Mr Obama plans to include this in his speech tonight, reports Bloomberg:
“We have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election."
That's ironic. The economics that supports Mr Obama's stimulus package and the popular justifications like this one:
http://www.salon.com/opinion/feature/2009/02/24/reich/
all draw inspiration from Maynard Keyne's General Theory, written in the early twentieth century. Mr Keynes and his disciples explicitly reject the idea of the "long run" -- "in the long run," Mr Keynes quipped, "we are all dead!" Ironic, then that Mr Obama plans to attack those who focus on short-term gain. Keynesians believe in active fiscal policy geared towards the short-run; Mr Keynes models do not care about the short-run.
Keynes prizes short-term gains over long-term prosperity; Keynesian don't care about balanced budgets and most certainly don't care about looking beyond "the next quarter." Actually, the neoclassicists that Messrs Bush, Reagan, and the GOP draw upon belong to the branch of economics that Mr Obama seems to be lauding in that quote.
In classical analysis, short-term gains and losses don't matter; monetarists would argue that only inflation matters; for neoclassicists -- to whom Mr Obama's "long-term prosperity" is of absolute and paramount concern -- would call for complete inaction, or at least very moderate action. The most a neo-classicist might call for would be corporate and capital-gains tax cuts to stimulate investment. The extreme branches, like those who follow David Ricardo, would argue that any action in the short-term would fail anyway because people would anticipate higher taxes in the future.
So Mr Obama, in his desire to be populist, has actually looked to the wrong set of economists. In reality, being a Keynesian policy, Mr Obama's fiscal policy cares very little about the long-run and cares absolutely about the short-run.
"We have lived through an era"? No, Mr Obama, your use of the past perfect is mistaken; rather, "we are still living in an era..."
“We have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election."
That's ironic. The economics that supports Mr Obama's stimulus package and the popular justifications like this one:
http://www.salon.com/opinion/feature/2009/02/24/reich/
all draw inspiration from Maynard Keyne's General Theory, written in the early twentieth century. Mr Keynes and his disciples explicitly reject the idea of the "long run" -- "in the long run," Mr Keynes quipped, "we are all dead!" Ironic, then that Mr Obama plans to attack those who focus on short-term gain. Keynesians believe in active fiscal policy geared towards the short-run; Mr Keynes models do not care about the short-run.
Keynes prizes short-term gains over long-term prosperity; Keynesian don't care about balanced budgets and most certainly don't care about looking beyond "the next quarter." Actually, the neoclassicists that Messrs Bush, Reagan, and the GOP draw upon belong to the branch of economics that Mr Obama seems to be lauding in that quote.
In classical analysis, short-term gains and losses don't matter; monetarists would argue that only inflation matters; for neoclassicists -- to whom Mr Obama's "long-term prosperity" is of absolute and paramount concern -- would call for complete inaction, or at least very moderate action. The most a neo-classicist might call for would be corporate and capital-gains tax cuts to stimulate investment. The extreme branches, like those who follow David Ricardo, would argue that any action in the short-term would fail anyway because people would anticipate higher taxes in the future.
So Mr Obama, in his desire to be populist, has actually looked to the wrong set of economists. In reality, being a Keynesian policy, Mr Obama's fiscal policy cares very little about the long-run and cares absolutely about the short-run.
"We have lived through an era"? No, Mr Obama, your use of the past perfect is mistaken; rather, "we are still living in an era..."
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skewz
Chris MacDonald
Kerry Lauerman
Joan Walsh
Salon.com
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