No soul-searching on the left?

Soon after China began its economic reforms a curious pattern developed.  Many of those who quickly rose to prominence in the business world had spent the 1960s and 1970s as members of the Red Guards, torturing and killing people to advance the glorious cause of socialism.  I suppose we shouldn’t be surprised; the highly ambitious and talented are not necessarily particularly ethical, and often rise to the top of any social hierarchy.  Much the same pattern can be found in other former communist or fascist countries.  A sort of convenient amnesia sets in and all crimes are forgotten.

There’s probably no reason to decry this state of affairs, no matter how unfair it may be.  The gains to China from moving past Maoist policies are so great that it would be silly to slow the progress with a lot of score-settling.  Still, it isn’t exactly pleasant to watch.

I was reminded of this phenomenon when I read a recent Washington Post story on the empty seats at the Fed:

Then there’s monetary policy, the Fed’s core function. There is now a strange situation in that the institution in charge of guiding the U.S. economy has only one PhD economist among its top officials, Chairman Ben S. Bernanke. The other three currently serving governors are not monetary policy specialists (they are Tarullo, a former law professor, Duke, a former banker, and Kevin Warsh, a financial markets expert). Two of Obama’s nominees are economists, San Francisco Fed president Janet Yellen and MIT professor Peter Diamond. This is, as it happens, a pretty terrible time for the Fed not to have as many smart economists in its upper ranks as possible; the central bank faces a massively consequential decision over the coming months of whether to undertake new steps to try to boost the economy.

Massively consequential decision?  Yeah, I guess I’d say so.  But I think we can all agree that at this late stage, nearly three years after the start of the recession, it is nowhere near as “massively consequential” as the decisions of September and October 2008, when expectations of inflation and NGDP growth were rapidly falling below the Fed’s implicit target, and just about everyone agreed the economy needed lots more aggregate demand.

I hope I’m not being impolite by bringing up a few inconvenient truths.  As far as I can recall there were virtually no articles in the leading elite newspapers (WaPo, NYT, LA Times, NYR of B, etc) talking about the urgent need for more monetary stimulus.  Yes, there might have been an occasional off-hand mention of monetary policy, acknowledging that perhaps, in theory, the Fed could do something.  But then the idea was quickly brushed off as a long shot, which shouldn’t distract us from the need for fiscal stimulus.  And all those empty Fed seats in early 2009?  Once again, I don’t recall any sense of urgency on the issue.

Of course the media must get its information from somewhere, and I assume most reporters aren’t experts on the fine points of unconventional monetary policy.  I’d guess they talk to their fellow liberal bloggers and academics.  And what were they saying in September and October 2008 about the urgent need for more monetary stimulus?  How about the first half of 2009, when we desperately needed the stimulus?  Weren’t most of the liberal bloggers saying there was nothing the Fed could do when rates were near-zero?  So here’s my question; if there’s nothing to be done when rates are near zero, then why is the Fed now facing a “massively consequential decision”?  Indeed rates were in the 1.5% to 2% range throughout September and October 2008, so not only was the need much greater at that time, but the Fed’s ability to deliver monetary stimulus was also presumably much greater.  (By ‘presumably’ I mean according to the standard model.)

Here’s Brad DeLong on Obama’s biggest mistake:

In fact, it was recess appointment time at the Fed in August 2009–if not earlier. But it is definitely recess appointment time at the Fed. This is, I think, Obama’s largest and most damaging unforced errors.

If not earlier?  How about January 21, 2009?  Obama didn’t even offer up any names until a few months ago.

Perhaps Obama’s one of those arrogant liberals who believes all right-wingers are morons.  Perhaps he never read any Milton Friedman, and never learned that monetary policy is still highly effective at the zero bound.  Maybe he just read Keynes.  Maybe he just relies on reporters who didn’t know about the “massive” importance of monetary policy in early 2009.  Maybe he relies on liberal economic advisers who didn’t understand the massive importance of monetary policy in early 2009.  So he let Fed seats sit empty, instead of immediately filling them with pro-stimulus academics when his high popularity would have allowed them to sail through the Senate.

