It's Another Game of Dingbat Kabuki! (Why Oh Why Can't We Have a Better Press Corps?)

And it's yet another game of Dingbat Kabuki, as Fred Barnes blathers away about Federal Reserve Heir Apparent Ben Shalom Bernanke on the opinion page of the Wall Street Journal. It's amazing how many misrepresentations Barnes can pile into a short column:

WSJ.com - Why Bush Picked Bernanke: WASHINGTON -- President Bush knew exactly what he wanted yesterday when he picked a successor to Alan Greenspan as chairman of the Federal Reserve Board. He sought a nominee as risk-free as possible.... Alone among the candidates, Mr. Bernanke had no detractors.

That was only one of his strengths. He is an expert on monetary policy and that, of course, is what the Fed sets.... President Bush had another major concern: protecting his economic policy. He wanted a Fed chairman who wouldn't differ sharply with his emphasis on tax cuts and tolerance of large budget deficits.... President Bush, like President Reagan two decades ago, feels economic growth is more important than deficit reduction...

But on page 598 of Ben Bernanke and Robert Frank (2001), Principles of Economics (New York: McGraw Hill: 0072289627) http://www.amazon.com/exec/obidos/asin/0072289627 we find:

Suppose the government increases spending without raising taxes, thereby increasing its budget deficit.... An increase in the government budget deficit... reduces public saving... [and] will reduce national saving as well.... At the new equilibrium F', the real interest rate is higher at r', and both national saving and investment are lower... the government has dipped further into the pool of private savings to borrow the funds to finance its budget deficit... investors [must] compete for a smaller quantity of available saving, driving up the real interest rate... mak[ing] investment less attractive, assuring that investment will decrease along with national saving.

The tendency of government budget deficits to reduce investment spending is called crowding out. Reduced investment spending implies slower capital formation, and thus lower economic growth.... This adverse effect of budget deficits on economic growth is probably the most important cost of deficits, and a major reason why economists advise governments to minimize their deficits....

Barnes is completely impervious to Bernanke's elementary textbook point: deficit reduction--Bernanke's advice that governments need to "minimize their deficits"--is a means to faster economic growth. Bernanke is as "unfriendly" to a high-deficit long-run fiscal policy as is Kohn or Ferguson--or Feldstein, for that matter.

Barnes blathers on:

It was President Bush's fear of a Fed chair hostile to his policy that doomed Mr. Greenspan's candidates -- Fed vice chairman Roger Ferguson, 54, and Donald Kohn, 62.... Even at the risk of slowing the economy, the White House was told, they would continue raising interest rates so long as the president refused to raise taxes and seriously address the deficit...

Yet if Barnes had gotten to page 753, he would have seen what Bernanke advises a central bank to do in the case in which a budget deficit produces:

[the] source of inflation [which] is excessive aggregate demand, which leads to expansionary output gaps.... To reduce inflation policymakers must reduce aggregate demand, usually through tight monetary policy [i.e., high interest rates]... reduced output and higher unemployment... a recessionary gap. These short-run costs of disinflation must be balanced against the long-run benefits of a lower rate of inflation...

There's no daylight between Bernanke and Ferguson-Kohn here either.

And there's still more!

Glenn Hubbard, 47... worked for President Bush in his first term. Mr. Hubbard, now dean of Columbia Business School, was CEA chief. He favored the Bush policies of tax cuts and partial privatization of Social Security, but the president felt Mr. Hubbard sometimes talked down to him...

I do think that of mainline Republican economists Ben Bernanke is the best choice for Fed Chair--monetary policy is his thing. Glenn Hubbard is much better qualified for the most senior jobs at the Treasury. But to refuse to consider Glenn Hubbard's extremely strong merits because Bush's feelings are hurt because he thinks Glenn "talked down" to him... that's a hell of a way to run a personnel selection process, that's all I'm sayin.

Comments

[econreason]

Fred Barnes! Why even bother reading, much less responding to this blathering twit? I've heard of straw-men, but this guy isn't even a straw-parody.

[Earl Hathaway]

Sorry, but it's got to be said. Is there anyone mildly versed in Economics -- say someone who passed Econ 102, intro macro -- who wouldn't be talking down to the President? I'm overstating the case, but only slightly...

