Semi-Daily Journal

While the Financial Times may be grumpy, the cheerleaders at the National Review are giddy. Peter Ferrara writes that all schools of economics teach us that fiscal stimulus leads to higher income growth - as if the Keynesian multiplier was a long-run proposition. Meanwhile Lawrence Kudlow tells us that economic research proves that fiscal stimulus will not raise interest rates. I guess Lawrence has not read that excellent Dec. 2002 survey by William Gale or the latest research from the Federal Reserve staff.

Hmmm. Wasn't it a couple of months ago that people on this board were calling the FT a "right-of-center" publication? The atlantic rift seems to be getting wider.

Yup, the FT is about as critical of the Bush administration as you can get.

and please brush the bowl and flush again.

This is becoming old news. No serious economist, whether they be right, left or middle takes the Administration's economic policy seriously. (That's probably because the reverse is also true).

Anyway, that leaves us with politcial operatives dressed up as economists and an assorted collection of cranks to support these measures. Hmmm... smells like class warfare.

One wonders how long Mankiw will put up with this nonsense.

Ah but you forget that Kudlow has carefully analyzed the ratio of the price of platinum to the price of beryllium and concluded from that that we are at no risk for deflation and on the road to recovery. Besides who cares what kind of elephant shit these damn English journalists put out everyday.

Stephane writes:
>One wonders how long Mankiw will put up with this
>nonsense.

I guess this would be an interesting question if anybody thought it would matter if Mankiw is there or not. My assumption would have been that a serious economist would be interested in the job that Mankiw took because he or she believed that the administration was very much in need of capable advice, and felt very strongly about having a Republican administration in power for whatever reason. So there are two possibilities about when it was decided to move the CEA out of the White House (and away from any casual contact that could have occurred with staffers there, which is at least as important as possible face time with the president). Either it was before Mankiw took the job, or after. If it was before, I have no idea why anybody would want the job. If it was after, then I might suppose that it would stiffen Mankiw's resolve to do some good, somehow before things get really out of hand. Do we have any idea what economic ideas might now be cooking within the administration, now that they have essentially won their tax fight (but lost more time and credibility to do something with larger and more prompt positive effect)? I mean, maybe there's something really scary coming up.

The Financial Times puts economics a "distant third" for this administration, behind "national security and re-election politics." Is it really that distant behind national security, though? After all, this administration has shown incompetence at national security as well, appropriating insufficient and poorly distributed funds for homeland security, failing to take care of the most pressing security issues in Iraq, letting a potential terrorist base of operation resurface in Afghanistan, and... you get the idea. Even it's reelection politics are kind of incompetent as you've been pointing out, Brad, in that it is doing nothing to reverse the cyclical downturn in the economy.

So... maybe these guys are just incompetent all around?

Well, at least with national security, this administration has succeeded in creating the IMPRESSION of being very effective and determined, whereas with the economy, everyone essentially sees through the ruse. Maybe that's what the FT meant? Or maybe they fell for it themselves?

The FT's problem is that they assume that Bush has economic advisors because he wants to hear what they say. This is not the case. Bush has economic advisors so that they can produce justifications for the markets and the public at large to cover whatever giveaways to Bush's rich cronies he's decided to push this Congressional session. Mankiw, et al. are being TOLD what policy is. They aren't involved in making it.

The FT argument makes no sense. The Fed is not part of the administration and the administration has nothing to say about who will be president of the NY Fed. That decision is made by the board of the NY Fed. Whatever reasons Stanley and Peter don't want the job says nothing whatsoever about how top economists feel about joining the administration. In fact, Peter's decision not to take the Fed job can be viewed as a vote of confidence in the administration by the FT's logic.

My view is that the problem is not that good economists like Greg Mankiw and Harvey Rosen won't join this administration, but that they are not listened to once inside. That is a different argument than the one the FT made.

Serious economic policymaking has been so downgraded in George W. Bush's America that it is becoming harder to persuade anyone to do it.

You can rewirte it as

Serious ENVIRONMENTAL policymaking has been so downgraded in George W. Bush's America that it is becoming harder to persuade anyone to do it.
Now that Whitman is leaving who will Bush get to replace her? EPA is a thankless job of finding solutions that make everyone at least a little unhappy. The Cheney group makes the environmental policy then expects the EPA administrator to spin it to the enviros. This administration wants someone at EPA to have enough creditials to be taken seriously, but the mindset of a used car saleman.

This week Collender compared Bush to a bait and switch life insurance salesman and Collender tries hard to be objective.

http://nationaljournal.com/members/buzz/budget.htm

"Wasn't it a couple of months ago that people on this board were calling the FT a "right-of-center" publication?"

I can hardly characterise otherwise a paper that caters to financiers. But, you know, these people need real information to make real-world decisions. Just because a paper's editors disagree with G. W. Bush is not a sufficient condition to make it a left-wing news source...

"The atlantic rift seems to be getting wide."

Perhaps (although Chirac has been playing it very smooth - I think the momentum actually comes from this side of the pond). Yet, it's not from Brittain that one would expect expressions of rift, is it?

Europeans have a better understanding than Americans that the Republican Party and this Administration in particular are an extention of the religious right. Scary stuff.