This is one of the more
sober disagreements with the stimulus package, but again these things are best measured by relative degrees. And as this debate rages it continually raises the question in my mind as to how useful the study of economics really is. On one hand Mr. Phelps sees too much while Mr. Krugman sees too little, both highly accomplished and both possibly wrong. So why bother listening at all in the short term? The signal to noise ration here doesn't run in our general favor.
Nobel economist Edmund Phelps opposes the package for the usual gamut of anti-Keynsian reasons which is a fair intellectual point. Unlike most of his ilk he will at least acknowledge the obvious when he says that "We're completely flying blind...there's a chance some of the infrastructure spending will do the job of creating more work for earth moving equipment and construction workers". I think use of the word "chance" here clearly betrays an ideological preference rather than sober reflection but nobody's perfect.
This however is where the whole thing comes undone for me. Phelps worries that the future bill due on current deficit spending might have an impact on present demand and "have a chilling effect on the desire of entrepreneurs to innovate".
Bullshit.
Just to be clear here we're talking about people from the same population that only recently ran the world economy into the ground by both buying and selling ARM's with negative equity balances, securitized debt into bonds that were only slightly more valuable than a Beanie Baby,bet that housing values could rise 10% annually for eternity,and fueled the no profit dot.com boom to say nothing of thinking that Saddam was involved in 9/11.
So these same folks that fell for the above snake oil and more have suddenly embraced pure reason and can compute the fair value of future tax increases relative to present demand?? Come the hell on.
