Friday, February 13, 2009

The case for kicking the can down the road

Paul Krugman, who's got a relatively good record of understanding the American economy, feels the Obama plan is too modest ....
Krugman - Failure to Rise -

... So far the Obama administration’s response to the economic crisis is all too reminiscent of Japan in the 1990s: a fiscal expansion large enough to avert the worst, but not enough to kick-start recovery; support for the banking system, but a reluctance to force banks to face up to their losses. It’s early days yet, but we’re falling behind the curve.

And I don’t know about you, but I’ve got a sick feeling in the pit of my stomach — a feeling that America just isn’t rising to the greatest economic challenge in 70 years. The best may not lack all conviction, but they seem alarmingly willing to settle for half-measures. And the worst are, as ever, full of passionate intensity, oblivious to the grotesque failure of their doctrine in practice.

There’s still time to turn this around. But Mr. Obama has to be stronger looking forward. Otherwise, the verdict on this crisis might be that no, we can’t.
Politics is the art of the possible. One reason to kick the can down the road is that there's no choice -- the GOP's Marketarian religion and the makeup of the US Senate means this is the best politics can do. If more members of the Party of Limbaugh leave the Senate then we can do more.

Another reason, however, is that we don't know what's going on.

I think both are good reasons to kick the can, but the second, of course, is more interesting. I'm old enough to know my strengths and weaknesses, and to have a pretty good understanding of what humans more talented than I are capable of. From that I'm reasonably confident that even someone with the extreme talents of, say, Richard Feynman, couldn't fully understand the causes and interactions driving the Great Recession.

Heck, people are still trying to fully understand the Great Depression, and that world was very simple compared to ours.

We're boldly going where no "man" has gone before.

I would not be shocked, if, six months from now, the Dow is over 10,000 and home prices are up 10%. On the other paw, I would not be surprised if, ten years from now, we are as shattered as post-WW II England.

I suspect I'm not alone in my thoughts. Maybe Geithner came across as uncertain because, really, nobody should be certain today.

So we've kicked the can. In six months we kick it again. Maybe 70 years from now we'll understand today's collapse -- even as we contemplate the post-human economic crisis of 2079.

1 comment:

alanbooker said...

It looks very bleak to me. I suspect that in the middle of next winter when the numbers of unemployed go over the tipping point and it becomes clear that we are in for very dark times, we will see unrest!