So I began to pen an essay on the subject then remembered that we already went there last fall. Give this one another read...
The Thing About Coffee - Or - Firm in His Addition - Or - Empirical Evidence is in the Eye of the Beholder
The question we should ask, says Paul Krugman in Fridays NY Times, is what policies would offer the best prospects for healing the damage? The administration would have tried to accelerate recovery by sustaining public spending and putting money in the hands of people likely to use it. Republicans, on the other hand, insist that the path to prosperity involves sharp cuts in government spending. And Republicans are dead wrong. He goes on to cite the just-released IMF World Economic Outlook, a report that, he says, combines short-term prediction with insightful economic analysis. A grim and disturbing document, telling us that the world economy is doing significantly worse than expected, with rising risks of global recession. But the report isnt just downbeat; it contains a careful analysis of the reasons things are going so badly. And what this analysis concludes is that a disproportionate share of the bad news is coming from countries pursuing the kind of austerity policies Republicans want to impose on America. He then confesses; O.K., it doesnt say that in so many words. What the report actually says is: Activity over the past few years has disappointed more in economies with more aggressive fiscal consolidation plans."
Fascinating that a man of Krugmans intellect, and tenure as a political commentator, would suggest that todays Republican politiciancampaign pledges notwithstandingis somehow less predisposed to spending than his predecessors. I see little, at this juncture, to support that assertion (look no further than their voting records).
The thing about coffeefor the infrequent useris that the occasional cup will deliver that generally desirable kick. But when one finds oneself partaking on a daily basis, for an extended period of time, it, oddly, can deliver the opposite effectsluggishness. Should the heavy user find himself in need of a boost (an approaching deadline perhaps)if caffeine is to remain his stimulant of choicehell have to step it up; go high-octane and maybe throw in a Red Bull or two. Knowing full-well hell be suffering the ultimate consequencea major crashonce the deadline is met. But if he is to keep from destroying his health, crash he must.
From what I understand about alcohol (boring me doesnt drink), the casual user gets by just fine on the occasional beer, glass of wine, etc. He enjoys the short-term effect, and his life is all about facing the everyday challenges that come with the typical modern human experience. The functioning alcoholic, on the other hand, feels miserable when that cup of coffee on his desk isnt spiked with whatever it is he spikes that cup of coffee with. Functioning alcoholic is a term used for addicts who can hold down a job while simultaneously holding down their liquor. The term, however, is not to be confused with a functioning liverand therein lies the problem. On the surface things may appear just great, while, inside, the abuser eventually drowns his organs and, alas, shortens his modern human experience.
Todays politician (central planner) is, at best, the chronic caffeine addict. At worst, hes the functioning alcoholic. He is forever haunted by his constituents query; are we better off today than we were four years ago? The notion of coming down off of years of over-spending, and suffering the healthy, market-clearing (and economy-saving) pain of recessionon his watchdoesnt warrant the remotest consideration. And, sadly, as any user can attest, the greater the [stimulant-induced] sluggishness, the greater will be the cry for continued (and heightened) stimulusparticularly when the inevitable crisis (or garden-variety recession) occurs. And just like the in-denial addict who believes he can drink his way to success, the plannerwhose mantra, a la J.M. Keynes, would be in the long run were all deadassures us hes got everything under control.
I find it utterly baffling how, in the face of the developed worlds record sluggishness and runaway deficits, Krugman remains firm in his conviction. Or is it that hes firm stuck in his addiction? That would make sensefor addictions make blunderers out of otherwise bright individuals.
Now to be fair, hes hardly the only hard-core addict Keynesian among us. They are aplenty, and they do indeed have their arguments, as market-advocates (like yours truly) have theirs. Each side offers up its empirical evidencewhich the opposition refutes. The ardent Keynesian proffers a compellingto the laymanexposé of how free-market-fanaticism put us in this pickle. His opponents, he accuses, are addicted to an out-dated ideologyand he has all the empirical evidence to prove it.
Thus, with both sides stuck as they are, when we step outside the spinwhen we look at the world objectivelywe conclude that ideology is indeed (I here confess) addicting, that the Keynesian vs Laissez-faire argument is eternal, and that empirical evidence is forever in the eye of the beholder.
May the following wisdom of Nassim Taleb inspire you to keep your wits about you. As for me, alas, Im too far gone
Our ideas are sticky. And we tend to stick to our theories. Good idea then to delay ones theories, for once theyre made theyre very difficult to let go of.
Once your mind is inhabited with a certain view of the world, youll tend to only consider instances proving you to be right. Paradoxically, the more information you have, the more justified youll feel in your views.