I suppose my liberal readers are asking why I am picking on progressives.  I have several answers:

1.  I’ve already done lots of columns picking on the WSJ and conservative inflation hawks.

2.  The hawks still haven’t changed their minds, so there’s no reason for them to do soul-searching.

3.  Consider a partial list of those who understood that monetary stimulus was highly effective in late 2008 and early 2009:  David Beckworth, Bill Woolsey, Josh Hendrickson, David Glasner, Jim Hamilton, Nick Rowe, Mike Belongia, Robert Hall, Niklas Blanchard, Tim Congdon, Tyler Cowen, Bryan Caplan, Robert Hetzel, Earl Thompson, and many others whose names don’t immediately come to mind.  Do you notice there aren’t a lot of left-wingers on that list?  I’ll admit that in between his many columns denigrating the possibilities of unconventional monetary stimulus, Paul Krugman did occasionally call on the Fed to do more.  But it was obvious that he held out little hope for success.

Don’t get me wrong, I’m thrilled to see all the sudden liberal support for unconventional monetary stimulus, and I’m angry about Republican senators using delaying tactics.  But I’m also frustrated by the lack of soul-searching on this issue.  It’s clear to me that if all these liberal bloggers and liberal newspapers (and yes, to us right-wingers even the WaPo is liberal) have suddenly woken up to the fact that monetary policy can be highly effective at the zero bound, then the macro model they had in their heads in late 2008 and early 2009 was in some sense flawed.  You’d expect some sort of re-examination of how we got here.

Yes, I know there are only so many hours in the day.  It’s very time-consuming writing posts pointing out that right-wingers don’t know how to read, or are completely nuts.  But perhaps liberal bloggers could set aside just a few minutes to consider whether, like a broken clock that’s right twice a day, right-wingers might once and a while stumble over an important insight.

Why start off with the Cultural Revolution anecdote?  My hope is that monetary stimulus happens, and that it works.  But I have a nagging feeling that when and if that happens, all the liberal Keynesians will say “See, it shows the right-wingers were wrong and the left was right.  It shows the economy really did need more stimulus.”

At this point all I want is monetary stimulus, and I don’t much care who gets the credit.  But I hope future historians will keep in mind that while Obama may have made some “unforced errors,” there were plenty of assists from his fellow liberals.  And those policy errors will have caused untold hardship to the unemployed.  It’s great to have your heart in the right place, but you also need to know how the world actually works.

PS.  I had not yet discovered some of the best liberal blogs in late 2008 (Yglesias, Duy, Harless, etc.), so apologies if I’ve overlooked bloggers who were on top of this issue from the beginning.


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24 Responses to “No soul-searching on the left?”

  1. Gravatar of Benjamin Cole Benjamin Cole
    19. September 2010 at 11:31

    Mea culpa, I am guilty–but with excuse. Yes, I have been, and maybe will again be, a member of the financial media.

    But look at it from a reporter’s perspective–for 20 years (following Volcker) monetary policy has been nearly on autopilot. We have low inflation, good growth. The Taylor Rule. The Fed is mysterious, and holds meeting that become only public after the fact, in condensed form.

    Congress is wide-open, with scandals, wars, debates and control (somewhat) of fiscal policy.

    Ergo, most reporters roughly understand fiscal policy, but not monetary policy.

    The idea of QE has only recently been raised, in the last few years. No one really even seems 100 percent sure it will work (although Milton Friedman seemed sure, but then he never lacked for confidence).

    And, some of this is the monetarists’ “fault.”

    You haven’t blogged enough, written enough op-eds, formed a coalition, thought up a campaign with the proper language and politically persuasive arguments.

    We are a democracy, and ideas have to get into the “public square” to be battered about. It’s rough stuff, but you gotta get in there.

    How about the top three QE’ers requesting a meeting with the President or the Fed?

    Writing editorials for the WSJ, NYT and WaPo?

