Doctor Cleveland's picture

    There Is No Center

    Since the election, and in fact for some time before, pundits have been demanding that President Obama move to "the center." They don't have a lot of details, usually, about where that center is, and if they do suggest a detail it usually comes from one side of current debates, but they're all convinced that Obama needs to go there. But there's a reason that pundits can't describe this magical "center" better. It doesn't exist.

    Obama can't move to the center, at least on the question of the economy, because there is no center. It's been his attempts to stand on that non-existent middle ground that have left him with nowhere firm to stand.

    Usually I am all for discussing the middle ground. And I despise the "false dilemma" scam, which pretends that there are only two extreme choices when actually there are dozens of better ones between them. In most debates there is plenty of middle ground and only charlatans or fanatics deny that. But there are questions that actually do come down to only two choices, because the debate isn't just about practical details but about an underlying theory of how things work in the first place. Debates about strategy and tactics have many possible answers; debates about fundamental models often have only two. Our economic arguments are arguments about basic models of the economy.

    Here are some questions that have no middle ground:

    Does the Earth orbit the Sun or the Sun orbit the Earth?

    Is disease caused by germs?

    Do childhood measles vaccinations cause autism?

    Can witches cause illness and harm livestock?

    Does my car have anti-lock brakes or not?

    These questions (and there are many like them) don't entertain compromise, and people who tried to offer "reasonable compromises" on the question the Earth orbiting the Sun and the Sun orbiting the Earth really came up with gobbledygook. It's one basic model or it's the other. And the theory we have about the basic way things work locks us into some pretty high-stakes decisions. Most of the time it doesn't matter whether I have anti-lock brakes or not, because I'm keeping a safe distance from the car in front of me and braking gradually. But if I suddenly need to stop in fifteen yards because the car in front of me on the highway just crashed, it matters a lot: either I need to step on the brakes as hard as I can, without fear of locking them, or I need to keep them from locking, even if it slows my braking speed. I really have to choose.

    If vaccines really did cause autism, I would need to protect my (hypothetical) infant children from autism; since they don't, I need to protect them from measles, mumps, and rubella. If I believed in witches with magical powers, Rebecca Nurse would be a menace to everyone in Salem; since I don't, I think the real danger is Reverend Parris and his murderous witch hunts. There is no middle ground on the Salem question: either Rebecca Nurse or Rev. Parris is a serious public danger. There's no room for saying "both sides" are to blame. They can't be. And, as in the Salem case, attempts to stake out middle ground only help the wrong the side; if you say, "Witches are a serious public danger, but we should pay more attention to procedure when we try them," then you are supporting the witch trials. (And forget about the more cautious legal procedure. That's off the table.)

    You can and should concede practical points to people on the other side of policy debates, when both sides agree on the basic underlying realities. But if you try to "compromise" by conceding that your opponent's basic model of reality is true, you have lost. If you concede that there are witches, people are going to get hanged. If you concede that vaccination "apparently plays some role which deserves further study" in childhood autism, then some kids are going to go unvaccinated and get the mumps, and some of those kids will die. Don't pump and pump your anti-lock brakes just to keep a backseat driver happy, if you're a couple yards from crashing into a pile-up. Just stop the damned car.

    Our current political debates are full of basic arguments about underlying models, debates in which there is no middle ground for compromise. Either carbon emissions are causing global warming or they are not; what we should do next depends on the answer. Once one accepts that global warming is real, and caused by carbon emissions, there are all kinds of practical questions about what to do about that, and reasonable compromises, but there's no compromising with the belief that global warming isn't happening. There's no point in trying to find "middle ground" with the birthers, or more seriously with Republicans who want to eliminate the FDA. Either the FDA is necessary to protect public health or it isn't. But the most important either/or question at the moment is this one:

    Does cutting government spending help or hurt an economy that's stuck in a bad recession?

    It is very clear that the Republicans, especially the ones who were most triumphant the other night, believe that cutting government spending will improve the economy. John Boehner promised to focus on "cutting spending and creating jobs." It sounds like he believes that the first helps accomplish the second. Rand Paul, who is nothing if not firm in his beliefs, wants to balance the budget, right now. This of course, is what Herbert Hoover did the last time we had such a grievous economic setback. Of course, from the other point of view, frequently explained by Paul Krugman, this is the worst possible thing to do. Since recessions are caused by a massive overall cutback in spending (in fact, since everybody cutting back on spending at once is what a recession is), having the federal government suddenly enact massive spending cuts only deepens the problem. There is no middle ground between these theories.

    There is no arguing this policy on the details. It is a choice between basic underlying models of how the economy works. John Maynard Keynes was basically right, or basically wrong. Milton Friedman either understood how recessions work, or he profoundly misunderstood them. We should hit the gas or we should hit the brakes. Hitting the gas and hitting the brakes at the same time is not one of the choices.