[Robert Edward Johnson]

1. I agree that deficits can be an awful thing that limit growth.
2. While I'd agree that Bernanke is not 'officially' (in his textbooks) in favor of deficits-for-the-hell-of-it, old-line-Keynes-style (as most of the profession was until the 1970s and as many were until the Clinton 1990s), I'd agree that Reagan and Bush both had and have deficits and that Bernanke's fairly Keynesian views (relative to Lindsey and Hubbard, and probably relative even to Feldstein and Taylor) are one of the 'real' reasons that Bush wanted Bernanke (relative to more 'monetarist' or 'rat-ex' types like Lindsey and Hubbard).
3. I think we'd also agree that while Reagan's deficit had at least SOME merit along the lines of saying, "let's double the defense budget so as to bring the USSR to its knees" (which appears to have worked!), just as one's PERSONAL deficits can sometimes have merit (e.g., borrowing for a house), that Bush's are FAR more questionable.
4. Since most post-Clinton liberals (unlike 'sixties' types like Walter Heller) DO seem to understand that deficits suck, I feel that liberals AND true conservatives (as opposed to Bush hack Republicans) AND libertarians would agree that Bernanke is, relative to Lindsey and Hubbard, thus an 'enabler' for Bush's worst failings which are becoming LBJ-esque and for exactly the same reasons. Indeed, Lindsey even accurately quantified the costs of the war in advanced and, arguably, was fired for it.
5. TO that extent, I feel that there's an analogy politically speaking between what Bush did in the Miers nomination (or more accuratly the Roberts nomination) in that he didn't pick someone whom the political right would love (e.g., Hubbard or Lindsey for the Fed, or a hard-core U of C economic analysis of law type for the Supreme Court) who would be GUARANTEED of trying to oppose Bush on deficits, but picked someone who was sort-of-OK ideologically on some issues but is arguably an enabler for Bush on others (once again, not as Barnes was saying but merely relative to Lindsey or Hubbard, as arguably Mankiw was from the get-go - free market on micro, but Keynesian on macro - you could almost predict the Bush deficits from the Mankiw pick!). It's also arguable that just as Roberts was confirmable in a way that, say, a hard-core Chicago guy like Richard A. Epstein or Posner was NOT (or their ilk), Bernanke, Feldstein, or Taylor were confirmable in a way that Lindsey or Hubbard (regrettably in my opinion) were not, or at least not as easily. Just as there are not only conservatives grumbling about Miers, but who are frankly still grumbling (with some justification) about the Marcel Marceau performance of Roberts, I suspect that the already-hacked-off right is privately going nuclear over the fact that Bush didn't try to 'pick a fight with the left' by picking Lindsey or Hubbard any more than he tried to 'pick a fight with the left' in either the Miers or Roberts nominations. With what parts of what I've said would you disagree and with what parts of what I've said would you agree?

[anne]

Ben Bernanke is a fine choice, for he will be open to many influences and not set aside the mandate of the Federal Reserve to attend to employment. Martin Feldstein and Glenn Hubbard as far as my experience tells are adamant about beliefs that should at least be questionable and both seem forever to be publicly snooty and individually forever talking down to others.

[ilsm]

"I think we'd also agree that while Reagan's deficit had at least SOME merit along the lines of saying, "let's double the defense budget so as to bring the USSR to its knees" (which appears to have worked!), just as one's PERSONAL deficits can sometimes have merit (e.g., borrowing for a house), that Bush's are FAR more questionable."

I am not sure that $800 hammers, the MV 22 and numerous other expensive things that still are not on line had much impact on the decline of the Soviet anomoly.

That would have happened anyway, the Pope from Poland had more to do with it than the insane national defense welfare programs both side waged against eachother's economic well being.

Neither deficits nor the preparation for war are good things.

Clinton enjoyed a decline in national security welfare outlays which could be if you look have resulted in part of the expansion.

Technical people had to go work on real science not star wars, and that benefited the next tech wave that made the surpluses.

I am not sure you could live in a star wars radar site.............

Or that a silo in Alaska with a missile that has never worked in benign tests is sane.

[SERO]

Bush is clearly unqualified to pick a central banker, so who did ? Is there an appointments committee that presents candidates for the rubber stamp ?

[realist]

if bernanke is an "enabler", then so is greenspan. they are both political whores, who will bend to the wishes and desires of bushco and the wall street pump and dumpers. they do not act. they react. they frequently refute their own previous pronouncements. they do, however, give serious attention to which way the political wind is blowing.

