Morality Plays...
Interfluidity appears to accuse me of being immoral because I am amoral, or something like that...
To the contrary, I say that our duties to be intelligent, reality-based, wise stewards of our resources, and brave are moral duties. Stupidity, addiction of fantasy, needless poverty, and cowardice are not moral virtues.
Interfluidity:
Tragedy of the technocrats: [H]uman affairs are a morality play, and economics, if it is to be useful at all, must be an account of human affairs.... It should be no surprise that human collectives choose policies destructive of GDP or employment growth when they deem those policies to be wrong or unjust. Individual human beings act against their material interests all the time.... There is a reason why people are asking What Would Milton Friedman Do? in the same way a Christian might ask what Jesus would do. The technocratic interlude for which Brad DeLong yearns was built upon scripture that Milton Friedman both penned and evangelized. We are in a period of Reformation now, with all the turmoil that suggests, and the outcome is not predetermined. Simply assuming the parishioners will remain faithful, or lamenting that they ought to remain faithful, is no way to win the argument....
It is easy, in the context of prevailing norms, to argue that [in bad times] governments should be prudent in the same way as households.... The most obvious moral counterplays, appeals to altruism in the face of misery, are vulnerable to vilification of the “undeserving poor” — people whose lack of diligence left them without “skills”, deadbeats who partied on debt they cannot now repay...
The principle to which Interfluidity refers is that when times are bad--when your present and expected future resources fall--you should cut back on your commitments. The fact is that these are bad times for private economic actors: their current incomes have fallen, and the high interest rates charged them means that their future resources are worth a lot less than they used to be when translated into claims on today.
But things are completely different for the government.
The terms on which the U.S. government today can borrow are extraordinarily, unbelievably good. The government's current resources have declined with the decline in tax revenue, but the taxes the government will receive in the future are--according to a bunch of calculations John Cochrane made when he came to Berkeley to give a seminar--worth roughly four times as much when translated into claims on goods, services, and labor today as they were worth three years ago. The resource constraints binding private economic actors have become much tighter. But the resource constraints binding the government have--because of the extraordinary falls in interest rates--become much looser. And high unemployment and slack capacity mean that the terms on which the government can get goods, services, and labor are significantly more advantageous than they were three years ago.
Every single particle of logic is crying out that now is the time for the government to pull its spending forward from the future into the present and push its taxes from the present back into the future.
The argument that "governments should be prudent in the same way as households" is not a moral argument: it is a stupid argument. It blindly closes its eyes to the reality that times feel very different for credit-worthy governments than for potentially insolvent private economic actors, and that what is prudence for the second is sheer idiocy for the first.
To claim that there is a moral case against the policy recommendations of technocracy today is to claim that there is a moral case for stupidity, a moral case for fantastic disconnection from reality, a moral case for needless poverty, and a moral case for cowardice.
And I really do not think Interfluidity wants to make that argument.
