The moment I read that, I was reminded of Joe Scarborough's question to Daniel Hannan this week about whether the egregious folly of the British Labour government would lead to a resurgence of the conservative movement in Great Britain around the 6th minute of this video, in which Daniel was somewhat less than optimistic.
Daniel Hannan interviewed by Joe Scarborough and Richard Haass on MSNBC, 3/30/09
Partial Transcript
Richard Haass of the Council on Foreign Relations (ironically enough) asks Daniel whether the G20 could do something on a World Trade Agreement as stimulus in the run-up to the summit.
Daniel: "What I'd really like to see them do [at the G20] is move against non-tariff barriers to trade, and by non-tariff barriers I mean things like nationalizing banks, subsidizing car industries, and having Buy America type clauses, in other words, restrictions on government tender that are intended to redirect things toward the home market - and I'm talking to you, Mr. President. The one thing we could all do is to try and avoid the mistakes that were made in the 1930's when the crash was followed by turning in to protectionism which then condemned the world to years of recession and ultimately to Fascism and war."
Joe: "Daniel, as we move forward, do you suspect that there will be a conservative counterbalance in Great Britain? Do you think the conservatives will most likely beat back Gordon Brown in the next election?"
Daniel: "I'm pretty sure that we're going to win the next election because people are very angry about what's happened but in terms of the kind of wider intellectual rebirth of conservatism, I'm not naturally sanguine by temperament and I'm not particularly optimistic about this. Last time that this happened, there had been a real consensus behind free trade. You go back to the Hoover and Coolidge and and Harding administrations, free trade and laissez-faire seemed as embedded then as it was in the 90's now, and how quickly things turned when there was a crash. And it basically condemned us to 40 years of Corporatism, and Keynesianism, and State Intervention, and it was only when people had seen where that ends, with total exhaustion, with stagnation, with inflation and with massive debt. It was only then that people were really ready for the remedies. And I just hope that the generation that we live in doesn't have to go through that entire process, that we can kind of short-circuit it, and realize early on before we get to a complete calamity, that you can't carry on forever spending money."
Patrick and Daniel are both correct...
I think that Patrick's point is well taken, as is Daniel's. To Patrick's point, I've already seen conservative Republicans and Libertarians on blogs, Facebook and Twitter greatly stirred by this "transformational moment". To Daniel's point, I'm daily more and more convinced that the average voter is neither conservative nor libertarian, and more inclined to read TMZ.com rather than RealClearPolitics.com, watch American Idol rather than Meet The Press, and blithely go along down the road to Fascism and another war. They may vote for a few more Republicans than Democrats in 2010, but that hardly encourages me after witnessing so-called GOP rising stars Eric Cantor, Paul Ryan and 83 other Republican "conservatives" vote to support the constitutionally questionable punitive ex de facto 90% tax against AIG bonuses. The real rising star of the Congress appears to me to be Judd Gregg, who's sadly retiring.
Cruising down the Highway to Hell
I'm deeply concerned that we're much more likely to be on the Highway to Hell, and the vehicle we're cruising in at increasing speed is the UN's own Agenda 21. Clintonista "science advisor" Nina Fedoroff told the BBC One Planet program recently that humans had exceeded the Earth's "limits of sustainability". Ut-oh...
If you're at all interested in economics and civil liberties and you've not familiarized yourself with the Clinton era UN Department of Economic and Social Affairs Division for Sustainable Development document known as Agenda 21, I suggest you do so immediately. I would go so far as to recommend that Glenn Beck revisit his ill-named 9/12 Project and rename it to the much more appropriate Pre-Agenda 21 Project.
In case you miss the Orwellian nuance in the official document, I invite you to download Jacqueline Kasun's excellent analysis of the Agenda 21 "vision" titled Doomsday Every Day: Sustainable Economics, Sustainable Tyranny and learn much, much more about what Herman Daly, Maurice Strong, and John B. Cobb, Jr. have in mind for you. I guarantee that the illogical frenzy of the Obama agenda policy cram-down will become crystal clear when you do. In computer programming we have an analogy for an agenda of this nature - we call it "the main driver".
Sustained by foundation money and federal grants, rarely mentioning Agenda21, salaried environmental activists are convening unsuspecting local citizens to engage in the “visioning” process to plan for the sustainable community in their future. Vice President Gore’s Clean Water Initiative and the administration’s American Heritage Rivers Initiative are nurturing the process by encouraging local “watershed councils” to make comprehensive plans for their regions.
Probably not many of these souls have read the works of Herman Daly or Maurice Strong, the Rio documents, or the modern college textbooks in sustainable economics. If they had, they might be less eager to help.
With the stimulus signed into law, Barack Obama got the dramatic, unprecedented jolt to the economy that he wanted -- the yearly budgetary impact of the stimulus is about 3 times what the 2001 Bush tax cuts were -- and now we'll have a chance to see if it works. Today was the day Barack Obama took ownership of the economy. A President could traditionally expect an 18 to 24 month honeymoon -- but with this dramatic action that honeymoon period shortened to 6 to 12 months. For Obama's stake -- and for liberalism's -- it had better work.
Let's lay down some markers on what success means, and hold the Democrats accountable for meeting them. Start with their own words. Advocates of the stimulus have taken one of two tacks to describe its impact:
The President's contention that the stimulus will save or create 4 million new jobs
The fact that the stimulus needed to be be at least $775 billion since this was the projected difference between the economy's actual and potential capacity.
President Obama is on the record stating that employment will be 4 million higher than if we did nothing by the end of 2010, and that economic growth will be about 2.8% higher (over two years, the stimulus represents about 2.8% of GDP) -- if you assume every dollar of stimulus is a dollar of economic growth, as is strongly implied by the second bullet.
What does this mean in terms of actual levels of economic activity?
First, we have to establish some baselines. Last week, Nate Silver posted an insightful chart forecasting the unemployment rate based on postwar recessions. If job growth continues along the average trajectory of the postwar period, unemployment will peak at about 8.1% this summer and begin declining. Most economists would say this is getting off relatively easy. However, if the trajectory continues along the lines predicted by recessions in the modern period marked by the Fed chairmanship of Alan Greenspan, unemployment will top out at 9.6% in June 2010 before beginning a steeper decline.
This is if we "do nothing."
Obama's projected four million jobs saved translates to a projected 2.8% off the unemployment rate by the end of 2010. My reading of the post-1987 chart suggests that unemployment if we do nothing would be at 9.1% in January 2011 and 6.3% post-stimulus. This is the worst case scenario. Looking at the postwar curve, 6.8% unemployment pre-stimulus would be converted into an astonishing 4.0% post-stimulus. This is highly unlikely, but it's the best case scenario.
Split the difference between these scenarios and you get an unemployment rate of 5.15% at the end of 2010. Either way, we should expect an unemployment rate no worse than 6.3% at the appointed date if Obama's economic theory proves correct.
The economic growth targets are a bit more nebulous, but the implicit promise is that the economy will get no worse than it is when the stimulus first kicks in. So we should expect zero economic growth at a minimum over the next two years if what we are promised actually occurs -- and likely more, since even 1-2% percent declines in economic activity are rarely sustained over four quarters or more (Obama has seven economic quarters to make it happen).
This is a terrific interview and should be read by everyone on both sides of the stimulus debate. Barro has actually done work in Keynesian economics (Krugman did not, incidentally) and he is skeptical of the stimulus. And, he lucidly explains why tax cuts are to be preferred over spending when it comes to economic stimulus:
...when you cut taxes there are two different effects. One is that you cut tax rates, and therefore give people incentives to do things like work and produce more and pay more -- maybe, depending on what kind of taxes. And then you also maybe give people more income. This income effect is the one that's related to this Keynesian multiplier argument, where it's usually argued that government spending should have a bigger effect. So that's the income effect. But the tax-rate effect, inducing people to do things like work and produce more and invest more, is a whole separate effect, and that could easily be much bigger than the multiplier thing, than the income thing.
