When you´re clueless, hide behind the long-run!

That´s exactly what Jeffrey Sachs does, using Krugman as his ‘excuse’:

In Krugman’s simplified Keynesian worldview, there are no structural challenges, only shortfalls in aggregate demand. There is no public debt problem. There is no global competitiveness challenge, since “competitiveness” is a myth when applied to national economies. Fiscal multipliers are predictable, timeless, persistent, and large. All growth reversals can be solved through larger deficits. Politicians can be trusted to design short-term stimulus spending programmes of hundreds of billions of dollars. Tax cuts are about as good as increases in government spending, and short-term boosts in spending are about as good as long-term public investments.  Not one of these conclusions stands scrutiny.

Why have we come to this vacuous debate between free-market extremism and a Keynesian superficiality that addresses none of the subtleties, trade-offs, and uncertainties of the real situation? There are probably two main reasons. First, the world is noisy and overloaded with media messaging. Getting heard seems to require a short, sharp and exaggerated idea endlessly repeated: economics as a media brand. Second, the world is facing novel problems at the global level, and novelty is hard to factor into economics, which is a rigid, ideological, theoretically based, and largely backward-looking field.

JS managed to make an ugly caricature of Krugman. But the PK bashing here is just a red herring. JS really has nothing interesting or constructive to say. When that´s the case, appeal to ‘structural challenges’ and ‘hide behind the long-run’!

One thought on “When you´re clueless, hide behind the long-run!

  1. “Keynesian superficiality”
    I think if we are ever going to fix the economy, the theory has to address all the reasonable complaints. Sachs’ line about fiscal multipliers certainly must be addressed.

    I like Krugman; if this was the 1930s, his would be a good argument.

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