    Frame your arguments so that you are not classified as “liberals.” Talk about economic growth, job creation, that an agressive monetary policy means less fiscal policy and smaller deficits. Cite Milton Friedman. Define non-Qe’ers as “do-nothings” or the “Japan Wing” of the Fed.

    Define zero inflation as a “dangerous utopian pipe dream” that could cripple US growth for decades. Suggest that “effete central bankers believe the psychic income they derive from zero inflation is equal to the real income lost by working and investing Americans.”

    Bring up Japan all the time. Stay on point. We do not want to become like Japan, no inflation, some deflation, and the world’s laggard in economic growth. Families having so few children that the population and work force is shrinking. Property and equity values down 75 percent–that’s the future of America, if we do not get into QE.

    The QE’ers can win this argument, but they have to make the argument in a winning way.

    I offer my meager assistance.

  2. Gravatar of Liberal Roman Liberal Roman
    19. September 2010 at 12:33

    I think it’s more because of how the argument was framed and still is framed. When I talk to my mostly Tea Party friends about the economy, I always tell them, “You know there is a much more interesting argument we could be having, monetary versus fiscal stimulus.”

    But that’s not the argument we are having. The argument we are having is do something versus do nothing. Why should I be doing soul searching when the other side is insane?

    Sorry, Scott, if Jim Bunning was holding up unemployment benefits because he felt they were detrimental on the supply side and wanted Fed appointees from Obama before he let the benefits go through then perhaps I would do some soul searching. But he didn’t do that. He held up unemployment benefits because….well just because it seemed tough and “conservative”.

  3. Gravatar of Joe Joe
    19. September 2010 at 12:34

    Professor Sumner,

    I can’t speak for academics, but when it comes to regular people in the public and media, I think you greatly underestimate just how ignorant people are of the Fed. Most people simply don’t know ANYTHING about it.

    I’ve read three textbooks, just finished the Great Contraction and Money Mischief, yours and others blogs, and I STILL can’t figure out how monetary growth stimulates the economy. The best I’m able to explain to my friends when they ask is your “hot potato” process. Plus, its just a really boring topic for most people, they’d rather argue about illegal immigrants.

    I don’t see how you’re going to be able to influence the public and media on a topic such as this. Maybe if you wrote a great paper or book on the tight money of the last 2 years, maybe that would have influence on intellectual academics. But when it comes to public policy, it takes a very long time until things get moving.

    Best,

    Joe

  4. Gravatar of StatsGuy StatsGuy
    19. September 2010 at 12:56

    You do realize that the argument isn’t with the left right now? – it’s with the pop-Hayeckians, who completely fail to distinguish between Keynes and Friedman. According to the pop-Hayeckian’s out there (Zero Hedge), Bernanke’s Fed is printing money as part of the last gasp of the great Keynesian Experiment. Hayek’s Road to Serfdom has spent several weeks at the Amazon #1 sales rank this year.

  5. Gravatar of ssumner ssumner
    19. September 2010 at 13:12

    Benjamin, You said;

    “You haven’t blogged enough, written enough op-eds, formed a coalition, thought up a campaign with the proper language and politically persuasive arguments.

    We are a democracy, and ideas have to get into the “public square” to be battered about. It’s rough stuff, but you gotta get in there.

    How about the top three QE’ers requesting a meeting with the President or the Fed?

    Writing editorials for the WSJ, NYT and WaPo?

    Frame your arguments so that you are not classified as “liberals.” Talk about economic growth, job creation, that an agressive monetary policy means less fiscal policy and smaller deficits. Cite Milton Friedman. Define non-Qe’ers as “do-nothings” or the “Japan Wing” of the Fed.”

    Of course constructive criticism is always useful, but I’m pretty sure I have done more of what you describe here than anyone else on the planet. I often cite Friedman. Indeed right now I am working on an article for a important publication, advocating inflation. I can’t force the WSJ and FT to print the articles I send them. But I have worked full time on this, without pay. I’ve done lots of debates, written lots of opinion pieces, interviews, etc, etc.