    The economic middle ground that Obama is supposed to move to, the brakes-and-gas-pedal strategy so beloved by dignified, respectable, and fundamentally innumerate opinion columnists, is where he started out. The early 2009 stimulus package, which Krugman rightly decried as too small for the shortfall in national demand, was put together by people who couldn't decide if government spending was good or bad. The result managed to be the worst of both worlds: not enough to turn the economy around, but more than enough to worry people about the expense. And worse, as Krugman points out, Obama has a bad habit of conceding the "spending is bad" model:

    I felt a sense of despair during Mr. Obama’s first State of the Union address, in which he declared that “families across the country are tightening their belts and making tough decisions. The federal government should do the same.” Not only was this bad economics — right now the government must spend, because the private sector can’t or won’t — it was almost a verbatim repeat of what John Boehner, the soon-to-be House speaker, said when attacking the original stimulus. If the president won’t speak up for his own economic philosophy, who will?

    We have a choice. We can cut government spending, and throw cops and teachers and firefighters out of work, and see how that picks up the economy. Or we can take advantage of the ridiculously low current interest rates on government debt in order to spend on things which we actually need and can use: fixing our roads and bridges, improving our transportation system, funding crucial technological research before competitors like China get ahead of us. We can choose between a model in which government spends in the lean years and pays down debt in the fat years, or a model in which it cuts harder when times are tough. And President Obama can choose between championing one theory about how the world works or another. It can't be both. The Earth orbits the Sun, or it doesn't.

    There is no middle ground. It has already collapsed under our feet.


    Dayum. Now wot is LissieB gonna do wit all dem union-made Journey to the Sentrist of the Earth Tee Shirts?

    Good one, Donal.  I'm already abandoning my Sentrist movement and deciding where to focus next.  If you have any ideas, lemme know. 

    Here's another question for which there is no middle ground:

    In 2008 were republicans musing about "the will of the people?"

    And another:

    Did John Bohner cry about how his party had not gotten the people's message in 2008, and so they needed to compromise with the new President?

    U And yet another:

    Are any of the republican hierarchy actually interested in governing?

    In governing?  No.  In power? Very much.

    What Destor said.

    The truth is, what currently passes for "conservatism" in this country is entirely oppositional. It objects to the basic policies we've followed over the last five, eight, or eleven decades, depending on which
    conservative" you ask, but offers no practical alternatives to them.

    Ed Schultz, the liberal talk show host, has coined the term  - -The 99ers.  The term refers to those who have received 99 weeks of unemployment compensation which is the maximum period of eligibility.  Attempts to extend the period were stymied in Congress.  Since unemployment continues, I must assume that the 99ers have had to resort to Medicaid and food stamps.  Many are experiencing foreclosure on their homes.  I see continued gloom in the years ahead.  State and Federal budgets are (or will be) soon depleted.  Yet the presses at the treasury are running at full speed as we print more and more currency with less true value.  For those collecting the various free benefits, I'm certain many able-bodied people would rather be gainfully employed.  Some would happily live their entire lives drawing "Free Money" and services, but I believe that many unemployed Americans would love to be doing productive activities again.  As the value of our dollar plummets, we must receive some results from the generous benefits which we so freely provide.  This is the time to act.  A program similar to the Emergency Relief and Construction Act must be implemented as was enacted during the Great Depression.  To respond otherwise could cause a world-wide collapse of the financial structure.  A new WPA may be our only hope.  Sitting on the fence has accomplished nothing!

    I sense that the GOP would gladly see our economy (and middle-class) collapse if inaction assured that Obama would not become a two-term president.

    Great comment, Chuck. Here's one of those either-or questions:

    Do extended unemployment benefits keep people from taking jobs?

    The current "conservative" answer is generally yes. It's very easy to hear conservative officeholders, columnists, and bloggers claiming that extending unemployment is a "disincentive" to work. In that model of reality, people running out of benefits is going to be TEH AWESOME!!1! because people will take jobs they wouldn't otherwise stoop to and the jobless rate will decline.

    The other model is that people are still unemployed after 100 weeks because there are not jobs for them. In that model, cutting off benefits doesn't get anyone a job. It just makes people destitute. And when they're destitute, they stop spending on things like, say, groceries, which means other people in their community get poorer.

    One of those models is basically true.

    I think that I understand a majority of Americans...They base their self-esteem upon their productivity.  Yes, I have also dealt with generations that survived "on the take" -- always taking what the government would provide for them.  Their numbers were minute.  I despised them, but I went on believing that man was, basically, productive and honest.  Perhaps, that makes me a Patsy, but I prefer to remain delusional


    I agree with you, Chuck. I think the idea that most people who are still drawing unemployment after 23 months don't *want* a job is totally divorced from reality: it's an attempt to hide from unpleasant reality by scapegoating people.


    Great blog post, Dr. C. You make a very cogent argument against this "compromised" fiscal poicy for recovery that tries to "take a little from here and a little from there" to appease everyone. It probably becomes most glaringly ludicrous when you start encountering compromise demands that allow for the spending of "stimulus" funds, but only after first agreeing to spending cuts to pay for them.

