The United States has entered the era of the experiment. President-elect Barack Obama is putting forward an infrastructure program whose plans and price tag are unclear. Treasury Secretary Henry Paulson whipped up the Troubled Asset Relief Program to buy up bad mortgage instruments, and, expanding on that experiment, President Bush wants to try extending TARP to autoworkers. The idea that experiments are warranted in current circumstances comes from the New Deal.
No – the logic behind the Troubled Assets Relief Program’s variation that the government make direct equity investment in troubled financial institutions by many economists including Paul Krugman:
Before I explain the apparent logic here, let’s talk about how governments normally respond to financial crisis: namely, they rescue the failing financial institutions, taking temporary ownership while keeping them running. If they don’t want to keep the institutions public, they eventually dispose of bad assets and pay off enough debt to make the institutions viable again, then sell them back to the private sector. But the first step is rescue with ownership. That’s what we did in the S&L crisis; that’s what Sweden did in the early 90s; that’s what was just done with Fannie and Freddie; it’s even what was done just last week with AIG. It’s more or less what would happen with the Dodd plan, which would buy bad debt but get equity warrants that depend on the later losses on that debt.
Paul has been critical with certain aspects of TARP but he notes that not only has the basic idea of equity infusion is what financial economic theory suggests is a viable policy means for addressing the financial crisis but it has also been successfully tried.
The logic behind fiscal stimulus in general was explained in the 1936 General Theory authored by Lord Keynes. Lawrence Summers recently explained the specific logic behind Obama’s call for an acceleration of infrastructure investment. Summers appeals to conventional economic wisdom and not some longing for the New Deal.
While her alleged ties of the current policy proposals to the New Deal falls in its face, Shlaes repeats her debunked claim that the New Deal made the Great Depression worse:
Modern economists, monetarist or Keynesian, have not rejected this story line. The trouble with the 1930s, in their view, is that government did not fiddle enough. Had the Federal Reserve, the Treasury or the White House fiddled more, the Depression might have been shorter or less severe. The New Deal Fed, they say, never got the price level quite right. Or, the New Deal stimulus programs were too little. And so on. But there is significant evidence that the very arbitrariness of the New Deal made the Depression worse.
What is this “significant evidence” you ask? Oh yea – the past writing of one Amity Shlaes! If the Washington Post really wants to make an argument against Obama’s fiscal policy proposals, might I suggest they find an economist rather than a discredited rightwing hack to make that case?
18 comments:
You mean the discredited right-wing hack that keeps getting invited onto the talk shows and treated preferentially and deferentially by Russ Roberts (as opposed to, say, Eric Rauchway, whose interview at EconTalk was used as an excuse for Roberts to bash unions)?
I don't disagree that the Trust Fund Baby is a right-wing hack, and that her, er, "research" wouldn't have passed muster for an undergraduate assignment, but she's a celebrated right-wing hack.
It is amazing that she gets such attention, this English lit major, although I suppose I should not exhibit such prejudice against someone who works at the Council on Foreign Relations, wrote a book making this argument about FDR, and gets to write columns in WaPo that get specially highlighted. Bah!
Ms Shlae's career accomplishments in the absence of any academic preparation high lights the true nature of that career. Is Ms Shlaes hired and admired by so many organizations because of her analysis of ideas or because of the content of her analysis. A slight, but significant difference. In the media, especially that sector of the media concerned with politics and its association with economic concepts, contributors are most often supported and promoted on the basis of their ability to represent a specific point of view.
Ms Shlaes does a good job of representing the perspective of wealth and priviledge. She is not called to account for the inadequacey of her ideas because those ideas are shared by the people who support the venues through which her ideas are spread.
When viewed in this manner, Ms Shlaes academic preparation for her career makes perfectly good sense. She is schooled in the art of fiction, the representation of things as some may want them to be known, not what they may actually be. In the not too distant past one would usually refer to such professionals as publicists rather
than analysts. The world has changed and with it the nature of some aspects of journalism.
I'm new to this site. I'd like to know more about the author, Progrowthliberal. Where can I find some biographical information, such as name, degrees, work experience, etc? Thanks.
No – the logic behind the Troubled Assets Relief Program’s variation that the government make direct equity investment in troubled financial institutions by many economists including Paul Krugman
This sentence no verb.
Anonymous. Well I am not particularly new to this site.
But what I'd like to know is why someone who is not willing to provide even a screen name feels entitled to any information about PGL at all. It is awfully nervy of you. He can respond or not but obviously he has no obligation to do so, and certainly not to an anonymous stranger.
You're right. And neither does this one. By design?
"This sentence no verb."
enariast
Bruce,
Your knee-jerk defensiveness is curious. Most blogs have an "About" page. I couldn't find one here, and don't tend to return to bloggers who don't provide at least some basic info about themselves. After I get it, I'll be happy to reciprocate.
In theory, PGL is trying to attract a reading public. I'd like to know who's behind the words before committing more time to reading them. Pretty simple, huh?