[A Reader]

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[liberal]

Brad DeLong wrote, "Glenn Hubbard is much better qualified for the most senior jobs at the Treasury. But to refuse to consider Glenn Hubbard's extremely strong merits..."

Huh? Hubbard is an established hack.

From Paul Krugman's "The Rich, the Right, and the Facts,"
http://www.prospect.org/print/V3/11/krugman-p.html

"But this report was based on what we may charitably call a strange procedure. Here's what Hubbard's report did: it tracked a group of individuals who paid income taxes in all ten years from 1979 to 1988, and compared their incomes not with each other but with those of the population at large. The restriction to individuals who paid taxes in all years immediately introduced a strong bias toward including only the economically successful; only about half of families paid income taxes in all ten years. This bias toward the successful was apparent in the fact that by the end of the sample period the group contained very few poor people and a lot of affluent ones: indeed, only 7 percent of the sample were in the bottom quintile by the sample's end, while 28 percent were in the top quintile. More important, by comparing the sample with the population at large rather than with each other, the report essentially treated the normal tendency of earnings to rise with age as representing social mobility."

[Barry]

Brad, considering that Mankiw tossed his published beliefs aside, I'd not get my hopes up of Bernanke holding to his. Bush prizes (one-way) loyalty, but he absolutely demands submission.

[liberal]

Robert Edward Johnson wrote, "I suspect that the already-hacked-off right is privately going nuclear over the fact that Bush didn't try to 'pick a fight with the left' by picking Lindsey or Hubbard any more than he tried to 'pick a fight with the left' in either the Miers or Roberts nominations."

I doubt it. Business has its class interest, to be sure, but it's not ideological in the same way that religious/social conservatives are, and business seems to have approved Bernanke.

Of course, "business" and "the economic right" aren't the same thing, but I think the economic right is content for now with gutting our Republic by destroying the tax code and having China finance our government operations.

[rea]

Let's hope that Barnes is overestimating the extent to which Bernanke has sold his soul to the Devil in order to obtain advancement, rather than Prof. DeLong underestimating the man's mendacity.

[elliottg]

I'm confused by all this analysis of the choice. I'm too simple to discern between straightforward quid pro quo and kabuki. It seemed to me that Ben Bernanke took the job as CEA chief for one reason and that was in exchange for a promise of being Fed chief. I don't believe it was required so much that he prove himself loyal by what he did during his tenure at the CEA as much as Bush needed to fill the CEA job and by that point noone was willing to endanger their reputation except someone with a powerful incentive. That's how I saw it then and that's how I still see it. I was always confused by all this informed speculation that has been going on for months that it would be anyone other than Bernanke because I always thought that he was too smart to have taken the CEA job on a gamble that he would get the Fed job or on a loyalty trial basis. Generally, whenever Prof. DeLong posted one of these articles, I posted a comment to the effect that Bernanke either got the nod or he was hating life for making a bad deal. It turns out that Bernanke got the job. I have to conclude that consideration of any other choices was just so much kabuki.

Now that Bush's approval ratings are so dismal, appointing a leading economist to the CEA job is not as important. Let the speculation begin about that because I'm clueless as who, with any kind of reputation, would want it without a big incentive (like Fed chief).

[kharris]

The "Bernanke was the safe choice" story also appears in the WP, which makes me wonder whether this is not another White House spin operation. Bernanke is not conservative enough for some, so a story must be launched which explains that, while Bush wanted somebody acceptable to right-wing nut-bags. Why was he unable to pick somebody as right-wing as he and the nut-bags wanted? Because the nut-bags have been riding Harriet Miers so hard that Bush had to go the safe route in picking a Fed Chairman.

Robert J.,

Gorbachev would beg to differ on the point that Reagan's defense spending brought the USSR to its knees. Gorbachev says he was ready to calm relations and cut defense spending in order to shore up domestic consumption, but that Reagan's bellicose manner drove Soviet generals crazy. Gorbachev thus had no choice but to distance himself from Reagan and from a more peace-nik set of policies. The army of Reagan deifiers have insisted that Reagan's policy worked so long and so loud that the other side of the story has been lost, but if we are to use that period as input for future military and foreign policy, we ought to keep the other version of the story in mind.

Oh, and what islm said, too.

[elliottg]

Two more comments one on-topic and one off.

1. How come no information about the influence of Greenspan in the selection. Wouldn't Bernanke have been his first choice? Wouldn't it have been dangerous to cross him or would Greenspan been unwilling to express any opinion to anybody (a negative opinion expressed even in private might be leaked).