    Liberal Roman, You said:

    “Sorry, Scott, if Jim Bunning was holding up unemployment benefits because he felt they were detrimental on the supply side and wanted Fed appointees from Obama before he let the benefits go through then perhaps I would do some soul searching. But he didn’t do that. He held up unemployment benefits because….well just because it seemed tough and “conservative”.”

    Two responses. Whether the other side needs to do soul searching is completely unrelated to whether you do. (BTW, I have no idea whether you do, but I’d guess you don’t as you seem to agree with me.) But I am pretty sure the people I describe need to do a lot of soul searching. If they hadn’t gotten it wrong in 2008-09, Obama would have come right out of the gate pushing expansionary monetary policy, and there’s a good chance the economy would be doing better by now. But when I read liberal blogs all I see is gloating about the wonderful job Obama is doing, and how right liberals are about everything and how wrong conservatives are. Brad DeLong has a recent post claiming Obama’s a huge success, even with 9.5% unemplyment! The left has now implicitly admitted that I was right all along about the acute need for easy money in 2008 and 2009, but they don’t seem to realize their mistake cost the country dearly. Or that the model they relied on (Keynesianism) was bogus. The left controls the government, not the right. The right was to blame for everything up until January 20, 2009.

    If and when the right realizes where they screwed up, I’ll also ask them to do soul-searching. But they haven’t even gotten that far yet. It’s a compliment from me to liberals to point out that they have actually woken up to the need for monetary stimulus before the right did. Now they need to figure out why they were wrong 2 years ago.

    Joe, You said;

    “I can’t speak for academics, but when it comes to regular people in the public and media, I think you greatly underestimate just how ignorant people are of the Fed. Most people simply don’t know ANYTHING about it.”

    No I don’t underestimate how ignorant people are, believe me, I understand that most people don’t have a clue, indeed most microeconomists don’t really understand monetary policy (beyond interest rates.)

    BTW, this post was not about average people.

    I am not trying to influence average people, I am trying to influence people who have influence. And to some extent I am succeeding.

  6. Gravatar of ssumner ssumner
    19. September 2010 at 13:17

    Statsguy, You said;

    “You do realize that the argument isn’t with the left right now? – it’s with the pop-Hayeckians, who completely fail to distinguish between Keynes and Friedman. According to the pop-Hayeckian’s out there (Zero Hedge), Bernanke’s Fed is printing money as part of the last gasp of the great Keynesian Experiment. Hayek’s Road to Serfdom has spent several weeks at the Amazon #1 sales rank this year.”

    Read my response to Liberal Roman, I think you both completely misunderstood my post. I’m not trying to say the left is worse than the right. But until they figure out what they did wrong in 2008, they won’t be able to formulate sound policies. Hence the soul-searching would be in their own interest.

    BTW, it isn’t the pop-Hayekians who caused Obama to fail to nominate anyone for the Fed for more than a year. Or to refrain from a recess appointment. Obama’s the President, not Zero Hedge.

  7. Gravatar of TGGP TGGP
    19. September 2010 at 13:28

    I didn’t know Harless was liberal. Some would say that ambiguity is to his credit, others might disagree.

    Caplan is an interesting writer, but I don’t recall him devoting much attention to monetary theory (I think he had his fill of macro in grad school). He wrote about how he thought Bernanke was a great nominee for the position, and then later on how wrong he was about that.

  8. Gravatar of woupiestek woupiestek
    19. September 2010 at 14:07

    I think you can better give up on the soul searching on the left. Here in Europe they don’t even feel shame for having supported Stalinism and Maoism. They do change their opinion but they never admit it.

  9. Gravatar of Lorenzo from Oz Lorenzo from Oz
    19. September 2010 at 14:36

    The Left generally is not good at soul searching (this may, of course, be part of the human condition, — indeed, the more educated and knowledgeable one is, the less open to changes in outlook one tends to be — but the Left are particularly not good: they are particularly likely to believe economic fallacies, for example). People on the Left who get into soul searching about erroneous beliefs often end up leaving the Left.

