Via Matt Yglesias, an interesting post from Steve Randy Waldman:
[T]he austerity debate is unhelpful. There are complicated trade-offs associated with government spending. If the question is framed as “more” or “less”, reasonable people will disagree about costs and benefits that can't be measured. Even in a depression, cutting expenditures to entrenched interests that make poor use of real resources can be beneficial. Even in a boom, high value public goods can be worth their cost in whatever private activity is crowded out to purchase them. Rather than focusing on “how much to spend”, we should be thinking about “what to do”. My views skew activist. I think there are lots of things government can and should do that would be fantastic. A “jobs bill”, however, or “stimulus” in the abstract, are not among them. If we do smart things, we will do well. If we do stupid things, or if we hope for markets to figure things out while nothing much gets done, the world will unravel beneath us. We have intellectual work to do that goes beyond choosing a deficit level.
This is very well-said, and I've occasionally fallen into the trap of arguing in favor of more stimulus without specifics. But there are "jobs bills" containing good policy ideas that are being held up by a blind allegiance to austerity, regardless of the strength of the programs. Indeed, so long as the metric of seriousness in the U.S. Senate is how many billions have been cut from a bill rather than how many smart programs it contains, anyone who believes in activist government is forced make their arguments in the aggregate.
That said, those who favor activist government need to do a better job of explaining how and why these programs work -- one of the flaws in the public debate right now, and a reason that the Democrats aren't getting as much credit for their economic policies as they should, is that people see the agregate spending but not necessarily its benefits.
-- Tim Fernholz