2. Is the economic report on autopilot or is it not that important? With two vacancies and the transition, how does this report get properly vetted by the CEA?

[anne]

What should be remembered and changed is that conservative attackers were successful in cowing the media these last years, so that from the Washington Post to PBS there was a push to the right. The end of the week on PBS is now dominated not by the Wall Street Journal news department, but by the likes of the editorial board of the Journal. The New York Times managing editor allowed a reporter to "run amok" and slant news coverage leading the country to war. Imagine the damage.

[liberal]

kharris wrote, "The army of Reagan deifiers have insisted that Reagan's policy worked so long and so loud that the other side of the story has been lost, but if we are to use that period as input for future military and foreign policy, we ought to keep the other version of the story in mind."

Adding to this, let's suppose for sake of argument that Reagan's actions hastened the fall of the USSR. One might reasonably argue that this was laudable from a utilitarian viewpoint. However, such a line of reasoning fails to take into account "risk-adjusted returns." Part of Reagan's strategy included tactics like placing first-strike-capable Pershing missiles in Europe (well, at least that's how the Soviets saw them), which possibly greatly enhanced the likelihood of an accidental nuclear armageddon (by making Soviet trigger fingers itchier).

[Ken Houghton]

elliottg - Barnes claims that Bernanke was Mr. G.'s third choice. (Certainly, Kohn was supported by him.)

Senile old Jim Bunning was on CNBC this morning calling Bernanke the wrong choice. I feel better about it now.

[elliottg]

Thanks. I made an assumption that is invalid. I didn't read Barnes's article.

[Monte Davis]

"The army of Reagan deifiers have insisted that Reagan's policy worked so long and so loud that the other side of the story has been lost..."

To swallow the Ron-with-flaming-sword version, you have to pay a lot of attention to a handful of accounts from Soviet generals -- and none to

1) a sclerotic command economy
2) a popular cynicism about Marxism and the Party so deep as to make Howard Zinn seem like Parson Weems
3) decades of internal and satellite dissidence, with growing openness to news from the West
4) Afghanistan, Chernobyl, etc.

[realist]

bin laden said the the mujahiddin was responsible for the economic downfall of the soviet union (not reagan's defense spending). he also said that al qaeda will do the same to the u.s. wonder what bernanke would have to say about that. with the exception of backing bushco's tax cuts, he hasn't said much from his cea post.

[Howard]

i want to return to barry at 4:46 a.m.

the story of many bush administration appointments to date is of people who know better selling their souls out of some misguided sense of hierarchical authority.

Whether bernake turns out to be another of them will largely be driven by whether bush is truly weakened by the last 3 months of not.

[The Fool]

bernanke recently saud, "In the wake of Hurricane Katrina, a critical objective for policy will be helping to restore the communities and the economy of the Gulf Coast. We must also continue the types of economic policies that have brought us through these shocks and that will ensure continued healthy growth. These policies include making tax relief permanent, reducing the deficit..."

Bernanke apparently thinks that reducing the deficit is consistent with making Bush's tax cuts permanent.

[me]

"Adding to this, let's suppose for sake of argument that Reagan's actions hastened the fall of the USSR."

This argument is som bogus. Reagen just happened to be president when the USSR fell.

It was 50 years of a consistent poplicy from Congress, led by democrats most of the time and supported by the executive branch, that facillitated the fall.

JFK, with the support of Congress stood up to Russia in Berlin and Cuba.

Reagen did no more or no less than anyone one else, he just was lucky to be in charge when it took place.

[Robert Edward Johnson]

If you listen to Kharris and liberal, you'd think that Reagan's policies drove Gorby to be MORE militaristic. If that's true, why did he get overthrown by a cabal of hard-liners? I think something's quite wrong with Kharris on that one! Kharris and islm (and possibly Monte Davis would agree) feel that the Pope being Polish had a lot to do with it. Well, the Pope had NOTHING to do with the collapse of the USSR. He MAY have had an impact on de-colonizing East Europe, but even THAT'S questionable. We've had dissident movements before, such as in Hungary and Czechoslovakia (Dubcek) before the Czechs and Slovaks amicably divorced. Yet there was NEVER a hint that the USSR would lay off. Moreover, there are some who'd give the credit to Lech Walesa, and none to the Pope, since the revolutions of 1989 did, after all, start in Poland, and I suspect that Lech Walesa and his political activities had more to do with that than a Polish Pope who had ZERO political power in Poland. I suspect that EVEN with Lech Walesa, if you'd NOT had the doubling of US defense budgets, the threat of Star Wars, missles in Europe, etc., all you'd have EVEN TODAY is a history footnote about Lech and about the dead Polish Pope the same way that you can look at the 1956 Hungarian Revolution, or sad photos of Dubcek in Life magazine raking his front yard in Bratislava when he was demoted to a minor forestry post or somesuch out east. Monte Davis seems to feel that the USSR would have collapsed anyway, and lists:

