Thursday, April 09, 2009
What If Keynes Is Wrong? - Rocco Martino
Sounds a lot like a plan; a good plan...
Rocco Martino writes in the Philadelphia Bulletin:
"Quietly I said, 'Doc, I would feel a lot more comfortable if this government called a meeting of the smartest people in the world — economics, mathematics, simulation theory, political science or whatever — and got them to build a model of the economy and then worked different scenarios to see what interaction exists between all these different conflicting demands, ideas, solutions and policies. They could check out the potential impact of programs with tax benefits for creating jobs, for research and development, for creating new industries, for creating whole new ways of doing things. Such a group would think outside the box. After all, boxes usually have nothing but stale air and old ideas in them. We need new initiatives. That’s where government spending should go. That’s how to prime the pump. I still remember how government backing for Research created the computer, radar, antibiotics, launched satellites in space, created the Internet, and on and on. The miracles of Ireland, China and India attest to priming the pump to create jobs with special tax breaks. We don’t create jobs if we raise taxes on one hand, and dole out money with the other. A major simulation effort could investigate all of these before we act. It’s why we build wind tunnels. Can you imagine what we would waste if we built airplanes and flew them to find mistakes and never used a wind tunnel? Ridiculous isn’t it. But that’s what we are doing now. Flying without testing. We need testing. Maybe then I would feel more comfortable with what is going on.'
Doc was silent. He looked at me, a slight smiling starting at the corners of his mouth. 'You sound like a modern economist,' he said. 'I like your ideas. Keynes was right for his day. Maybe he is incomplete for today. I like your idea of a bunch of smart guys testing policies before we go breakneck into spending.' Then he looked a little sad and wistful. 'If I was still teaching,' he continued, 'I would set something like that going. Maybe I can call my buddies at the University. If they could get some government funding, they could take a crack at it.'
I couldn’t help it. I almost jumped up and down as I said, 'Doc, that’s the kind of government spending we need.'"
