All the media back & forths of this Presidential campaign have somewhat obscured a few basic truths about the Republicans and their ideas for governing the country. Yes, we all know Romney has changed his mind on almost every issue, and nobody knows how he would govern. But the narrative and motivation of his candidacy still rest on a few paradoxical ideas about government and the economy.
The first is the "government can't fix your problems, so elect me to fix all your problems" fallacy. It's worth stepping back every once and a while and realize that this makes no sense. The Republicans have been hammering Obama for four years for directing his focus away from "job-creation," while arguing that the government should do less to create jobs. Less government is certainly a coherent ideological position, but not a good way to make jobs in a recession.
The next contradiction: lower taxes will encourage more people to work, which will bring down unemployment. Huh? This wouldn't even make sense if the US economy were somehow lacking for people looking for work. And anyway the problem is precisely the opposite. To the extent that lower taxes would encourage more people to work (which may not even be the case anyway), they would obviously increase unemployment since there aren't enough job openings for all the people looking for jobs anyway.
And lastly, the deficit. People seem to forget that there's a very specific reason to fear government deficits and debt: higher interest rates. Government debt isn't some vague but inherently evil entity that will erode Your Children's Future if not tackled Right Away. Your children will be richer than you! They'll pay back your debt fine!
On the other hand, if people fear the government will become insolvent and therefore unable to back its debts, then they demand higher interest rates, and these higher rates make private investment a less attractive alternative by comparison. That would be bad. But with interest rates on treasury bonds lower than ever, there's just no reason to make an issue of short term deficits.
And don't even get me started on foreign or social policy.
"The first is the "government can't fix your problems, so elect me to fix all your problems" fallacy."
ReplyDeleteThat appears to be a fallacy only due to the vague straw man. That pithy quote is more realistically worded as "more government programs/spending can't fix your problems". With that context, "governments doing less [of new spending/programs]" is quite logical.
You might disagree with arguments for such propositions, but there are no logical paradoxes or fallacies there.
"there's just no reason to make an issue of short term deficits"
Considering that the US feds have carried growing deficits for most of the years of the last 2-3 generations, "short term" seems to be quite an optimistic take on it.
Sure, there are decent ideological arguments for less government/less spending, but that's not what Republicans are selling, and in that sense, they're being completely disingenuous. Does any economic model support the idea that "serious change," in the employment sense, can come about in the short-term by slashing government?
ReplyDeleteAnd the point about the current deficits remains. Short-term means "in the near future." There's just no reason to get all worked up about it while interest rates are so low.
"Does any economic model support the idea that "serious change," in the employment sense, can come about in the short-term by slashing government? "
DeleteI don't know. With qualifiers like "serious" and "short-term" and "slashing", one could argue it six different ways. One might suggest that if slashing government was interpreted as the arrival of a long, more business-friendly trend, optimism there could create some serious short-term excitement. Or not. It's not a crazy thought though.
"There's just no reason to get all worked up about it while interest rates are so low."
People from whom I keep hearing that don't seem to appreciate the difficulty of repaying the principal. Simply assuming that children will be "rich" (living in high-inflation times?) is not reassuring. Whatever the probability of such wealth is, it's less than the 100% likelihood of having inherited the debt.
Sam, you should get started on social and/or foreign policy.
ReplyDelete