely in the long run brings further inflation and sets expectations in stone until you have a massive recession globally, like in 1991.

    Also, in case of a credit-bubble, will you tax massively to maintain the rule of 3% NGDP? Credit is one of the primary strengths (as well as weaknesses) of capitalism. The result of trying to maintain a rule like that would be incredibly unstable interest rates in the credit market.

    Truly, setting rules like this sounds extremely unrealistic. We cannot micro-manage the economy at that level.

  147. Gravatar of HarPe HarPe
    23. September 2011 at 00:36

    Also, on the tax debate. I am poor (not by american standards), and i smoke, but i want higher taxes on cigarettes. This is despite us already paying 7-8 USD per package of 20. Why? Because i know that the overall result is to reduce smoking, which primarily hurts the poor. Here, the long run matters.

  148. Gravatar of HarPe HarPe
    23. September 2011 at 00:45

    And for you people who think you have two parties in the US – Us on the outside are having a laugh at your system big time.

    Look – The only party that can increase spending massively is the right-wing party, which uses credit for war. The only party that can decrease spending massively is the left-wing party, which does that to destroy the lives of retirees and poor people. It’s hilarious. What a show!

    Obama was supposed to be the most leftist president you had had for years, peaceful and diplomatic and stuff. Us Europeans cheered. We liked him. And then he turns out to follow typical right-wing policies of austerity and the like. It’s like being tricked by a really good clown!

    Now, i agree these are serious matters and of course i sympathize with the victims of the last what? 5-6 presidents, or something. But with some perspective, you can also have a laugh at things.

    @Morgan Warstler & Others:

    Stop being extremist. Your reading Ayn Rand or Lenin respectively in your youth won’t lead you anywhere. Someone actually theorized reading any of those two in your teens would intellectually damage you for life. I hope that is not the case. So please show me it’s not by growing up and seeing the real world instead of extremist la-la land.

  149. Gravatar of Jeff Biss Jeff Biss
    23. September 2011 at 06:53

    Morgan,

    The meaning I discern from “Obama is a Marxist” is that he doesn’t accept free market dogma and so is a heretic. Today’s extremist “conservative”, as in Tea Bagger, has created a religion out of economic doctrine, or their religion posits that the free market reflects god’s will. Therefore, Obama is by default evil and the most extreme label one can give him is of the anti-Capitalist. You may be tricky but you don’t provide much evidence from statements such as “taxation is theft”.

    Taxation is not theft. Humans are social animals and we live in groups. This is the sole reason that we survive. As members of society we have obligations to that society and society has obligations to each member. This is fundamental to the nature of social animals. The difference between wolves and humans is that we have created the imaginary economy, which means that instead of requiring effort directly that which we consider an equivalent, money, is given.

    Also, as social animals, government is inevitable as social animals create hierarchy. No social animal does not create a hierarchy. Railing against the government is fine so long as one keeps in mind that essentially we have control. The problem is that our worldview has been severely skewed from a) Calvinism and (b) civilization itself. The issue isn’t government per se but who is allowed to take control. If you look at American politics, you’ll see that the wealthy have been given control becuase of a) Calvinism and (b) civilization. So, this government is our creation and if we want better then we need a paradigm other than greed is good to operate from.

    We have an evolved nature as social animals, which means that we are selfish and altruistic. You would do far better to account for that evolved nature and recognize that the development of philosophies and ideologies are more attempts at supporting one’s worldview rather than understanding human nature. This is why Calvinism is such a strong force, as it provided the rationale for freeing the wealthy from control or obligation because wealth is a sign of their righteousness and therefore of god’s approval. Greed is a very powerful emotion, and Calvinism celebrates it.

    For me, it’s a question of whether we allow Calvinism to continue as our operational paradigm or we change that. This is a problem because change requires effort on the part of the average person and having the rich assume control is merely entropy in action as it is the lowest energy state that a society can achieve.

  150. Gravatar of Morgan Warstler Morgan Warstler
    23. September 2011 at 07:36

    Humans may be social animals, but they are not Democratic animals, you fool.

    Forget calvinism. Get down to brass tacks.

    Government was formed by the little guys who owned property and wanted to protect it from big guys who didn’t.

    Go study life immediately after the fall of the USSR.

    “You dumb big guy! Stand here with this gun, and protect my shit!” said the smart little guy who creates value for a living.

    THAT is what government is borne from. THOSE LITTLE GUYS are the hegemony who have guided layer after layer on the onion. Each layer not as important or as weighty as the last. See Maslow.

    YOU want to forget who runs stuff and pretend there is a supremacy of Democracy – hardly the case. Meanwhile we can sprinkle capitalism on ANYTHING and it will get up and walk (see China).