1) a sclerotic command economy
2) a popular cynicism about Marxism and the Party so deep as to make Howard Zinn seem like Parson Weems
3) decades of internal and satellite dissidence, with growing openness to news from the West
4) Afghanistan, Chernobyl, etc.

Well, GEE Monte, the USSR has ALWAYS had a sclerotic command economy - unless you call the famines of the 1920s and 1930s booming growth. So since the move to Yeltsin came, oh, I don't know, ABOUT SIXTY YEARS LATER, I GUESS we're gonna have to rule out THAT cause!! North Korea and, uh, like, BURMA have VERY sclerotic economies and since they haven't overthrown THEIR governments, I GUESS we're gonna have to rule that one out. SORRY, THANK YOU FOR PLAYING. As for 2), gee, like the mass murders by Stalin in the 1930s wouldn't have ALREADY caused a revolution-by-cynicism-on-Marxism fifty years before 1990 when Hitler invaded in the early 1940s and Ukrainian women were LITERALLY throwing roses (not like Rumsfeld's fantasies, but for real, I've seen actual movie footage) in the paths of Nazi soldiers? Come on, get real. As for decades of satellite dissidence, you still have to ask the question, as I asked earlier, why the timing of it happening just after Reagan's policies, rather than at some earlier point? I don't want to simply posit post hoc ergo propter hoc, but sometimes things DO follow from other things causally, and I suspect that it is the fact that the USSR would have had to spend 20% of GDP to match us that led them to stop giving us Andropovs and Chernenkos and to give us Gorbys and Yeltsins instead. As for Afghanistan and Chernobyl, yes those were disasters for the USSR, but you can point to previous disasters that made the USSR look pretty foolish ever since 1918 but they didn't bring down the USSR. About the ONLY one of Monte's list to which I give any real credence is Afghanistan since it literally did bleed resources in a very painful way and made the Soviet Union look brutal (yellow rain) and yet pathetic and weak (since they were getting their asses kicked by technologically backward folks) at the same time. However, once again, if it HADN'T been for the Reagan military buildup, I suspect that the USSR would still exist and that they'd still be getting bled dry by the mujahedeen. I WOULD agree that IN CONCERT with the Reagan build up, the Afghanistan war was a 'good thing' for our strategy, which is one reason we, uh, so 'brilliantly' subsidized it through our CIA asset, Osama bin Laden, just as we formerly used Ho Chi Minh and later on, Saddam Hussein (since 1959). Since our use of Osama became problematic, I suspect that knocking off the USSR buld-up style WITHOUT helping Osama MIGHT have been almost as successful, and a much brighter idea for our OWN self interests. As you can tell, I'm not a war hawk per se, just a cold warrior.

[Robert Edward Johnson]

One correction - Kharris referred to islm, and I copied her on that, but it is actually ilsm apparently. I suppose she and I 'brain farted' on IS-LM curves out of Keynesian theory (or rather, Hicks' exposition of it). So ilsm, what DOES your initialed name stand for, anyway?

[lise]

Robert, what you wrote is interesting but the capitals make for harder reading and the sarcasm is tricky to get on the Internet unless quite blatant.

[lise]

We have been at war in a small poorly developed nation with no advanced weapons for 2 1/2 years with painfully little progress. I do not think we "defeated" the Soviet Union. I think the Soviet Union wore itself down economically and psychologically by the sort of arrogant over-reach that we must not fall prey to.

[lise]

It is time for Americans not to think the we can control the lives of millions on millions of people, and just try to insure that we are healthy in ourselves and protect ourselves. Imagine what we might have done had it not been for the nightmare of Iraq.

[lise]

It is time for Americans not to think the we can control the lives of millions on millions of people, and just try to insure that we are healthy in ourselves and protect ourselves. Imagine what we might have done had it not been for the nightmare of Iraq.

