Samuelson, Again
Robert Samuelson has yet another mind bogglingly inane column. He first does his ritual criticism of “conventional wisdom,” declaring that stimulus in the form of direct government outlays to shore up consumer spending and/or employment (checks, jobs programs, public works, tax credits etc) is totally off the table. His reasoning is pretty weak. He notes that the first 152 billion dollar stimulus was mostly saved and that public works programs take a long time to get started. Well, his first point is fair, but it seems like a bigger stimulus could still lead to more consumer spending. And as far as public works goes, there are lots of projects that are ready to go except for a lack of funding. Also, most economists think we’re going to be slumping for quite some time, so the regular concerns about public works funding leading to these works being spent during a boom don’t seem to apply. Samuelson just ignores other ideas for more direct supply side stimulus like expanding unemployment benefits or increasing outlays for food stamps. These are much more directly tied to consumer spending, not to mention that they help out people who are directly suffering as a result of the downturn.
But let’s get to his three fashionably impolitic ideas. His first is actually decent – “Raise fuel taxes the equivalent of one cent a gallon per month for four years.” The arguments for it are the same as any argument for a carbon tax, and it makes no real sense as a stimulus measure to get us out of a slump
This second one is truly daft: “increase the earliest age that workers can qualify for Social Security from 62 to 64.” This measure wouldn’t function as a stimulus, wouldn’t save the government money (he even says that the checks retirees get later would be bigger). At best, it would encourage people to work longer, but compared to more direct forms of stimulus, it’s pretty weak tea.
His last suggestion is the only one that makes some sort of sense, even on its own terms: allow for offshore oil drilling. But his own reasoning is still quite lame “America’s huge foreign oil bill weakens our economy but also destabilizes the world economy. Oil producers don’t spend all they earn, dampening worldwide demand.” OK yeah, but offshore drilling won’t meaningfully affect the price of oil, especially since its crashed recently, for decades. Once again, as a stimulus measure, it makes no sense. The only good reason for offshore drilling I’ve heard articulated is that it would directly bit into our current account deficit, bu Samuelson doesn’t even mention that.
So, here we have a columnist for America’s preeminent newspaper for reporting and analyzing politics. He has the reputation of being highly numerate and for proving insight about economic policy. And he uses his position as a columnist to peddle three ideas that no economist would support as a stimulus measure in a slumping economy. He wraps his ideas up in the vestments of “controversy” and the fact that the president elect isn’t likely to implement any of them. In Samuelson’s world, the fact that an idea is politically unpopular and unlikely to be implemented is a sign of its strength. But, in the case of stimulus, the opposite is clearly true. We have a consensus from Ben Bernanke to Larry Summers to Jamie Galbraith that some sort of direct, classic stimulus is needed. What Samuelson is doing is trotting out his favorite ideas and saying that now is the best for them to be enacted. This type of column writing isn’t only misleading and pointless, it’s also quite unoriginal.
