Monday, November 10, 2008
Krugman warns about the dangers of caution
In times like this the timorous easily fail to reach their goals. Dr Paul points out that even FDR stumbled when he let caution get the better of him, and that is why he urges the next administration to go all the way with fiscal stimulus, and then a little bit farther.
The political lesson is that economic missteps can quickly undermine an electoral mandate. Democrats won big last week — but they won even bigger in 1936, only to see their gains evaporate after the recession of 1937-38. Americans don’t expect instant economic results from the incoming administration, but they do expect results, and Democrats’ euphoria will be short-lived if they don’t deliver an economic recovery.Or as George C Scott so famously said, "L'audace, toujour l'audace!"
The economic lesson is the importance of doing enough. F.D.R. thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy and with his legacy. My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little.
In short, Mr. Obama’s chances of leading a new New Deal depend largely on whether his short-run economic plans are sufficiently bold. Progressives can only hope that he has the necessary audacity.
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The Chinese just declared they were going to put 7% of their GDP into a stimulus package consisting of massive public works projects and social welfare projects such as hospitals and schools. That's bold thinking.
We'll have to see what Obama does, but if it's less than what the Chinese are doing, we can figure he's thinking small, not thinking bold. We need pragmatic solutions right now, not ideology. We have a bad case of the "isms" right now, and you just can't govern effectively if everything you do must be "ideologically correct" and vetted by the ideologues before you do it.
- Badtux the Ism Penguin
We'll have to see what Obama does, but if it's less than what the Chinese are doing, we can figure he's thinking small, not thinking bold. We need pragmatic solutions right now, not ideology. We have a bad case of the "isms" right now, and you just can't govern effectively if everything you do must be "ideologically correct" and vetted by the ideologues before you do it.
- Badtux the Ism Penguin
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