    To be on the Left is to be focused on how much better things could be if society was changed: the more Left, the more better from bigger changes. That requires a very high level of confidence in one’s cognitive and moral acumen. Deciding one had got some big thing seriously wrong — and so had one’s fellow Leftwingers — undermines that sense of confidence.

    Hence decided that that is the case often leads to being ex-Left.

    A high degree of confidence in one’s cognitive and moral acumen also involves a low degree of confidence in the cognitive and moral acumen of those who do not agree. The more extensive the disagreement, the more so. Which easily becomes a status claim where one’s sense of identity is invested in the notion that disagreement with oneself is a moral and cognitive failing. The bigger the disagreement, the bigger the failing.

    Hence the way the Left treats people on the Right, and their views, are often implicit or explicit status claims. (The “they disagree because they are fools or knaves” phenomenon.) Which both leads to a propensity for ad hominem and blocks the ability to take in “wrong sourced” arguments and information. Again, this may be part of the human condition, but it is particularly intense on the Left. (Hence the paradox of progressivism: the higher one’s commitment to equality, the higher one’s status.)

    Now, you are particularly talking about economists, so people who should not, for example, believe various standard economic fallacies. But the wider points apply. And because the pattern has its internal, and shared, cognitive rewards, it tends to keep repeating.

  10. Gravatar of Benjamin Cole Benjamin Cole
    19. September 2010 at 16:14

    Scott-

    My comments were not directed personally at you–but at the QE’ers as a group. You are the stand-out, you have (I think) pushed the debate where it needs to go. Obviously, you blog regularly, and I am a loyal reader.

    I contend that QE’ers need to organize, approach the WSJ, NYT, WaPo as a group, and well as approaching public policy makers the same way.

    Accept my apologies if I sounded preachy–I was preaching to the choir, but I intended top preach to other QE’ers to join you, and present a coalition.

    If I can help link up several QE’ers, so that a group or seminal editorial can be written for the WSJ, let me know. I can even write the editorial, subject to editing for content (I am a financial writer, not an economist).

  11. Gravatar of Benjamin Cole Benjamin Cole
    19. September 2010 at 16:15

    BTW, the editorial I have in mind is, “Milton Friedman Would Have Printed Money”

    You want to catch, or hook ’em,. right away.

  12. Gravatar of Jeff Jeff
    19. September 2010 at 16:42

    Few laymen understand monetary policy and/or the workings of the Fed, but that does not excuse the failure of liberal economists to call for monetary stimulus. The only reason I can think of for their silence is that if they had acknowledged that the Fed can stimulate aggregate demand at no cost to the taxpayers, they could not have passed the stimulus bill, which was larded with payoffs to liberal constituencies. Never underestimate the venality of partisan hacks.

  13. Gravatar of David Tomlin David Tomlin
    19. September 2010 at 17:37

    Jeff, I think you’ve nailed it.

    For liberals fiscal stimulus means spending. For conservatives it means tax cuts. That may be the reason that liberals are re-discovering the monetary alternative just before the midterm elections.

  14. Gravatar of wcw wcw
    19. September 2010 at 20:28

    On-topic: the bulk of the politicians and policies described here as left/liberal are Eisenhower Republicans. Critique of these is not soul-searching for the left, but for the center. And even were I more centrist, a temptation I have managed to resist, I don’t think critique of their policy would pose much difficulty. Krugman makes a lot of noise, but he’s a Clintonian centrist himself, and appears to have equally little trouble criticizing the Obama administration’s errors.

    Off-topic: if you ever catch yourself writing about ‘the Left’ in North America, I earnestly hope you refer either to a brief window around 1966 or to the era before the first Red Scare.

  15. Gravatar of Lorenzo from Oz Lorenzo from Oz
    19. September 2010 at 20:51

    wcw: the bulk of the politicians and policies described here as left/liberal are Eisenhower Republicans.
    How many Eisenhower Republicans support gay rights, large expansion in health care, affirmative action, expansion in welfare compared to 1955, lower defense spending …?

