Why We Muddle Through

Just finished reading Niall Kishtainy's A Little History of Economics, and recommend it as a primer for anyone interested in the background behind today's arguments about government policy. Kishtainy's very accessible tracing of the vicissitudes of thinking about economics and economic policy makes clear something that has long troubled me--that despite decades of serious empirical work on economics, we still cannot answer once and for all the question of whether debt incurred by government is a good or bad thing. To the Keynesians, like NY Times columnist and Nobel laureate Paul Krugman, spending (and debt) is a net good, especially when interest rates are at historic lows. For example, Krugman et al., criticized the Obama administrations for not spending enough following the 2008 crash. To others, Supply Siders a la Milton Friedman and more, government debt (and the spending that creates it) is almost always problematic in the long run, burdened future generations with paying for their ancestors profligacy (and we know what Keynes famously said about the long run).On its face, this would seem to be a resolvable dispute. Computer simulations of future scenarios and econometric analyses of past chains of events should, in theory, shed light on the debate. I suppose that in a time when our society cannot agree even on the science behind climate change claims it should come as not surprise that economics sheds less light than heat on policy matters. In the end. as reading Kishtainy makes clear, it comes down to morality (or at least values) and what one believes is true rather than what the science shows. No wonder we can't agree.