Anon - there are several bloggers who choice not to publicly display their real names. I was advised NOT to by Angrybear when I first started blogging. Yes - I have published both in academic journals as well as the journals of my current business consulting profession. If my slight left of center positions were associated with my real name - I doubt I could continue my current consulting profession. Freedom of expression ain't exactly the real world for some of us. Alas.
I wasn't trying to be obscure, and I post (almost always) under my real name.
The subject of the sentence I quoted is "the logic".
The sentence I quoted has no verb at all.
So you can think of me as an annoying pedant, or you can think of me as a careful reader who is actually paying attention to what's written.
PGL,
Thanks for the info; that's all I need to know. FWIW, taking verbal potshots at public persona while choosing to hide behind a cloak of anonymity is a bit hypocritical, and doesn't rank too high on the fairness scale. Your choice, though.
Anonymous anyone who hides behind the screen name 'Anonymous' has no right to pass judgement on anyone at all. It is a simple attempt to duck responsibility for comments across threads on the same blog and certainly across blogs. It is not like we are demanding a real name, just some basic intellectual accountability.
PGL has established a public voice in the same way that Atrios did and Digby and Tanta. Each for various reasons chose not to reveal their actual birth names for some time but did not by that fact lose credibility. Whereas in my pretty long experience with blogging people who deliberately chose the screen name 'Anonymous' or 'Anon' or 'NoName' or 'Formerly Anonymous' are overwhelmingly blowhards who attempt to assert authority which they have not in fact earned. They tend to lay down the law while simultaneously challenging other peoples' credentials. Maybe I was wrong to read your first comment that way, but I have to say your second comment pretty much confirms it.
I am not or at least have not been a public figure and had relatively little skin in the game by using my own name. But it wouldn't matter, for all anyone really knows my birth name might be Miles McGillicudy, but the chances are real good that if in travelling across the econo-political blogosphere that comments signed 'Bruce Webb' are in fact by me, an identified persona with intellectual responsibilities to back my mouth with logic and links. Which is to say even bloggers with assumed screen names have a level of earned authority that people who simply post as Anon or any of its variants do not.
I front page post on an econoblog where about half of the posters use their real names while the rest use some sort of screen name. Some of the latter are known by real name to the other posters, while others remain truly hidden. Which doesn't mean the DOLB or Stormy are not responsible for the content they post. Do I know their actual names. Well maybe yes and maybe no. Do I know pgl's actual name. Well as it turns out no, on the other hand I know people who do, if for some reason it became vitally necessary for me to know more details I could probably find out. But mostly it isn't, I know him from his content over the years and if he wants to critique some person who happens to be a named public figure he has every right to without some snarking 'Anon' asking the question 'Well who do you think you are?'
If you want to defend Amity's thesis then go right ahead. It is just that nothing in that gives you a right to check anyone's credentials at the door. In these matters you are what you post. If you post drivel in the pages of major newspapers then you can expect hordes of critics with some being named public figures, others being named private figures, and others using some sort of screen name. And there is exactly nothing unfair about that. As long as you maintain one or more unique identities that allow others to track your opinions across time and blogospace. A test that all Anonymous's fail.
Hi Bruce,
Looks like I really struck a nerve.
I said I'd reciprocate, and I stand by it. If PGL reveals his info, I will reciprocate. If he doesn't, I will reciprocate. So far, the only difference between the names "Progrowthliberal" and "Anonymous" is a few letters in a screen name.
FYI, I have met and conversed with several of the people PGL admires, and also several of those he ridicules. They all have at least a few things in common: they are articulate and intelligent; they are also polite and respectful of others who hold opposing views, and they treat them with respect. In short, they are skillful at disagreeing without being disagreeable as they engage others in public debate. They know that decorum and respect for others should not be confined to one's chosen ideological group. Regarding those traits, by the way, the most skillful I've met so far is Dr. Russell Roberts at George Mason University. His podcasts at EconTalk are educational, largely because of his skill in that area.
Lastly, I know little to nothing about Amity Shlaes, and therefore have no opinion about whatever she has written. But after I read this artcle and checked a few others, I was just wondering to myself, hypothetically, how PGL would react if Amity decided she'd like to address her accuser publicly. That's when I started looking for an About page. I didn't find one, and now I know why. And, as I said, I now know everything I care to know about this blog.
Thanks for your time.
Anon - are you willing to make sure I can have gainful employment if I let the world know my proper name? Yes, abiding by your request would likely mean the end of my consulting career. So if I want to work, I guess you would have me never voice my views on any topic again.
PGL,
How you present yourself to the public in either walk of life is obviously your decision, not mine or anyone else's. [FWIW, in my experience, openness and honesty in all walks of life tend to yield more positives than negatives -- including personal income.]
I have now used up more than my share of your bandwidth. Thanks for your time.
Amity Shales is a Right wing hack and fool
I forget add on you are wrong to Defend Amity Shales she is a fool and right wing tool
Funny how I can't seem to find any history on Amity Shlaes before her schooling at Yale. Methinks this info may betray something of a higher standard of living relative to most Americans. I wonder if she knows what it's like to not be able to put money in a savings account, let alone pay your rent.
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