    And not a lot hangs on the term ‘the Left’, given that Scott clearly meant it in the “left of the American centre” sense. It is about the side of politics which is focused around a future-ideal sense of moral achievement, not necessarily the specific (and somewhat dated) version of nationalisation of the means of production and distribution.

  16. Gravatar of greg ransom greg ransom
    19. September 2010 at 21:48

    Obama claims he’s read both Friedman and Hayek.

    You can believe him, or not believe him, but that’s what he claims.

    You can find the quote on my blog.

  17. Gravatar of scott sumner scott sumner
    20. September 2010 at 05:29

    TGGP, Actually I don’t know either, but his comments on my blog sort of challenge me from the left (on China, etc.) so I put him there.
    I agree about Caplan, but he did mention it a few times.

    woupiestek, Good point. But I am also talking about the sort of sensible center-left economists who didn’t support Stalin and Mao. I also think people may have misunderstood my post. I am not asking people to apologize. I make lots of mistakes too–I supported the Iraq war. The point was to get them to re-evaluate their (Keynesian) model. I think it led them in the wrong direction.

    Lorenzo, Those are all very good points, but also read my reply to the previous comment.

    Benjamin, No need to apologize, you are one of my favorite commenters.

    Jeff, That may be part of it, but I’m convinced it wasn’t all. I debated with liberals who I personally know are very idealistic, and they were shocked that I thought monetary policy could help at the zero bound. I had to explain to them how it would work. They were genuinely confused. At least some were. Now Krugman is a more complicated case.

    David, Good point.

    wcw, The terms left and right are obviously relative terms. I am referring to the 50% of the population that are more liberal, when I use that term. (Basically people who vote Democratic.) You said;

    “Krugman makes a lot of noise, but he’s a Clintonian centrist himself, and appears to have equally little trouble criticizing the Obama administration’s errors.”

    I don’t know if you read Krugman, but 99% of his criticism of Obama is that Obama is too conservative. And Obama is obviously to the left of Clinton. So no, Krugman is not a Clintonian centrist. Maybe in the 1990s, but not today.

    Lorenzo, That’s right.

    Greg, Did he read Friedman on capitalism, or on monetary theory? I’d guess the former.

  18. Gravatar of David Tomlin David Tomlin
    20. September 2010 at 11:08

    StatsGuy:

    According to the pop-Hayeckian’s out there (Zero Hedge), Bernanke’s Fed is printing money as part of the last gasp of the great Keynesian Experiment. Hayek’s Road to Serfdom has spent several weeks at the Amazon #1 sales rank this year.

    It’s been a long time since I’ve read that book. I don’t recall it having much to say about monetary policy.

  19. Gravatar of OGT OGT
    20. September 2010 at 17:50

    I am more than a couple of notches below your primary target audience within the econo-sphere, but I’ll respond for myself.

    I think, I have been relatively consistent in writing in favor of an end to the dual mandate in favor verifiable targets, either Taylor rule-ish target or NGDP (which you and David Beckworth have been very convincing on). And I think I have also been somewhat skeptical of the efficacy of quasi-unconventional methods of easing, especially under the nebulous dual mandate.

    Credible promises of future inflation are, I think, more difficult to conjure than you sometimes seem to imply. (The idea of a discount rate for future promises that varies with time, political risk, liquidity constraints, and so on is, I believe, instructive in thinking about it).

    Beckworth in one post mentioned “regime change” as part of the formula to achieve credibility. I have felt that the separation between fiscal and monetary policy was a mostly useful convention, that should be scrapped when the zero bound is reached (but that mostly comes from Post Keynesian economists, not NK or OK). Had ARRA been money financed with contingent future money stimulus based on nominal goals been in place no one would have had to debate IOR or any other such thing.

