Acemoglu and Robinson "Fiscal Expansion Is Not Left-Wing Because Do You Know Who Else Was in Favor of Expansionary Fiscal Policy in a Depression? HILTER!1!!" Blogging
Mark Thoma sends me off to read Daron Acemoglu and James Robinson:
Inequality and Keynesian Economics: Paul Krugman and Robin Wells have an interesting article in the Occupy Handbook…. Krugman and Wells… [argue] that the huge increase in income inequality has also had major political consequences… the main corrosive effect of this inequality is in preventing Keynesian policies to combat the recession 2007-2008 and the sharp increase in unemployment that resulted. The idea here is that the “right” (the GOP) opposes any government intervention, and Keynesian fiscal policies and work programs that would have increased employment and combatted the recession are opposed by the right because, with increased inequality, they have become more beholden to the very wealthy.
Though intriguing, this idea is not backed up…. [T]he distinction between “right” and “left”… is not a natural one when it comes to Keynesian economics and policies. Many conservative politicians, and not just Nixon and Reagan, have embraced Keynesian economics…. [A]n economic history of Nazi Germany by Dan P. Silverman is entitled *Hitler’s Economy: Nazi Work Creation Program, 1933-1936…
My first reaction is that clearly Acemoglu and Robinson are not aware of all internet traditions. On the internet, any declaration that a position usually seen as left-wing in some sense--vegetarianism, say--is actually not left-wing at all because IT WAS SUPPORTED BY HILTRE!!1! is greeted with raucous laughter, and taken as an admission that you have no good arguments. The rhetorical principle that the side of the argument that says "Hitler" first automatically loses functions as a remarkably good heuristic, and also increases civility--for people really do not like being told that their policies are bad because they were Hitler's policies, and tend to respond in impolite ways.
My second reaction is that I do, to some extent, understand what Acemoglu and Robinson's impulse is here. The idea that we should engage in technocratic interventions in the macroeconomy to provide a stable economic environment in which free men and women can make their plans live their prosperous lives is, as John Maynard Keynes wrote back in 1936, "moderately conservative": it is in its essence neither left nor right, but merely sane.
The question of what technocratic interventions work best--pegging the price of gold, constant reserve stock, stable money growth rule, lender of last resort, nominal GDP targetting, automatic stabilizers, deposit guarantees, expansionary fiscal policy at the zero nominal lower bound--is not a question of values and goals, but rather a pragmatic question of what works, of what macroeconomic policy is properly "neutral" rather than deflationary. And that is an empirical-technocratic question, rather than a value-philosophical one.
But, even so, right here and right now both the policies of fiscal expansion in a depression advocated by John Maynard Keynes and the policies of massive quantitative easing in a depression recommended by Milton Friedman are strongly left-wing policies--not right wing ones. And, right here and right now, higher income and wealth inequality in our system of money-driven politics has strengthened the right. Thus I have a hard time reading Acemoglu and Robinson's resort to Hitler as anything other than an attempt to divert attention away from these facts.
But why do they do this?
I think that, once one recognizes this fact that both Keynes and Friedman are to the activist left of even the left edge of today's policy spectrum, one cannot then escape the conclusion that today the entire right wing and a good part of the center is simply not sane. The position of the right today is, in essence, that (a) because the top managements of highly-leveraged money-center banks were unable to understand or control their derivative books, (b) tens of millions of additional people must be doomed to poverty and unemployment, for (c) the market giveth and the market taketh away: blessed be the name of the market.
And this is simply nutso.
Our technologies, resources, and preferences are what they were in 2007, and high unemployment because we will not repair our magneto is a choice, and a disastrous one, and an insane one, and a right-wing one.
Acemoglu and Robinson, I think, want at some level to be thought of as Very Serious People, as part of the Bipartisan Center. They do, I think, fear that if they took those additional logical steps that they would find themselves dismissed as "shrill"--as like Paul Krugman and company.
So they try to avert their own--and everybody else's--gaze from the fact that right now to be truly technocratic and nonideological is to be advocating policies that are left of the entire political structure.