    The President's quote about government belt tightening hit me like a ton of bricks when he made it. It was the point I began to really wonder if he had the skills and the courage to actually stick with a disciplined approach to fixing the economy. Or would he allow himself to be "compromised" into an ineffectual waste of tax dollars on half-measures accompanied by feignts into the "fiscal responsibility" arena advocated by the Republicans?

    What we got was the worst of all possible outcomes. It seems we got all Keynesian with Wall Street and the Financial Sector, pouring hundreds of billions into them without strings attached to ensure the monies would be stimulative of the overall economy. (e.g. targeting funds for home mortgage cramdowns, reduction of interest on consumer debt, etc.). Then, we pulled in our horns after a couple half-hearted attempts and decided we couldn't afford to spend any monies that might more directly stimulate the Main Street economy. 

    The argument against extending unemployment benefits during a time of nearly 10% joblessness really becomes ludicrous. One thing that gets lost in the discussion of "jobs" is the definitional difference between "something to do with your time" versus "something that economically sustains yourself and (heaven forbid!) your family."

    Those who insist we eliminate the unemployment safety net consider a job to be a job, nothing more. In fact, I suspect most would welcome the downward pressure on "labor costs" caused by a sudden race to the bottom on wages. "You say you will work for a loaf of bread? Too bad. Your buddy here says he'll work for half a loaf. And tomorrow, I know that the guy with the family up the street will do it all for whatever crumbs I can scrape from the table. We just gotta' starve 'em into a degree of desperation sufficient to make it all happen. And - joy to behold! - just look at how this dynamic is reflected in the labor cost indices and in the numbers measuring productivity. We're win/win here, I tell you! Unemployment numbers are down significantly! Profits are up! Costs are down! We have at last found the path to economic recovery!"

    Listening to some of the economists such as Zanny Minton Beddoes and others, the arguments that ignore the impact of this recession on the "little people" become nearly so ludicrous as I've outlined above.

    Ultimately, I agree with your premise that there are some inescapable realities that can't be addressed with compromise solutions. To extend your metaphor, you can't determine someone is a witch by dunking, with the determinative outcome being only a witch would survive the test. It is every bit as ludicrous to pretend that we can fix the economy with application of both stimulus and "fiscal belt-tightening."

    History - and most respected economists - have shown that economic stimulus is required if we are to ever pull out of this tail-spin. What is required is leadership in Washington that has the courage to stay the course AND (most importantly!) the communication skills required to let the American people understand how it all works.

    Great blog, Doc. I had inchoate thoughts along the same lines regarding the whole 'return to the center' meme. But this is just beautifully laid out.

    On the particular question of Keynesian vs Austerianism I do have a niggling kind of objection, though. The objection being: NO ONE, absolutely NO ONE amongst right-wing economists, is actually Austerian. The proof lies in their op-eds back in 2001, or for the ones in government, their actual 'deficits don't matter' policy at the time. Everyone in academic economics is Keynesian. Everyone holding the presidency is Keynesian. It's the only accepted theory. There is no right-to-left spectrum on that question.

    If  the GOP take the presidency in 2012 they will deficit spend like madmen. I don't think anyone can have serious doubts about that.

    More importantly, their current appeal for fiscal prudence does not come from a desire to improve the economy. All their incentives, and their sociopathic singleminded desire for power, point towards destroying the economy one way or another before 2012. They know that is their only chance at winning. They fly the flag of Austerianism, not because they believe it, but precisely because they know it is incredibly damaging.

    And most important of all, people who imagine that their big-business backers will force them to be reasonable are, imo, completely delusional. Those backers see a much bigger prize in retaking the reins of power than in modestly improved growth leading to a relected Dem administration not interested in yet more laissez faire.

    I agree and I don't, Obey. I know at least one economist who recently got mocked by colleagues when they saw him with a copy of Keynes (which he was checking out for his spouse), along the lines of "What are you doing reading that crackpot?"

    And there is, as I understand it, "efficient markets" scholarship that claims that everything's fine and the downturn should be allowed to run its course. Of course, there is no Austerian economics that can be turned into anything like reasonable policy, except around the edges.

    And, of course, Ron Paul, who wants to go back on the fershinlugger gold standard, is about to be chair of the House committee that oversees the Fed. Bad times.

    Well, Keynes himself is of course ancient history by now. By 'Keynesian' I meant the standard Neoclassical synthesis. People make too much of the fresh-water/salt-water divide, imo. Most of the objections to stimulus spending are coming from people who aren't even macro-economists - either finance people or historians posturing as amateur econo-pundits. The only macro people objecting that I've seen are Kevin Murphy and Tyler Cowen, and they do so within pretty standard models, they just plug different values for variables such as efficiency of government spending and multiplier effects - values that, by the way, are quite absurd unless you're channeling your inner Schumpeter and his religious faith in creative destruction. But, again, nobody's disputing the models. Maybe I've missed something though...


    Okay, I yield the point. The arguments are between people using one economic model and those using no economic model at all. I get that.

    But that certainly doesn't leave any room to compromise. You can't concede, say, Megan McArdle's world view when it's based on ignorance and innumeracy.

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