With David Brooks writing columns again, and the Yankees playing the White Sox while their two division rivals play each other, I hope good things will emanate from New York and herald a good, vibrant Fall.
In this article, David Brooks says we should “instill good values and create a secure climate,” and so increase our focus on fundamentals and the long-term. That sounds good. I think Americans were short-sighted in terms of housing, financial regulations and other things.
Yet on matters of growth, employment and inflation, there is still no consensus among our best economists, and still so much they don’t know. America has Keynesians, tax-cutters, angels of austerity and stalwarts of the entitlement status quo, and many or all of them may be wrong. Keynesians believe temporarily increased spending will boost GDP and allow people to spend again, which will induce businesses to produce, invest and hire. Some proponents of small government think cutting taxes and government regulations will create a better environment for businesses to drive growth. Both of these sides are hoping for an aggregate revival of demand and supply they believe will sustain our economy in the long-term. Some people think we need to live within our means, cut spending and raise taxes, and reduce the debt for America’s future. Others feel certain entitlements and services, while expensive, are staples of American life for all times. Right or wrong, these theories all seem facially coherent and sufficiently far-sighted. Maybe Brooks wasn’t correct to imply short-sightedness in this part of the American economic debate. Maybe we’re just a bigger, more mixed, more indebted society. Maybe it’s still too early to tell.
Certainly, I would have liked more explanation from him. I’ll try on his behalf. In practice, all the expert disagreement and partisan politics on these issues create an uncertain regulatory environment that isn’t good for business. It could be a cause of today’s excess capacity, which could be delaying investment and job growth. It’s arguably pretty myopic for a congressional majority or administration to pass economic legislation that could soon be overturned or has yet to be detailed. Supposed benefits of the legislation may be outweighed by the uncertainty of achieving passage without permanence and an end without a resolution. Foregoing a consensus may only be good for the short-term.
On growth and employment, like any other government issue, there is a chance that policies are explained publicly with coherent, far-sighted reasoning, and motivated privately by short-sighted cynicism. But, even the cynics don’t know what will happen. Whether we come to toil, study, regulate, bring cynicism or sing tender centrism, today’s economy will offer us uncertainty in return. But, I’m glad Brooks and everyone else keeps trying.