[tom f]

Robert Edward Johnson

"However, once again, if it HADN'T been for the Reagan military buildup, I suspect that the USSR would still exist and that they'd still be getting bled dry by the mujahedeen"

Billions of dollars on suspicion...doesn't sound intelligent to promote this as a success story of public policy. As is said of youth, money is wasted on the rich.

[tom f]

Robert Edward Johnson

"However, once again, if it HADN'T been for the Reagan military buildup, I suspect that the USSR would still exist and that they'd still be getting bled dry by the mujahedeen"

Billions of dollars on suspicion...doesn't sound intelligent to promote this as a success story of public policy. As is said of youth, money is wasted on the rich.

[tom f]

Robert Edward Johnson

"However, once again, if it HADN'T been for the Reagan military buildup, I suspect that the USSR would still exist and that they'd still be getting bled dry by the mujahedeen"

Billions of dollars on suspicion...doesn't sound intelligent to promote this as a success story of public policy. As is said of youth, money is wasted on the rich.

[tom f]

Robert Edward Johnson

"However, once again, if it HADN'T been for the Reagan military buildup, I suspect that the USSR would still exist and that they'd still be getting bled dry by the mujahedeen"

Billions of dollars of domestically useless goods spent on something that some people "suspected"...doesn't sound intelligent to promote this as a success story of public policy. As is said of youth, money is wasted on the rich.

[ilsm]

Robert Edward Johnson,

As if doubling the defense welfare establishment would have made it any more feasible to convince the Reds we would intervene in Poland in 1988.

We did not go to Budapest in '56 because it would have started WW III with nukes even in '56. And we had many more than the Reds then.

The Pershing was a reaction to Red medium range missiles not the other way and made little sense, if the Reds took out US forces in England with Nukes the UK Polaris subs would have responded.

It was all the generals demanding more jobs for their friends, sekves and kids.

In a Mexian standoff with nukes you needed divine intervention.

[Stirling Newberry]

And you can be sure that as soon as there is a Democratic chief executive that cousin Ben will squeeze all that nasty excess aggregate demand right out of the economy.

And not one minute before.

[The Fool]

I'm sorry but anyone who says he is for making Bush's tax cuts permanent and for reducing the deficit is either an idiot because he wants two contradictory things or an asshole and an idiot because he is counting on the Republicans to find sufficient savings in Social Security, Medicare, Medicaid etc.

[liberal]

Robert Edward Johnson wrote, "If you listen to Kharris and liberal, you'd think that Reagan's policies drove Gorby to be MORE militaristic."

Huh?

"Well, GEE Monte, the USSR has ALWAYS had a sclerotic command economy - unless you call the famines of the 1920s and 1930s booming growth. So since the move to Yeltsin came, oh, I don't know, ABOUT SIXTY YEARS LATER, I GUESS we're gonna have to rule out THAT cause!!"

But lots of things have happened in those sixty years. Including, for example, WWII, "The Great Patriotic War."

"North Korea and, uh, like, BURMA have VERY sclerotic economies and since they haven't overthrown THEIR governments, I GUESS we're gonna have to rule that one out."

North Korea and Burma are also extremely closed societies, much more closed than even the USSR was (post-WWII, anyway).

"As for 2), gee, like the mass murders by Stalin in the 1930s wouldn't have ALREADY caused a revolution-by-cynicism-on-Marxism fifty years before 1990 when Hitler invaded in the early 1940s and Ukrainian women were LITERALLY throwing roses (not like Rumsfeld's fantasies, but for real, I've seen actual movie footage) in the paths of Nazi soldiers?"

IIRC, the Nazis were *so bad* that eventually Ukranians changed their minds about this (during the war). Not 100% sure of that.

"I don't want to simply posit post hoc ergo propter hoc, but sometimes things DO follow from other things causally, and I suspect that it is the fact that the USSR would have had to spend 20% of GDP to match us that led them to stop giving us Andropovs and Chernenkos and to give us Gorbys and Yeltsins instead."

Andropov was something of a reformer. Even Krushchev was.

I think the big difference is that the party elite themselves were less brainwashed and more educated and could see that their system (aside from monstrous human rights violations, etc) couldn't keep up economically with the West.

[Helen]

How does an increase in the government budget deficit reduces public saving?... The government doesn't increase taxes!