{"id":1372,"date":"2011-08-16T18:39:12","date_gmt":"2011-08-16T18:39:12","guid":{"rendered":"http:\/\/www.multiplier-effect.org\/?p=1372"},"modified":"2011-08-23T13:45:33","modified_gmt":"2011-08-23T13:45:33","slug":"the-shrinking-frontiers-of-the-possible","status":"publish","type":"post","link":"https:\/\/blogs.bard.edu\/multiplier-effect\/the-shrinking-frontiers-of-the-possible\/","title":{"rendered":"The Shrinking Frontiers of the Possible"},"content":{"rendered":"

Joe Nocera\u2019s musings<\/a> about Kurzarbeit <\/em>aside, it is not the case that what we need right now are more and newer ideas for increasing growth and jobs.\u00a0 We do not have a scarcity of such policy ideas.\u00a0 What we are lacking are the political institutions that would allow us to carry any of them out.\u00a0 Our policy problem is a political problem.<\/p>\n

It is remarkable how much of our lingering economic malaise can be attributed, not to the inherent thorniness of the problems we face, but to the misaligned incentives of our political system.\u00a0 As Greg Hannsgen pointed out in a recent post<\/a>, there is no reason to believe that the United States government has suddenly been rendered unable<\/em> to pay its debts as they come due.\u00a0 Rather, the danger appears to be that the political system (or at least an empowered minority of it) will simply refuse to do so.<\/p>\n

This is a recurring pattern.\u00a0 Take the case of growth and employment.\u00a0 The real resources necessary for a higher level of economic activity and employment are there, sitting idle.\u00a0 Unfortunately, most of the textbook policy solutions lay equally idle; discarded and now beyond the realm of political possibility.\u00a0 We have the productive capacity, but through political choice or obstruction we are simply refusing to use it.<\/p>\n

Under these circumstances, what should policy writers and economists do? One approach is to carry on and continue to make the economic arguments in favor of this policy or that\u2014and to \u201chope,\u201d as Peter Orszag recently put it, \u201cthat the legislative constraints can be adjusted.\u201d<\/p>\n

\u2018Hope\u2019 is the correct term here.\u00a0 There is little reason to believe that any policy idea that would increase GDP or job growth\u2014no matter where it sits along the ideological spectrum\u2014has any chance of being approved by the House or of overcoming the new Permanent Filibuster in the Senate.\u00a0 We have developed a political system in which the opposition (if you will forgive this parliamentary term) have an incentive to be skeptical of any possible solution to our economic problems\u2014to remain unpersuaded even of what used to be their<\/a> own<\/a> policy ideas.<\/p>\n

The other approach is to focus on \u201cnext time.\u201d\u00a0 If our institutions cannot handle this, we need to create new ones\u2014or to rely less on them.\u00a0 Perhaps we need political reform, or to build more automatic stabilizers into the system.\u00a0 The downside of this approach, obviously, is that it leaves us with nothing to say to the millions of people whose lives have been turned upside down by this economic crisis.<\/p>\n

What these people need right now is any policy that would (a) boost aggregate demand or create jobs (at such a level as to bring us some substantial amount of the way back to the economy\u2019s real potential), and that (b) does not require Congressional authorization.\u00a0 This is the policy puzzle of the moment.<\/p>\n","protected":false},"excerpt":{"rendered":"

Joe Nocera\u2019s musings about Kurzarbeit aside, it is not the case that what we need right now are more and newer ideas for increasing growth and jobs.\u00a0 We do not have a scarcity of such policy ideas.\u00a0 What we are lacking are the political institutions that would allow us to carry any of them out.\u00a0 […]<\/p>\n","protected":false},"author":202,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1372","post","type-post","status-publish","format-standard","hentry","category-economic-policy"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/1372","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/users\/202"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/comments?post=1372"}],"version-history":[{"count":13,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/1372\/revisions"}],"predecessor-version":[{"id":1450,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/1372\/revisions\/1450"}],"wp:attachment":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/media?parent=1372"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/categories?post=1372"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/tags?post=1372"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}