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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (17934)	11/27/2003 2:30:52 PM
From: unclewest	Read Replies (2) \| Respond to of 793625

Screw the headlines, the American people know better. I AGREE! It was a magnificent leadership move for a military commander. The troops will love him for it. All of the troops from the top down and the bottom up. Their families will love him for it. Every veteran will love him for it. The Iraquis will love this visit too...At least the good ones will. I liked the carrier landing too.

To: Glenn Petersen who wrote (17934)	11/27/2003 5:11:53 PM
From: LindyBill	Respond to of 793625

ECONOPUNDIT Can a deeper recession be a better recession? It is unclear whether "more unemployment, shorter recession" is better or worse than "less unemployment, longer recession." Tradeoffs are involved in this puzzle. Economists love to badger students with tradeoffs. This is one of their favorites. Paul Krugman's Tuesday column altered a George Bush quote to suggest the President referred not to this tradeoff, but to mysterious advice of an unknown advisor arguing against the American public's well-being. How can Krugman have done this? Last night I produced evidence Paul "borrowed" the argument, without attribution, from a blogger who (a) does not understand the depth/breadth tradeoff and therefore (b) misinterpreted the Bush quote so as to (c) produce the argument Krugman reported in his column. Let's now give Paul Krugman the benefit of the doubt. Let's assume he found the altered quote somewhere and just ran with it. Does the (spurious) Bush quote, as it stands, really suggest the President invented and then demonized a crazy economic advisor who hates the American public? The answer is "no" for anyone with an undergraduate knowledge of American macroeconomic thought. Whether you call them Hayek enthusiasts, new-classical economists, or real-business cycle theorists, there are many American economists who think Keynesian fiscal and monetary remedies do more harm than good. I am not one of them, nor do I play one on TV. But I teach both my undergraduates and graduates about them, because everyone else does. Any "B-or-better" undergraduate will tell you some American economists say recessions should be left alone, that they're good for us, because they (1) weed out non-competitive and inefficient firms, (2) reallocate resources from less- to more-productive uses, (c) lower our prices (making exports more competitive) and (d) lower our interest rates (increasing economic growth and future prosperity). All this benefit, however, takes place at a cost -- the cost of higher unemployment for some period of time -- the cost of a recession. Real business cycle theory suggests the long-term benefits of leaving a recession alone may outweigh the short-term costs of unemployment.* On the face of it, as Krugman presents the quote, Bush was simply rejecting the advice of some hard-line, right-wing real business cycle theorist advocating the recession just be allowed to play itself out. If Bush demonized anyone, it was an economist somewhat to the right of mainstream. Explaining it this way makes Bush look kind of warm and fuzzy, however. Better, thinks Krugman, to present the view that none but the demonic economist would ever suggest recessions should be allowed to play themselves out! Yes! That makes Bush look bad! Really bad! We conclude either Krugman has for three decades been a sleepwalker, unaware of minority opinion in his profession, or he uses his position at the New York Times to misrepresent this profession to the educated public. His agenda, I guess, is politics, not economic education. But I'm not the first one to notice this. ------------------------------------- * I'm ignoring the distribution question here. Clearly, the benefits can be captured by people other than the ones who pay the costs. Also there's the temporal matter -- we pay costs now, and get benefits later. There are ways of handling both these questions. Trust me. econopundit.com