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“Supply Side” economics has always been a fancy term that sounded like a plan. It was popular in the 1980s because it seemed to work – but very few people ever understood that it worked for the wrong reasons. It was, at least in practice, the old Keynesian theory dressed up in a suit and ready for a white-collar world.
It’s time to call this for what it is – a political con – and to put it to rest.
The times, they are a changin’. As the weather turns grey and cold an old fashioned protest has taken over Wall Street issuing demands that … well, they don’t have demands yet but the leadership … well, they don’t want leaders, but we do know that the establishment is pushing them to … actually, Mayor Bloomberg backed down from a confrontation.
The times did change. Protesters now scrub sidewalks and tidy up while speaking very eloquently and kindly about why they are there. This is nothing like 1968, the year that can be taken as an event in and of itself. According to a recent poll, a majority of Americans view this protest favorably, a rate ahead of Obama himself and twice the approval of the Tea Party’s hard line.
This is what it takes to start the process of change. The problem comes when the movement has to focus on specific goals. That will come with time.
It’s a currency war, it’s a trade war. It’s every kind of war that can be fought safely behind a desk. Are you ready for the latest dust-up, the assault on China?
The first shots came from of a rare bipartisan show of unity in the US Senate, which passed a bill requiring new tariffs on Chinese goods if they do not allow the Yuan to appreciate in value. 63 Senators went along with the measure, including 17 Republicans. It seems like a popular direction to go, but Boehner has said he will prevent a similar measure in the House. Obama said weakly that diplomacy is a better approach.
Doesn’t sound like the war is on after all. But support for it is growing.
The Nobel Prize in Economics for 2011 has been given to Thomas Sargent and Christopher Sims for their work on how central bank policy shapes an economy dynamically. There’s always a bit of politics in this Nobel Prize, and this year is no different. The two recipients more or less proved that economics can be used for a central bank, and even a government, to shape the future. Expectations guide how people make decisions, and they aren’t always rational.
If that sounds obvious, it’s partly because we’re living in a world that these two helped define. It helps to take a step back to a time when economics was inherently backward looking, going over old data as it comes out and adjusting to meet the world that was measured a month or several ago.
It’s easy to make too much of any poll. At best a poll is only a snapshot of the ebb and flow of opinion – and that’s assuming the polltakers called more than a few people and did the math right. A good poll usually does little more than take what people know in their guts and move it into a kind of intellectual argument with real numbers. The use of that is for you to judge.
But there is one poll that appears to be worth contemplating. According to a CNN poll of 1,010 people who bothered to answer their phone, 15% of Americans now think that the Federal government will “do what’s right just about always or most of the time.” This is a new low since the question was first asked in 1958 (pdf).
This naturally begs the question, “15%? Really? That high?” But there’s a lot more to it than that.
Barataria - The work of Erik Hare 