    If aliens looked down and the US, they would see a hierarchy in our social animal kingdom… at the top, 30M-40M Tea Partiers who all VOTE, OWN SHIT, and OWN 200M guns, and at the bottom those who don’t vote much, don’t own shit, and don’t own guns.

    Look dude if you were right, and everybody counted equally, things wouldn’t turn out this way would they?

    AGAIN, you want to do something VERY HARD: change how things turn out.

    I want to the EASY THING: make immediate policy changes that fix shit (universal health care, guaranteed income, GOV2.0, etc.) with the approval of the DECIDERS.

    —-

    I gave you a perfectly rational and moral reason to view taxation as theft. I didn’t say you SHOULDN’T have theft, you can (see digital piracy), I said we OUGHT to regretful of it as a society. People on the dole, should be ashamed. Beggars cannot be chooser.

    Look up the should / ought dichotomy if you struggle here.

    Instead of answering my explanation, which would require some deeper thought out of you, you decided to simply repeat yourself.

  151. Gravatar of Mike Sandifer Mike Sandifer
    23. September 2011 at 08:00

    HarPe,

    Thank you for pointing out that Obama would be economically conservative in any other developed country on earth. It’s only the weakness and cluelessness of Democrats that’s allowed right wing extremist nuts to take this country over to the degree they have.

    The fact that having retirement subsidies, legalized abortion, and universal healthcare are still controversial in this country is laughable. How much worse that we actually have a caucus in Congress that wants to voluntarily bankrupt the most solvent country on earth, because… we might go bankrupt one day.

  152. Gravatar of John Thacker John Thacker
    23. September 2011 at 08:04

    How much worse that we actually have a caucus in Congress that wants to voluntarily bankrupt the most solvent country on earth, because… we might go bankrupt one day.

    Yes, it was shocking that so many Democrats were willing to let us miss a debt payment rather than cut spending.

  153. Gravatar of John Thacker John Thacker
    23. September 2011 at 08:11

    Greed is a very powerful emotion, and Calvinism celebrates it.

    Isn’t favoring redistribution (especially to yourself) also celebrating greed? Sumptuary laws were about combating “greed” as well, and I don’t support those.

    The only really non “consumerist” or non “materialist” or non “greedy” position is one that doesn’t care at all about patterns of consumption, which I don’t think is tenable.

    If we were really anti-greedy, then the rich would be fine with being taxed to pay for the poor and middle class– but the middle class and poor would be equally fine with not doing so.

  154. Gravatar of John Thacker John Thacker
    23. September 2011 at 08:28

    The fact that having retirement subsidies, legalized abortion, and universal healthcare are still controversial in this country is laughable.

    Having a retirement program isn’t controversial. But you can’t universally subsidize everyone. What’s controversial is how much to subsidize different groups (young vs. old, rich vs. poor, etc.), and the fact that the math doesn’t work.

    We have universal healthcare in this country; we have for years and years, and it’s not controversial. There has never been the slightest attempt to repeal the emergency room mandate, for one thing. What we don’t have is universal health insurance. Even if we did, then, like other countries, certain treatments that would increase health would be denied because of being too expensive, just like now.

    Your complaints are largely hyperbole, inflating differences of degree into controversy about differences of kind.

    Mike Sandifer is no different from those who call Obama a socialist.

  155. Gravatar of Mike Sandifer Mike Sandifer
    23. September 2011 at 10:23

    Thacker,

    Democrats don’t practice this brand of politics. If you think otherwise, then I’m wasting my time responding to you.

    And your claims that we can’t afford to subsidize retirement for everyone are simply untrue. Just lifting the cap on taxable earnings for Social Security purposes may make the system solvent for as far as the eye can see. There are many other approaches as well.

    The fact is, we can afford a far more generous welfare state, with some structural reforms, and admittedly with somewhat lower GDP growth potential.

  156. Gravatar of John Thacker John Thacker
    23. September 2011 at 10:39

    Mike, Democrats absolutely do practice “this brand of politics” as well, if you mean brinkmanship threatening default and shutdowns, insulting people, making threats, rioting, taking things out of context, and mischaracterizing people. Partisans all do that.

    I’m sorry that you’re so blindly partisan that you won’t even respond to someone who thinks not half as badly of your team as you do of theirs.

    I strongly criticize the idiots on the right that question motives, but there are many who do the same on the left. I’m sorry that you’re so closed-minded, as I would love to have a rational conversation.

    You can’t “subsidize” everybody. You can adopt pro-growth policies like NGDP targeting to help everyone, but Re-distribution is more zero sum. Your policy of increasing taxes would certainly mean not subsidizing retirement for the wealthy. Personally, I would do that but also cut benefits to the upper middle class.

    I don’t mind subsidizing the poor; I dislike subsidizing the well-off.

    Democrats spend too much time defending subsidizing the well-off for my taste, like with Solyndra and the current budget dispute.

