Thursday, April 16, 2009Today I overheard one of the undergraduates who works for me defending the teabag protests to his compatriots. I would have loved to have jumped in and argued the point, if only to prevent the spreading of such absurdity to others, but it wasn't appropriate to do so. See, I'm becoming somewhat more mature.
However, I have a blog, so I can write all the things I wanted to say to the little pipsqueak. He made the ridiculous argument that since households have to balance their budgets, the government should balance its as well. This is wrong in so many ways I don't know where to start. First, households don't balance their books, especially in the short term. They go into debt to buy a car, to buy a house, to go to school, etc., etc. But this is a totally irrelevant point. What's far more aggravating is the goofy analogy made between households and governments. They aren't the same type of organization at all, and the persistent attempt to make such poor analogy may have a distinguished pedigree (going back to at least Plato) but that doesn't make it any less dumb - and frankly pernicious, given how it's been use to justify all sorts of paternalism. From a logical point of view I have little to add to Aristotle's effective refutation presented in the Politics. From a macroeconomic perspective, debts per se aren't all that important in normal times as long as the debt-to-GDP ratio is declining. Between 1945 and 1980 we had deficits most years, but the proportion of indebtedness declined from over 100% to around a third. More importantly, in a deep recession (like the one we're in now) the federal government is the only entity capable of propping up aggregate demand. When the economy is in the toilet, businesses and consumers cut back on spending, resulting in layoffs and thus more cutbacks in a downward spiral of declining demand. It's the feds job in these circumstances to prime the pump (to use an old expression). Cutting national spending during down times is a wonderful way to turn a recession into a depression.
All of these arguments are fairly uncontroversial, except among those who like holding forth about national economic policy without knowing a damned thing about it. Which of course constitutes about 85% of the Republican party and its adherents.