  20. Gravatar of OGT OGT
    20. September 2010 at 18:35

    Lorenzo- I think your poli sci model is a bit over simplified. It is true that a consistent feature of the left leaning political movements is to favor political action to effect change, which requires a bit of hubris. But if we’re going to make our broad generalizations complete, you have to include the right’s most consistent feature, which is status quo bias, whatever IS is good. And whatever IS must be the result of natural forces that we shouldn’t tamper with.

    The quintessential example is, of course, slavery, which was supported by right wing movements up until its last days. And this isn’t just a US phenomenon, the Conservatives in Britain resisted outlawing slavery in India (along with forced marriage of ten year olds) long after both were outlawed in Britain out of respect for “tradition.” (To their credit they opposed the Christian proselytizing in favor on the British Evangelical left).

    Now right leaner mostly favor a neo-liberalish policies, because that is the system in place. In aristocratic times right leaners favored the aristocracy, because that was the system in place. Stopped clocks and so on….

    (Of course, political parties in practice are different in that they represent interests more than ideas, right or left).

    Sumner- A bit of topic, but in a previous post you wrote: “China is more fragile than it appears to outsiders. For instance, a strong yuan put deflationary pressure on the Chinese economy in the late 1990s.”

    I took that to mean that you were implying that the PBOC in the face of a rising Yuan was unable to offset the effects through other monetary means, though it was motivated to do so. That seemed, to me, to conflict with other things you’ve written at least if the change in exchange rates was considered an exogenous shock. But in the comments you felt, I mischaracterized your views. That wasn’t my intention, I think I simply misinterpreted you

  21. Gravatar of wcw wcw
    20. September 2010 at 20:14

    Lorenzo, Ike integrated the armed forces fourteen years before the Voting Rights Act. (If you want to get picky, it he was executing a Truman-era Executive Order, but compare to the two decades it took Clinton-Obama to integrate gay soldiers). Eisenhower was against single-payer, but so is Obamacare. Ike proposed a plan of federal reinsurance for health insurers in 1954, a large expansion in health care. And ‘the Eisenhower administration was not hostile to the American welfare state, and even extended it in areas such as social security.’ [Presidential Studies Quarterly, Sep 2009] If anything, today’s Democrats are to the *right* of Eisenhower.

    Sumner, my ‘the Left’ comment was for commenters who capitalize. As for Obama, I agree that Krugman sees him as too conservative. I disagree that Obama is to the left of Clinton, but I can be convinced otherwise. However, I don’t think it will be easy to convince me that Democrats these days are to the left of Eisenhower. I wouldn’t necessarily be a big fan of a return of the postwar North American liberal consensus, but it was certainly a good deal further left than anything floated as reasonable national policy today.

  22. Gravatar of scott sumner scott sumner
    21. September 2010 at 06:20

    David Tomlin, Hayek and I both favor NGDP targeting.

    OGT, I don’t know of any attempts by governments to create inflation that failed. As Jim Hamilton once said “Put me in charge and I’ll show them how to create inflation.

    Regarding China in the late 1990s, they were tied to the dollar as it rose against other currencies, especially in East Asia. This caused China to go into deflation, despite some fiscal stimulus.

    wcw, The federal government shrank quite a bit under Clinton (as a share of GDP.) I have a hard time finding a single conservative move by Obama. Clinton cut capital gains taxes, forced millions of women on welfare to go get jobs, signed Nafta, deregulated banking. So yes, I think he was at least slightly more conservative than Obama.

    But I agree that it’s hard to compare the two, as the circumstances were different.

  23. Gravatar of Checking the Tape «  Modeled Behavior Checking the Tape «  Modeled Behavior
    23. September 2010 at 04:14

    […] ~ September 23rd, 2010 in Economics | by Karl Smith Scott Sumner complains that liberals are suddenly changing their tune on monetary policy. Perhaps, but this is the time to make love not […]

  24. Gravatar of TheMoneyIllusion » Response to Karl Smith TheMoneyIllusion » Response to Karl Smith
    23. September 2010 at 05:43

    […] I recently did a post entitled: “No Soul-Searching on the left?” […]

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