Davidf Brooks comes out swinging against liberal technocrats. He doesn't name Paul Krugman, but he could have!
Many of the psychologists, artists and moral philosophers I know are liberal, so it seems strange that American liberalism should adopt an economic philosophy that excludes psychology, emotion and morality.
Yet that is what has happened. The economic approach embraced by the most prominent liberals over the past few years is mostly mechanical. The economy is treated like a big machine; the people in it like rational, utility maximizing cogs. The performance of the economic machine can be predicted with quantitative macroeconomic models.
These models can be used to make highly specific projections. If the government borrows $1 and then spends it, it will produce $1.50 worth of economic activity. If the government spends $800 billion on a stimulus package, that will produce 3.5 million in new jobs.
Everything is rigorous. Everything is science.
I especially like this:
Other [critics and skeptics] get moralistic. This country is already too profligate, they cry. It already shops too much and borrows too much. How can we solve our problems by borrowing and spending more? The liberal technicians brush this away, too. Economics is a rational activity detached from morality. Hardheaded policy makers have to have the courage to flout conventional morality — to borrow even when the country is sick of borrowing.
That's right - Obama needed to find the courage to let Nancy and Harry buy every bit of pork that had accumulated on the Democratic wish list during the darkness of the Bush years. Bold! The economy may yet limp into recovery in time to give Obama some oxygen for 2012. However, unlike Reagan in the depths of 1982 or Clinton in 1994, Obama can hardly run as the man with a plan who made the tough choices. Flipping the keys to Nancy and Harry was the opposite of leadership.
RESPONSE: Krugman fires back:
Second, David would have us believe that the Obama people were misled by their excessive faith in models. But we actually know what happened when the stimulus was being discussed: the modelers, who said that we needed something much bigger, were dismissed in favor of gut feelings about market psychology.
We will never know whether a bigger stimulus would have been effective. One might wonder about the availability of even more shovel-ready projects, and of course, Krugman would have experienced terminal apoplexy if the stimulus was made larger by way of tax cuts.
On the other hand, Krugman is correct in saying that some economists, himself included, thought the stimulus was too small at the outset. Krugman has less to say about Keynes' "animal spirits", upon which Broks harped; I don't think many people believe that Barack, Nancy and Harry inspired the confidence of the business community.