Earlier this week I said something that might have surprised some readers. The context had to do with orthodox Keynesian policy prescriptions. The elevator version of Keynesianism is this: run government deficits during recessions and run surpluses during boom times. If we ignore tax policy, this would mean government spending should increase during recessions and government spending should fall during booms.
I typically challenge Keynesians at this point to show me a time when they consistently said, “now is the time to run surpluses and reduce spending.” I doubt I will ever hear it. My original sense for why we’d never hear it was because Keynesians simply loved government. But I want to change that view. Some of the most thoughtful Keynesians I have read recently (such as Professor Fazzari) do not strike me as being mere cheerleaders for the state. They truly believe in a utilitarian view that sensible Keynesian management policies will make us better off.
What, then, makes me think otherwise. Two points, one practical and the other inspires the title of the post. First, I do not think Keynesian policy as advocates would want to see it is possible given the composition of government expenditures. Suppose tax collections are always constant (which is a bad assumption I know) at today’s approximate $2.2 trillion. During the current downturn, spending is $3.8 trillion – meaning the deficit is $1.6 trillion, or over 10% of the entire economy. Some Keynesians do not think this is large enough, but let’s just assume that it is. It seems natural to me at least that a $1.6 trillion surplus would be “large enough” during good times. Of course, no one has ever told me that a good time was a crisis requiring that much surplus accumulation, nor do I think serious Keynesians would advocate that large a surplus. Let’s assume that they would argue a $400 billion surplus is adequate during booms. What does this mean?
It means that government spending during good times would be lower by two trillion dollars. Now look at the following chart, which shows the composition of current federal expenditures:
How much of that chart do you think is truly discretionary? I’d argue that it would be generous to call even 10% of it, or less than $400 billion, discretionary. Just recall all the hand wringing about a $60 billion spending reduction for this last spending bill. So, even if we agreed on the Keynesian policy, it can never happen. Ever. Not in my lifetime, or in any other lifetime I will ever have the pleasure of living in. For example, a $2 trillion spending reduction would leave us with “only” $1.8 trillion to spend. The Defense Department plus Social Security together spend $1.76 trillion. Thanks for playing, try again next time.
What about power and loving government? For those who exercise power, it is not clear to me that spending lots of other people’s money is all that important. Power is not the same as spending other people’s money. I think the converse is not true, but think of what power really is. In my view power is the ability to control and direct the affairs of others. My wife has power over me simply by making me feel bad when I do stupid things. My church has power over me by convincing me that my love of liberty and the human spirit and the Enlightenment is going to land me in hell. Sure, my wife also exercises power over me because she controls our family purse strings, but she’d have it anyway if I did. So, for those who lust for political power, it does not rest solely in the actual taxation and spending – although those things surely enhance it. The power comes from the ability to direct the lives of the citizens you govern – and running surpluses during boom times does exactly this. Only those wielding political power can do such a thing, the rest of us cannot. And what is more, the ability to run surpluses during boom times implicitly gives you the awesome power to ramp up spending during slack times – probably more power than you’d have under conventional policy. This is not my way of advocating such a thing, but rather it is how I have come to get my mind around possible reasons for power-hungry progressives to want to accede to allowing spending to fall.
However, we never see such things happen. So is it because my view of power is wrong? Is it because of the practical limitations from above? Or something else?
An inherent problem with the theory of surplus spending in good times is that there is rarely, if ever, a time when there is anything approaching a consensus that yes, “we sure living in good times, let’s pay down some of that accumulated debt.” There are always too many people with real or imagined grievances who are able to spur politicians to spend with all the OPM they can lay their hands on. It is only with hindsight that we collectively reflect on “the good old days.”
872403 809873Hi, Neat post. Theres a problem along with your internet site in internet explorer, could test this IE nonetheless is the marketplace leader and a excellent portion of people will omit your superb writing because of this difficulty. 266436
607364 31053Id require to consult you here. Which isnt some thing Which i do! I enjoy reading a post that can make folks feel. Also, appreciate your permitting me to comment! 802906
203488 451237I got what you intend, saved to favorites , really decent internet site . 909156
332176 953392Intriguing internet site, i read it but i nonetheless have some questions. shoot me an e-mail and we will speak much more becasue i may have an intriguing thought for you. 408971
Thanks for the good writeup. It in truth was a amusement account
it. Glance complicated to more delivered agreeable from you!
By the way, how can we communicate?
161139 621341I take pleasure inside the comments on this weblog, it actually gives it that community feel! 329923
В ООО «Прогресс-Трейд» вы найдете широкий выбор чугунных труб и фасонных частей.
Мы предлагаем выгодные цены и приятное обслуживание.
5894 335159No a lot more s . All posts of this qaulity from now on 825240
I know this if off topic but I’m looking into starting
my own weblog and was curious what all is needed to get setup?
I’m assuming having a blog like yours would cost a pretty penny?
I’m not very web smart so I’m not 100% positive.
Any suggestions or advice would be greatly appreciated.
Many thanks
I always spent my half an hour to read this website’s content all the time along with
a cup of coffee.
I’m gone to inform my little brother, that he should also
pay a quick visit this website on regular basis to get
updated from latest news update.
I am regular reader, how are you everybody? This piece of writing posted at this website is truly pleasant.
Hi, Neat post. There’s an issue along with your web site in internet explorer, may check this?
IE nonetheless is the market chief and a good section of people
will miss your excellent writing due to this problem.
I am really loving the theme/design of your site. Do you ever run into any browser compatibility problems?
A handful of my blog visitors have complained about my website not operating correctly in Explorer but
looks great in Safari. Do you have any ideas to help fix this issue?
Its like you read my mind! You appear to know so much
about this, like you wrote the book in it or something.
I think that you can do with a few pics to drive the message home a little bit, but instead of that, this is magnificent blog.
An excellent read. I’ll definitely be back.
I am regular visitor, how are you everybody? This article
posted at this website is genuinely pleasant.
863241 690424I really enjoyed reading this internet site, this really is excellent weblog. 859300
929768 158332Ive writers block that comes and goes and I want to find a method to get rid of my writers block. It can occasionally be so bad I can barley make sentences. Any tips? 302963
You need to be a part of a contest for one of
the greatest blogs online. I’m going to highly recommend this website!
This piece of writing will help the internet people for
creating new webpage or even a blog from start to end.
77023 728638An fascinating discussion might be valued at comment. I do believe which you merely write read much more about this subject, it may not often be a taboo topic but normally persons are too couple of to dicuss on such topics. To a higher. Cheers 937308
438878 554535An intriguing discussion is worth comment. I believe that you ought to write regarding this subject, it may not be a taboo subject but normally persons are too few to chat on such topics. To another location. Cheers 289101
574713 313853Can I just now say that of a relief to locate somebody who truly knows what theyre speaking about online. You truly know how to bring a difficulty to light and function out it crucial. The diet require to see this and appreciate this side on the story. I cant believe youre no far more popular since you certainly possess the gift. 225761