  157. Gravatar of HarPe HarPe
    23. September 2011 at 11:57

    The claim that the government can’t afford, well, anything it likes is spurious – a downright lie. It also remind me of ancient Athens. They “wanted” to outlaw slavery, but in the end, they “realized” that “it’s not doable economically”.

    The point is, all this talk of “the math doesn’t add up” and “we have to pay our debts, don’t we?” and all that shit is purely ideological and doesn’t take into account the governments position as a sovereign that issues its own currency. Government deficits could just as well pile up as reserves, so why not do that instead of taking on debt?

    The government can do anything it likes within the borders of the nation. End of discussion. And this is where the ideological arguments should come in. What do we WANT the gov’t to do? We need to start answering that question instead of being stuck in lies of ideological so called “realities” that have nothing to do with reality.

    Now, government spending can have different effects on the economy, sure, but ideology is getting in the way of empiricism and sound theory there, so we can’t know yet.

    I really don’t like partisan politics, because that’s not where democracy is at. Democracy happens by the grass roots.
    In Sweden, the previously taxes-taxes-taxes right has moved to the right of the middle. So has the former Social Democratic party. The same has happened in Finland. Parties are fundamentally turncoats and always will be. It’s up to us as citizens to show them how we want it, if we want democracy.

    Also, redistribution isn’t purely zero-sum. I agree it’s more a social policy than an economic one, but due to marginal tendencies to spend being lower in the higher end of the income distribution, redistributing from there to the lower end (like retirees) will maintain demand better than not doing so.

  158. Gravatar of HarPe HarPe
    23. September 2011 at 11:59

    Also @ whoever calls China a capitalist country: Ownership of capital is still illegal there. A market economy is not equal to capitalism. China is fundamentally etatist, not capitalist and not socialist.

  159. Gravatar of Mike Sandifer Mike Sandifer
    23. September 2011 at 19:30

    HarPe,

    I agree the debate should largely be about what we want the government to do, but it sounds like you’re appealing to MMT, which I don’t agree with. But, I assume we can both agree there’s no solvency problem for the US in the foreseeable future.

  160. Gravatar of HarPe HarPe
    24. September 2011 at 07:29

    Mike, i do agree with the MMT-school in some things. Some of their central tenets just are. They shouldn’t be only in the MMT-school, but also part of others. Technical solvency can never be a problem, but inflation can, for an example. Then the debate becomes about inflation instead of solvency vs. insolvency. I consider myself more of a general post-Keynesian than a pure MMTer.

    More generally, i see governments as the highest democratic function (although they quite often create large democratic deficits if left to themselves). As that function, they have the highest authority and mandate in all matters. And then, again, the question becomes where and how we want them to use that authority, not about whether they have it or not.

    For an example, i want the gov’t to control certain parts of the market economy, but i don’t want the gov’t to intrude in people’s private lives through “anti-terror” laws and such.

  161. Gravatar of John T. Kennedy John T. Kennedy
    25. September 2011 at 19:18

    Isn’t this this a dire and inescapable moral hazard of having a government monopoly on money and monetary policy?

    Do you think informed consent for your monetary prescriptions can really arise among citizens as a whole? Or must average citizens cross their fingers and guess which public officials will manipulate money correctly?

  162. Gravatar of Scott Sumner Scott Sumner
    26. September 2011 at 07:03

    Everyone, I have lots of posts on my views on taxes.

    Harpe, I don’t favor 3% NGDP growth.

    John, I think monopoly on money is inevitable, but I’d let the market actually determine the money supply and interest rates.

  163. Gravatar of PrometheeFeu PrometheeFeu
    26. September 2011 at 10:20

    @Morgan Warstler:

    I find it deeply disturbing that you are advocating imposing pain and suffering upon the population just so your party can be in power. Those of us who are currently alive would very much like to live the best life possible in an imperfect world rather than have to suffer so you and your ilk can lead us into paradise some day… maybe… Your maxed-out credit card analogy is mostly accurate except for one thing: The population has to pay for whatever crap your people put on that credit card. So we don’t really care that you maxed out the credit card in order to make a smaller government. (oh goodie. Before we had a big government that cost a lot and did some stuff for us, now we have a big government that costs a lot and does nothing for us. Thank you Republicans!) What we care about is that ultimately, taxes or inflation are the only ways to pay for spending. So thanks a lot for the upcoming taxes and inflation. I’m sure your people will be applauded as liberators right when we’re done paying for your wars.

    As for your explanation of government, it could not be further from the truth. Government was formed by the big guys with horses, swords, bows, arrows and friends who have the same in order to formalize their power over the little folks who have less of the above.

  164. Gravatar of Republicans miss the boat on Fed policy | PARTISANS Republicans miss the boat on Fed policy | PARTISANS
    5. October 2011 at 08:53

    […] Scott Sumner: The definition of treason […]

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