A Benjamin Cole post
The big news in the Market Monetarism world is that Scott Sumner, the don of the MM’ers, is taking his keyboard to join the Mercatus Center at the right-wing redoubt George Mason University in Virginia. Washington, D.C. is not far.
Sumner hinted at empirical studies and serious economic work to be done in MM, numbers-genius Mark Sadowsky on duty.
But what I really hope for is that Sumner, in his new platform, gains access to and prominence in GOP-right-wing economic circles, which are primed anyway to dump their tight-money hysterics, but need an intellectual fig leaf to do so.
Now far be it from me to suggest the cap to Sumner’s career will be to cover Republican pointed appendages in close quarters, but just as the GOP sheds their “fiscal responsibility” costume for “deficits don’t matter” every time they own the Oval Office, I suggest the tight-money pants are going to be dropped soon, also.
GOP SWEEP 2016?
As Sumner has pointed out, the Reaganauts and The Wall Street Journal went after Fed Chairman Paul Volcker in the early 1980s for being too tight. So did the then-widely read conservative columnists Evans and Novak, who accused Volcker of being a Trojan Horse from Jimmy Carter, the President who initially appointed Volcker. Reagan Administration Treasury Secretary Don Regan publicly suggested the Fed should be part of the Treasury Department, and answer to the President. That’s all.
Over on the fiscal side, I see early hints of possible post-2016 GOP tacks. There is gushy enthusiasm for “dynamic scoring” on tax cuts—that is, cut federal taxes, and consequent deficits don’t matter, as the tax cuts will spur growth and more taxes. And then suddenly GOP’ers are now buzzing about “primary deficits”—that is, operating deficits, before debt payments.
Between dynamic scoring and primary deficits, an ocean super-tanker of red ink can be floated under a virtuous Flag of Republicanus.
It is in this den of inequity (and no, the Donks are not any better) that Sumner can render patriotic service, by justifying running the money presses red-hot for a good long time.
The GOP can call it Market Monetarism.
A few decades back, Huey Long, then Governor of Louisiana, built highways, schools and hospitals for the Depression-era residents of the Pelican State, then northerly branch of the Third World.
People accused Long of being a corrupt log-roller. Long essentially retorted, “Yeah, but the schools, highways and hospitals got built. What did you do?”
Godspeed Scott Sumner. If the GOP adopts MM, all the books and empirical studies in the world will be a teeny sideshow.