海角大神

Last Wednesday (Dec 26, 2012), I posted the following comment on听The Amazingly Popular Bush Tax Cuts by Randall Holcombe:

听鈥淩eal Housewives of the Beltway: How the script for the fiscal cliff melodrama was written鈥� in the听Wall Street Journal听(Sat. December 29, 2012) provides a more comprehensive discussion of how this on-going 鈥渕elodrama was written.鈥� The first item they mention is the one I highlighted above:

But for the听Journal听the primary culprit underpinning these continuing bad policy choices is the 鈥榲ampire鈥� like Keynesian influence on 鈥渕ostly Democrats but increasingly many Republican and conservative intellectuals鈹�who think that growth derives from government spending 鈥� .鈥� Though, as argued by Block and Barnett (鈥淚nvoluntary Unemployment,鈥澨�Dialogue, Vol. 1, 2008, pp. 10-22), 鈥渙ne would have thought that Keynesianism would have been stopped dead in its tracks by the phenomenon of stagflation.鈥� Too bad the stake was never completely drive through听the heart of the vampire. Thus the vampire lives and as a result of this underlying fallacious view of how the economy operates,听The Journal听argues:

The result has been continuing bad fiscal policy, expansion of government (See Robert Higgs鈥檚 excellent discussion听here), and an ever accommodative Fed with no permanent benefits (and few if any temporary benefits) but with significant costs both current and future.

Recovery and renewed economic growth depend on decreasing, not increasing government involvement in the economy. Per Rothbard (America鈥檚 Great Depression, p. 22)鈥�

In this environment, a truly Rothbardian policy would be a win-win policy for both the short and the long run.

Chances of such a policy 鈥� slim to none with听99.99999 鈥� %听 odds on none.

Given the actual problem is the spending, the size of the government relative to the economy, then the sad thing is that going over 鈥榗liff鈥� may actually cause less long run harm than any likely compromise.