Over at the WaPo. And I got more words to fool around with than usual!
I tried, you’ll let me know how successfully, to bring some nuance to the argument, as the point is decidedly not “look, we’ve done all this great policy and the US recovery is stellar!”
It’s that contrary to what I think is probably conventional wisdom, many economists actually understand the basic hydraulics, as it were, of both the macroeconomy and critical sub-systems like health care quite well. We basically can diagnose problems and prescribe solutions that if implemented, will roughly have their intended effect. The piece considers the Recovery Act, Fed actions, Obamacare, the bailouts–all worked in much the way I would have expected–plus and minus.
A key part of the argument is the mistakes made along the way, both here and more so in Europe. For example, the fact of inadequate stimulus actually underscores my point: there were prominent economists at the time who, based on known hydraulics since Keynes (and not just the need for fiscal stimulus but the fact that multipliers are amplified when the Fed’s stuck at the zero lower bound), recognized that inadequacy and proscribed the implied actions. Some of those economists worked for Obama at the time!
And, as the piece explicitly underscores, none of this is to deny the economic amnesia among many in my trade.
Europe is a poignant and tragic example. They’ve consistently bucked the “known hydraulics” at tremendous cost to their citizens.
Obviously, knowledge that doesn’t get implemented because of politics and bad economics is wasted, so I’m not trying to tell a happy story here. But I do think I’m broadly right about this.
Some figures that didn’t make it into the paper: